Basic Market Timing Portfolio for December (BND, DBC, VEU, VNQ, VTI)

previously detailed some basic portfolios as well as trading ideas. In an effort to be more user friendly, I track the portfolios monthly on my blog using Google Docs. One portfolio consists of 5 basic ETFs: Vanguard Total Bond Market ETF (NYSE:BND), Powershares Commodity Index (NYSE:DBC), Vanguard FTSE All-World ex-US ETF (NYSE:VEU), Vanguard REIT Index ETF (NYSE:VNQ), Vanguard Total Stock Market ETF (NYSE:VTI). 
 
Despite only being 5 ETFs, one could take multiple approaches to the portfolio, from buying and holding to actively managing it; or an investor could use a combination of different approaches or trading strategies. Listed below are the month end results for November of the 5 ETFs listed above. One could purchase the top 1,2, or 3 performing ETFs based on momentum as judged by the 3-6-12 returns or just the 6 month returns. In this case, that would indicate a purchase of VNQ, VEU and DBC (3-6-12 strategy).  This combination of ETFs differs from last months list. DBC is a new addition this month with commodity prices in an uptrend this has powered DBC past VTI into the second strongest ETF.
 
Another twist an investor could add would be to purchase the underlying securities based on momentum only if they are also trading above their 200 day moving average (or another moving average of your choice). At the end of November, all 5 ETFs were above their 200 day simple moving average. 

Many of the strategies listed here were inspired in part by Mebane Faber, author of The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets. For an even better explanation of some of the strategies, I recommend the book. Also, he has a new project which allows users to replicate the best performing hedge funds, AlphaClone.

The data source for the information below is Finviz, which has some of the best free financial data on the web (as well as a new elite service) and Google Finance.

Ticker Company Performance (Quarter) Half Year Year Sum of 3-6-12 Month Returns 200-Day SMA
(BND) Vanguard Total Bond Market ETF -0.36% 3.54% 5.39% 8.57% 2.30%
(DBC) PowerShares DB Commodity Index Tracking 12.93% 14.95% 1.66% 29.54% 7.16%
(VEU) Vanguard FTSE All-World ex-US ETF 9.87% 14.12% 4.86% 28.85% 4.25%
(VNQ) Vanguard REIT Index ETF 7.40% 10.32% 31.87% 49.59% 6.93%
(VTI) Vanguard Total Stock Market ETF 14.46% 9.37% 12.93% 36.76% 5.96%

Written By  Scott’s Investments   (No Positions)

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