Q: How would you define the difference between the tactical and target allocation in the model portfolio? How would you define the column titled “weight”?
J: The difference between target and tactical is pretty simple. If an asset class is fundamentally attractive and currently in an uptrend, the target and tactical allocations will be the same. The reason I post both is that some may want to simply buy and hold. The target allocation is fine for those folks. For folks who want to be more opportunistic, the tactical allocation probably makes more sense from an investment standpoint. “Weight” is just the difference between the two. “Underweight,” for example, just means that the tactical allocation is below the target one.
Q: I just became a member on your site after reading the blog for a couple of weeks. Really good stuff, thank you. I came across your 3 part series on “How to time the market like Warren Buffett”: https://thefelderreport.com/2014/08/07/how-to-time-the-market-like-warren-buffett/
I read parts one and two, but couldn’t find part three. Could you please forward me the link? Thank you again for the very interesting work.
J: Thanks for the kind words. Glad you’re finding the research valuable. Here’s the link to part, 3: https://thefelderreport.com/2014/09/05/seeing-the-forest-for-the-trees/
Q: I like to pick individual stocks, so which one of your stock picks would you say would be the best to start with. I like nly and nxrt the best. I really don’t like shorting. I understand it is there to protect to the downside, but if these buys are fundamentally good companies that will be around for years, the fluctuation doesn’t bother me that much as I long as they continue to produce a stable dividend to live off of. If the shorts don’t work out you just lose out, but if the companies have staying power than live off of the dividends, and let your research pay off over time. Also, why not invest in a laddered bond portfolio for income with rates up in the air? I’m thinking one with a 5 year duration, with 20% maturing every year and rolling it.
J: I put the allocation column there to show approximately how I am invested in each name. I can’t really help you decide which is best for you because I don’t really know your situation. The best I can do is tell you to click the symbols in the portfolio to read more about each. From there you’ll have to make the determination on your own. I will say that I personally feel more comfortable owning the portfolio in its entirety than I would just one or two names, especially because I believe the hedges may come in handy sometime soon. As for a bond ladder, I like the idea and have recommended that more than once recently.
Q: Jesse, didn’t know if you saw this. boy is this market tough with stocks going up and bonds not collapsing and gold being dead. Today in Ask fleck someone said a guy who had been in cash since 2010 finally decided to move into stocks because he was tired of waiting even though he agreed the market would collapse. http://www.zerohedge.com/news/2015-05-27/billionaire-hedge-fund-manager-paul-singer-reveals-bigger-short
J: Thanks. I hadn’t seen that. The magic 8-ball for bonds is pretty hazy right now. I’m comfortable being underweight given all the crosscurrents.
Q: hi jesse do you think people are waiting for a 10% correction to buy?
J: No. The money on the sidelines meme is bogus. There just isn’t any left. People have been buying every dip we’ve seen for over two years now. A 10% correction at this point would have those folks to scared to buy.