In the previous posting we called attention to the call for 40% fixed, 60% equity in July. What does a 60/40 allocation look like as of Jan 1?
It now projects 20% more downside risk than upside potential if only passive indexes are used. Even selecting a combination of active ETF’s has 10% more downside risk than upside potential.
What if we go to 50% fixed?
Now the UP Ratio is 14 times more upside potential than downside risk with a 15% allocation to Vanguard Growth Technology, 8.9% allocation to the Hong Kong ETF, 7.8% to the MidCap Growth iShare ETF and 4.7% allocation to the iShares Asia X Japan ETF. This is not a well diversified portfolio, but it is close to mine. I overweight China Technology and the Spyder, which over weights Technology. I use the model as a guide and my brain as the decision maker. I am currently at 50% Equity and I plan to move to 40% fixed in the very near future.
This is how I recommend professionals use this model. Amateurs should not use it.