A rare interim sell/buy trade in my 7-ETF model (and a key message for investors)
A message to all subscribers about what ETFYourself.com is and isn't
I normally manage the 7-ETF portfolio so that when changes are made to the portfolio, they are announced on Tuesdays. Today is Wednesday, and I just made a portfolio change. So, I guess you could say there’s “business as usual” and “time to act” and while they are usually in sync, sometimes they are not.
I know that some investors wish investing was a neat, clean process, where we just put our money in “the market” and magically, 10 or 20 or 30 years later, we retire on the pot of gold. If you have read even a little of what I’ve written about and managed other people’s money through since the 1990s, you know I don’t believe that fantasy. But I suspect many Wall Street sales people do. It is how they are trained and how their bread is buttered, so to speak.
Today’s rare Wednesday post has 2 purposes:
Paid subscribers to ETFYourself.com have, below the paywall, their usual recap of what I did, why I did it and how this move, as with any other I make as an investor, is done with the total portfolio in mind. I don’t just “buy this because I like it” and ignore the world, and my portfolio, around me. And I think those who do invest that way are doing something dangerous.
Below, for all subscribers, paid and free, is what I hope is a helpful recap of what ETFYourself.com is all about. We are now 9 months into this, and we have learned a lot from our subscribers about what gaps can be filled in the vast, complex, hype and sleaze-filled world of investment publishing. And we are doing our level best to fill the gaps we think we can with this offering, and with our Sungarden Institutional service.
So paid subscribers, I’d appreciate you reading this message below before or after you slide down past the paywall to see the latest portfolio move and updated depth chart.
And free subscribers, I hope this message will serve as a timely reminder of what we do and why we do it.
ETFYourself.com: what is it, and how does it aim to help self-directed investors?
As a reminder, while I have my own money in this portfolio, its main purpose is as a portfolio construction and research tool. ETFYourself.com is intended to help investors of all shapes, sizes, and experience levels LEARN HOW TO THINK LIKE A PORTFOLIO MANAGER. That is a platform that virtually no one in the investment advisory or investment publishing industry has as their primary business objective.
An important but, in my opinion, secondary goal of this portfolio is to earn a solid return with relatively low volatility along the way. Naturally, if I am making interim moves like this, I’m pretty serious about that second goal!
But frankly, if it were up to me (and it isn’t since I don’t control what goes on after I hit “send” on a post), I would hope that any paid subscriber to ETFYourself.com would take the 7-ETF grid, and either mimic mine structurally or use the concepts I teach to make their own.
Which parts of this can (and should) be personalized by any subscriber?
How many ETFs to own at one time (this is the first step in “construction”)
What will each ETF position size be (this keeps it simple and helps manage risk)
How many ETFs to consider to fill each of those slots at any one time (I call this the “depth chart” like with a sports team)
Which ETFs to include in the depth chart (continuing with the sport analogy, these are the players on the roster)
Which ETFs to own right now (this would be the current starting lineup, and the rest are on the bench)
What decision-making process leads to changes in the portfolio (i.e. when does a starting player go to the bench, and a player on the bench go into the game)
As a quick review, my answers are as follows:
7 ETFs
They range from one 30% slot to one 5% slot, with a 15% and a trio of 10% slots too
7 ETFs (creating a 7x7 grid, plus BIL, a T-bill ETF which is a “wildcard” I can plug in anywhere at any time). That gets me to an even 50 ETFs for consideration.
I researched a wide range, with the goal of each row in the depth chart having ETFs I could essentially sort from most defensive to most offensive, and I list them from left to right in the grid)
That’s what the top section is, the current portfolio
Do you want to be given a fish, or be taught how to fish?
If this were just about Rob Isbitts getting paid for making investment decisions, I could go back to managing/advising clients, what I did for 27 years as a fiduciary before selling my practice to semi-retire…not so much, based on the hours I put in teaching, writing and investing for myself! That’s why we don’t talk much about “track records” here.
Who cares about the past if you are a DO IT YOURSELF (DIY) investor? I’d think the goal in subscribing to this site is to learn from someone who has spent decades in the trenches, made all the mistakes (though I’m sure I’ll find new ones to make) and then decide FOR YOURSELF how to apply it. Our past and future live sessions allow you to bounce questions off me, not so I can tell you what to do, but so I can teach you how to think about all this stuff.
Why ETFYourself.com is so, so different…yet not for everyone
Ultimately, ETFYourself.com is about learning to truly be a DO IT YOURSELF investor. As the old expression goes, I think that too many subscription sites promise to give people a fish. So they eat for a day, and then what? The learning stops, or they fall into the trap of “some of your picks were bad.”
They should be focusing on the PROCESS first, and the PICKS second. That’s why I wax poetic all the time about position sizing, and created the 7-ETF portfolio force myself and our subscribers to start with some discipline. From there, any DIY investor is armed with plenty of knowledge to start deciding for themselves how to manage their own portfolio. Because through our service, they have “learned how to fish.”
Putting it all together
So today’s example of what I did in my portfolio is hopefully helpful. But the real question for every subscriber and those considering subscribing to ETFYourself.com is this: do I want to be my own portfolio manager and enjoy the sense of control over my financial destiny that comes with that? Or do I want to hop from subscription to subscription, hoping one of them has the “best picks”…whatever that means!
And as we have seen in several cases now, ETFYourself.com subscribers start by learning in this simpler, ETF-only environment, and then reach the point where they want more. More of what? Maybe it is a more wide-ranging ETF portfolio, or a dividend-driven tactical stock portfolio, to pursue total return. Or maybe it is learning how to incorporate options in a simple but effective way. All of that is why we created the Sungarden Institutional Service.
Best regards,
Rob