DIY

Your asset allocation strategy needs to:

  • Grow PLUS
  • Protect Assets

ONLY through the identification of asset class valuations and trends can a strategy be developed and implemented

Please follow the following steps.

Step 1a – Identify Stocks Valuation/Expected Return

US stock valuations are based on Robert J Shiller’s methodology: cyclically adjusted price to earnings ratio (“CAPE”).

Look-up current CAPE Rank:

Look-up Expected Return:

Here is the CAPE valuation rank table with the corresponding expected return on stocks.

As you can see, the lower the valuation, the higher the expected return (and vice versa).

The current CAPE: 37, RANK 98%

Step 1b – Identify Bonds Current Yield/Expected Return

For fixed income, current yields are sufficient for the expected return.

The CURRENT yield of the 10 year Treasury: 1.56%

Step 1c – Assign Stocks & Bonds Expected Risk

Stocks: 15.0%

Bonds: 7.5%

Step 1d – Identify the Stocks/Bonds Mix with the Highest Efficiency

Efficiency = Return/Risk

StocksBonds
20%80%
40%60%
60%40%
80%20%

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Step 2 – Identify entry/exit trend(s)

Identify the trends in asset classes to determine your entry (exit) point.

Access the CURRENT asset class trend(s) workbook, submit:

Note: The information provided here should not be construed as a solicitation of an offer to buy or sell securities. AND the potential results should not be interpreted as a guarantee of a strategy’s or approach’s potential success.