Investing for wealth preservation and growth or for retirement purpose is by definition a long term process. In a long term period, experiencing wars, natural disasters and political or social unrests is a fact of life. How to deal with and navigate through these threatening events is pertinent to the success to achieve financial goals.
As baby boomers are exiting or getting ready to exit the work force, this year suddenly saw many dramatic events unfolding: Japan's earthquake and the still unfolding nuclear power meltdown events, the middle east violence with fear of radical islamic involvement and, this weekend's airstrike by allied forces on the Libyan regime are all pointing to certain tipping points in the world economic and political landscape. The new generations and the baby boomers suddenly find themselves in a world with entangled dangerous events.
The events certainly made their marks on financial markets: the big swings of the Dow Jones Industrial stocks (DJI) and S&P 500 stocks (SPY) left a dent on the otherwise stubborn euphoric markets. Most risk assets including U.S. stocks (SPY) (VTI), international stocks (EFA) (VEU), emerging market stocks (EEM) (VWO) and REITs (IYR) (VNQ) (RWX) lost ground in the last week. The only standout in the group is commodities (DBC) (GSG). For the week, DBC actually gained 0.78% while gold (GLD) gained 0.11%. For more detailed performance information, please refer to here.
Portfolio Performance Comparison
| Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate | 10% | 69% | 3% | 13% | 4% | 14% |
| Six Core Asset ETFs Strategic Asset Allocation Moderate | 11% | 89% | 4% | 17% | 7% | 31% |
| Four Core Asset ETF Index Funds Emerging Markets Strategic Asset Allocation Moderate | 9% | 70% | 4% | 17% | 6% | 26% |
| Five Core Asset ETF With Commodity Benchmark Strategic Asset Allocation Moderate | 11% | 85% | 3% | 12% | 6% | 29% |
| Five Core Asset ETF Benchmark Strategic Asset Allocation Moderate | 11% | 76% | 4% | 16% | 5% | 19% |
Portfolio Performance Comparison
| Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate | -3% | -32% | 2% | 16% | 4% | 28% |
| Six Core Asset ETFs Tactical Asset Allocation Moderate | 9% | 67% | 10% | 78% | 14% | 96% |
| Four Core Asset ETF Index Funds Emerging Markets Tactical Asset Allocation Moderate | -2% | -16% | 7% | 62% | 10% | 64% |
| Five Core Asset ETF With Commodity Benchmark Tactical Asset Allocation Moderate | 2% | 18% | 5% | 43% | 10% | 64% |
| Five Core Asset ETF Benchmark Tactical Asset Allocation Moderate | 6% | 42% | 7% | 60% | 10% | 63% |
| Assets Class | Symbols | 03/18 Trend Score | 03/11 Trend Score | Direction |
|---|---|---|---|---|
| Commodities | DBC | 14.15% | 12.94% | ^ |
| Gold | GLD | 8.86% | 9.46% | v |
| US Equity REITs | VNQ | 5.89% | 8.03% | v |
| US Stocks | VTI | 5.55% | 8.03% | v |
| International Treasury Bonds | BWX | 5.07% | 4.04% | ^ |
| International REITs | RWX | 4.27% | 6.89% | v |
| US High Yield Bonds | JNK | 3.74% | 4.13% | v |
| Emerging Market Stks | VWO | 2.97% | 4.64% | v |
| Intermediate Treasuries | IEF | 1.82% | 1.16% | ^ |
| US Credit Bonds | CFT | 1.71% | 1.71% | v |
| Total US Bonds | BND | 1.12% | 0.97% | ^ |
| International Developed Stks | EFA | 0.87% | 3.28% | v |
| Emerging Mkt Bonds | PCY | 0.57% | 1.18% | v |
| Mortgage Back Bonds | MBB | 0.23% | 0.12% | ^ |
| Treasury Bills | SHV | 0.05% | 0.05% | v |
| Municipal Bonds | MUB | -0.9% | -1.22% | ^ |
| Frontier Market Stks | FRN | -3.22% | 1.01% | v |
In conclusions, no one has a crystal ball to predict the future. The effective way to cope with major risks for mankind is to adhere to sound portfolio strategies such as asset allocation with diversification and tactical allocation based on prevailing events.
Symbols:EEM,VNQ,FRN,VWO,IYR,ICF,GLD,RWX,VTI,SPY,IWM,PCY,EMB,JNK,HYG,PHB,EFA,VEU,IEF,TLT,GSG,DBC,DBA,CFT,BWX,MBB,BND,MUB,SHV,AGG ,Exchange,Tickers,(NASDAQ,EEM),(NASDAQ,VNQ),(NASDAQ,FRN),(NASDAQ,VWO),(NASDAQ,IYR),(NASDAQ,ICF),(NASDAQ,GLD),(NASDAQ,RWX),(NASDAQ,VTI),(NASDAQ,SPY),(NASDAQ,IWM),(NASDAQ,PCY),(NASDAQ,EMB),(NASDAQ,JNK),(NASDAQ,HYG),(NASDAQ,PHB),(NASDAQ,EFA),(NASDAQ,VEU),(NASDAQ,IEF),(NASDAQ,TLT),(NASDAQ,GSG),(NASDAQ,DBC),(NASDAQ,DBA),(NASDAQ,CFT),(NASDAQ,BWX),(NASDAQ,MBB),(NASDAQ,BND),(NASDAQ,MUB),(NASDAQ,SHV),(NASDAQ,AGG),
Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
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