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Asset Allocation Rotation

Asset Allocation Rotation. 10/13/09. By Don Wilson. Web Site donsfunds.com. Stock Market Investing/Trading. Started Investing 1987 Stocks w Fundamental Analysis 1993 Technical Analysis 1994 Built First Market Risk Management Model 1997 Trading Mutual Funds

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Asset Allocation Rotation

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  1. Asset Allocation Rotation 10/13/09 By Don Wilson Web Site donsfunds.com

  2. Stock Market Investing/Trading • Started Investing 1987 • Stocks w Fundamental Analysis • 1993 Technical Analysis • 1994 Built First Market Risk Management Model • 1997 Trading Mutual Funds • 2003 Automated Mutual Fund Trading “Tango5” • 2004 Automated ETF Trading – “TangoETF”

  3. ETF’s & ETF Trading Systems • ETF’s in general • Managed Risk Models • Some ETF trading systems • Focus on ETF Asset Allocation Rotation

  4. Managed Risk • Stock Market a Dangerous Place • Priority Number one is NOT PROFIT, it is MARKET RISK MANAGEMENT • Using Risk Models we can measure the actual risk in the market • This allows us to avoid large loses during those dangerous market times

  5. Overcoming Losses • 35% loss requires a 74% gain to break even. • 50% loss requires a 100% gain to break even. • 75% loss requires a 400% gain to break even.

  6. Example Russell2000 21 yearsThe Power of Compounding Returns with Risk Management Black line is Russell2000 without Risk Management Red line is with Risk Management 1579% Greater Return with 38% less risk

  7. Managed Risk Continued • SECOND PRIORITY is measuring the Alpha and Risk of individual ETF’s • Which gives us return per unit of risk • Using our ETF Risk Adjusted Ranking Models • Then identify the very best ETF’s to invest in at any given time

  8. (RSI 14 + Stochastic 13/21) divided by 2

  9. www.donsfunds.com

  10. The ETF Advantage • Diversification • Transparency, Predictability • Safety • Liquidity • Cost

  11. Asset Classes • More Asset Classes Main Benefit to ETF’s • If you can dream “it” up, you can make an ETF out of “it”. • Case Schiller Real Estate Index ETF • Junk Bond Spread (up and down) ETF’s • Van Eck Files for First A-Shares China ETF • Replicate Hedge Funds - IQ Hedge Multi-Strategy ETF, ticker QAI

  12. Best Place to Find ETF’sseekingalpha.com

  13. Wisdom Tree CEWEmerging Market Currencies

  14. Best Place to Find ETF’sseekingalpha.com

  15. Managed ETF’s ?? • Problem is disclosure of stock basket • There are some Managed ETF’s now • I would call them Semi Managed • Managed over Quarters not Actively Managed • One in registration will be weekly, disclosure after close on Friday • Some in registration will be daily

  16. Example of Excellent Managed Mutual Fund DFSCX Period 21 years, Bottom Chart using Managed Model

  17. TangoETF Aggressive w Inverse Option

  18. TangoETF Inverse Option • Bull/Bear Cycle approximately 4 years • 3 year Bull Market, 1 year Bear Market • Do not want to go Long/Short in all markets • We developed Bull State/Bear State Signal • So we only Short using inverse funds in Bear State Market

  19. Example ETF’s in Aggressive Portfolio Mix Aerospace Internet Utilities Energy Materials Commodities Small Cap Indexes Mid Cap Indexes Emerging markets Europe Single Country Funds

  20. Asset Allocation Isrealson Research

  21. Isrealson’s Asset Allocation 15% Drawdown for 40 years until 43% Drawdown for 2008

  22. Introducing: TangoETF Six Asset Class Rotation Model • Large Cap • Small Cap • Foreign (International) • Bonds • Real Estate • Commodities

  23. Unique Approach to Asset AllocationRotation & Risk Management Large Cap Small Cap International Bonds 10-40 ETF’s Risk Adjusted Ranking 10-40 ETF’s Risk Adjusted Ranking 10-40 ETF’s Risk Adjusted Ranking 10-40 ETF’s Risk Adjusted Ranking ETC. Large Cap Risk Management Small Cap Risk Management International Risk Management Bond Risk Management

  24. Measuring Market Risk Market Risk Always Moving - Up ? Down ? Asset Class Risk Level Developed Computer Models that Measures Asset Class Risk High - Reduce Market Exposure Draw a Line in the Sand Low - Increase Market Exposure

  25. Families Needed for Each Asset ClassExample Large Cap Family, ETF Funds

  26. ExampleU S Bond Family, ETF Funds

  27. Six Asset Class Equity Curves

  28. Large Cap & Small Cap Equity Curves

  29. Bond & Foreign Equity Curves

  30. Real Estate & Commodity Equity Curves

  31. Putting It All TogetherTango Asset Allocation Rotation Annualized Return 19.69% Max Drawdown 8.79%

  32. Putting It All TogetherTango Asset Allocation Rotation11/21/02 – 10/07/09, 7 years19.69% Ann, 8.79% MDD, 1.55 Sharpe, 3.18% SD Correlation is to SPY

  33. TangoETF Subscription Service • Four Portfolio’s Available • Aggressive • Moderate • Conservative • Endurance • Asset Allocation Rotation will be available soon

  34. TangoETF Subscription Service • Automated ETF Trading System • Each Portfolio holds three positions • Subscriber receives email each night • Emails - Trade Gains Each Position, Portfolio Daily Gain, Positions to Buy or Sell. And a Link to Portfolio Daily Update on Web Site • Subscription $299.95 per year

  35. TangoETF Subscription Service

  36. 401(k) Platform Available using TangoETF Managed Risk

  37. Questions Contact don@donsfunds.com Sunrise 401 (k) Advisor: Mike Hall 1-972-406-8491 Best Place to Find ETF’sseekingalpha.com Another source IndexUniverse.com

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