Yuval,
Thank you for your comments.
Indeed, my bad, I saw that article of yours last summer. I guess I tried to consume too much information too fast, so I forgot most of it as a result.
Yeap, then my links look a bit silly I guess, having your level of expertise and experience.
You are right, that dual momentum strategy yielded 2% in 2020 as I see on the website of the guy. So indeed it would have interfered with your 105% big time I guess.
As I see you are quite tolerant and respectful, unlike some commenters on p123 I observed during my brief stay on this forum. So I venture a couple more questions.
In my humble opinion, we all mostly got lucky last spring, when FED provided unthinkable liquidity, so the party got some more fuel to burn. Maybe I’m wrong here, but I like reading history and what I see does not look as a lasting situation.
So here is a question.
Maybe it is a one more of silly ones, but anyway I’m curious to hear your take on it.
What do you think would happen to your strategy if we had a re-run of 2000-2003 or 2008-2009 last spring?
Do you have any protection from the downside in your strategies?
Or do you just ride to the bottom with the equities market (whatever that bottom would be), hoping that following returns will cover the drawdowns?
I am quite risks-averse, but I think I could be fine with volatility - but only if it does not result in a permanent or a long-term loss of capital.
And, to justify your time spent answering, this is not a theoretical question. I’m considering investing my one year salary in your picks.
Again, I was about to do that last summer, but then I saw the drawdowns in your numbers and freaked out. OK, with hindsight, it cost me a lot, but that is my sleeping point at the moment anyway.
So the best alternative I see now is either cash or something low-volatile like Permanent / All Weather Portfolio. My line of reasoning is that I’m OK loosing 10-15% next 2-3 years due to inflation, but not 50% due to mean-reversal. And then, after CAPE is down to a reasonable levels again, I will be happy to switch to 60/40 or whatever.
I have recently invested one year salary with another service, so I’m really interested to know your downside protection (if any). What is your plan for the times when hell breaks loose?