Mission Accomplished

Portfolio Navigation produced a profit for the year of 10% and I am now 49% in cash.

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Portfolio Navigation Says Reduce Exposure

I am starting to take profits in skyrocket tech stocks.  My portfolio Gain is  /3 +$ +8.61%)  currently (clipped from my Schwab account). As some US states go back to work I will continue to reduce equity exposure unless the US recants its trade wars.  Absent America rejoining the world, I agree with Minard at Guggenheim, the S&P 500 could drop another 25%. 

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We Need More Than Data To Fight COVID-19

We need the right people to gather it and interpret it and it ain’t reporters or politicians or doctors and nurses.  It’s statisticians like

Dr John Ioannides Professor of Health Research & Policy at Stanford University

His research interests are clinical trials. He has worked in the fields of evidenced-based medicine and clinical investigation.  In particular, randomized trials and in appraisal and control of diverse biases in biomedical research.

He says: “The one situation where an entire, closed population was tested was the Diamond Princess cruise ship and its quarantine passengers. The case fatality rate there was 1.0%, but this was a largely elderly population, in which the death rate from Covid-19 is much higher.

Projecting the Diamond Princess mortality rate onto the age structure of the U.S. population, the death rate among people infected with Covid-19 would be 0.125%. But since this estimate is based on extremely thin data — there were just seven deaths among the 700 infected passengers and crew — the real death rate could stretch from five times lower (0.025%) to five times higher (0.625%). Even this highest estimate is phenomenally lower than the 3.4% initial estimate from the WHO.

Fareed Zakaria quoted him on last Sunday’s program and then had three experts on a panel that totally ignored the numbers.  WHY? Because these numbers are boring and will not sell media time.  Furthermore, it is not entertaining.  It is not sensational.  So what is the right investment strategy if Professor Ioannides is correct?

Here is some data from the field:

From Bloomberg Prognosis today

China’s Data on Symptom-Free Cases Shows Most Never Get Sick

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Problems, Problems

Which is worse: Covid-19 or the massive debt problem?  neither, it is knowing I have to take my wife into Stanford hospital for surgery next week and knowing there are currently 10 cases of coronavirus there and more expected next week.  The fact that my portfolio is still up 1%since the top and I am now back to 60/40 equity to fixed is no comfort whatsoever.  Think I’ll take a short nap and dream of poppies on Windy hill.

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Portfolio Navigation Works Again

My portfolio is now 8% above where it was on February 21st when I published “The Last Straw” article, instead of waiting to break even.

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Nothing is as Bad as it Looks: 351,372 15,263

As of 7:00 am yesterday I was 83% in equities. The reasons:

  1. My DTR changed to 10%
  2.  I ran the numbers On Bloomberg Corona Update and found this:

        351,372  were confirmed Cases and 15,263 were deaths worldwide.                                     The font size was larger than I can replicate here.

  1. Where deaths have occurred Deaths Cases World
    Italy 5,476 59,138 9.26% 4.3%
    Mainland China 3,270 81,093 4.03%
    Spain 2,182 33,089 6.59%
    Iran 1,812 23,049 7.86%
    France 674 16,689 4.04%
    U.S. 460 38,951 1.18%
    U.K. 281 5,683 4.94%
    Netherlands 213 4,749 4.49%
    South Korea 111 8,961 1.24%
    Germany 94 24,782 0.38%
    Belgium 88 3,743 2.35%
    Switzerland 66 8,060 0.82%
    Indonesia 48 514 9.34%
    Japan 41 1,089 3.76%
    Turkey 30 1,236 2.43%


    Numbers don’t lie…but Marketers present them falsely.  The Heading font size announcing the number of confirmed cases and deaths was Huge (check it out yourself on the  Bloomberg  COVID-19 update)  What are these BIG numbers in BIG print supposed to accomplish?  Scares the ___ out of you!

    Below the Big print are the results for each country in terms of deaths, in the 1st column. That puts Italy at the top of the list. Italy deaths then becomes the opening remark on every newscast.

    What they don’t tell you is what I add in the 3rd column, the percentage of people who contract the Virus who die.  If they ranked by this statistic, Indonesia would be at the top, but then, everybody would say, what the hell, It’s only 48 people!

    What if they included with the BIG print introduction, the percentage of Worldwide deaths, which is 4%?  Well, that would detract from the story THAT WILL SELL…TO WHOM?  The Advertisers who take up half the airtime on their radio and TV programs.

    Don’t get me wrong. I am all for freedom of the press and I think all Americans should avoid crowded places and close contact with other people.  I just want news to be presented truthfully for the sole purpose of informing.  OMG! I’m starting to sound like Trump.


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Has Trump Ever Had A Stock Portfolio?

Trump: “I don’t want to have stock buybacks,” he said Friday at a White House news conference. “I don’t like buybacks. I didn’t like them the first time.”

Why? Because Biden said that is what he would do?  I agree, when you required corporations to return the money they were hoarding overseas, you should have required them to invest it in new plant and equipment. You put no strings on it. The buybacks are part of what made the market go to all-time highs this year.  But now is not then!  Now, we need anyone and everyone to buy, buy, BUY to prevent another 2008.  What do you want them to do with all that money, buy up other companies?  You and Biden said they are already too big and you want to break them up.

Mr. President, stop telling corporations what to do and when to do it. Fire all those jerks who are giving you this bad advice and save your ass and the country by cancelling all those stupid trade wars.  Wait a minute, on second thought, keep going the way you are.  The market will recover when you lose the re-election. Then you can go back to your real estate deals in all those countries you have befriended.

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Famous Sayings

If you can keep your wits about you when all around are losing theirs, you’re crazy…but right.


If everyone in your government is in agreement, they are probably wrong. If all governments are in agreement, they are definitely wrong.

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So, What to Do?

The very first video located on the right hand side of this page is about the importance of calculating one’s DTR (Desired Target Return).  As my personal DTR has increased from 4% to 8%, due to the excessive and irrational gains pointed out in the “Then and Now” posting 1/9/2020 and  Figure 3 from the subsequent March 9th posting. As a result, my current equity allocation is 66%.

The Theory supporting this action is called: Portfolio Navigation” and is described in the second video.  How I arrived at this was explained under “Archives”, as the posting for March, 2013.  An empirical investigation for DB plans was posted March 2015.  Finally, Kal Salama, Chief Investment Officer of The Headlands Group, and I showed how this methodology could be applied to individual accounts, like IRA’s in the June 2017 post. To my knowledge, nobody has written a paper explaining why Portfolio Navigation is not better than the old buy and hold strategy and is not better than the rebalancing strategy that always maintains a constant mix.

So, I will play Devil’s advocate.  Portfolio Navigation ignores human emotions and forces humans to sell equities as returns exceed their DTR and buy equities as returns fall below their DTR.  Investors want to do the opposite.  Advisors must therefore, force clients to do what they do not want to do at highs and lows in the market. That will no doubt result in losing clients as clients look for the advisor who made the most money at the top and the one who lost the least at the bottom. Clients are their own worst enemy.

I am my only client and I do not want to ever have to be required to tell clients what they do not want to hear just to keep their business.  I would not want that responsibility even if they gave me carte blanch authority to make decisions in their behalf.  I will be 88 this month and will not accept that awesome responsibility. I limit my thoughts to the few who watch this blog, to do with it as they think best.


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A Perspective

Who was stupid enough to buy this morning?  C’est moi .  Yes, I had a buy order in for SPY at 286 and it executed at 275.  I am now at 60% in SCHO and 23% in 4 tech stocks and my portfolio is now down .78% for the year.  There are things worse than losing money. You could contract Covid-19.  Evin worse, you could die.  Even worse, someone you love could die.   As published in my last posting, I recently started buying after being 100% in cash equivalents on December 3rd.

How’s that working for you Frank?  I am currently 60% in SCHO, 15% in SPY and 23% in 4 US tech stocks.  More importantly, my wife is doing well with her chemotherapy.  Life is good and the outlook is even better. So, enjoy it and remember to  Laugh:

The robber says: “Your money or your life”!  Jack Benny says nothing. The robber shouts: “I said your money or your life”!  Jack Benny says: “I’m thinking, I’m thinking”.

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