Reflections from “TechWreck 2000″
Sunday, October 12th, 2008
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
It took several years to let go of all my anger, sadness, despair, suicidal thoughts, self-pity and resignation. I came to accept my past mistakes and gradually replaced the negative thoughts and feelings with optimism and determination to educate myself so that I would never put myself in a similar position again.
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
It took several years to let go of all my anger, sadness, despair, suicidal thoughts, self-pity and resignation. I came to accept my past mistakes and gradually replaced the negative thoughts and feelings with optimism and determination to educate myself so that I would never put myself in a similar position again.
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
It took several years to let go of all my anger, sadness, despair, suicidal thoughts, self-pity and resignation. I came to accept my past mistakes and gradually replaced the negative thoughts and feelings with optimism and determination to educate myself so that I would never put myself in a similar position again.
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
It took several years to let go of all my anger, sadness, despair, suicidal thoughts, self-pity and resignation. I came to accept my past mistakes and gradually replaced the negative thoughts and feelings with optimism and determination to educate myself so that I would never put myself in a similar position again.
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
It took several years to let go of all my anger, sadness, despair, suicidal thoughts, self-pity and resignation. I came to accept my past mistakes and gradually replaced the negative thoughts and feelings with optimism and determination to educate myself so that I would never put myself in a similar position again.
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
It took several years to let go of all my anger, sadness, despair, suicidal thoughts, self-pity and resignation. I came to accept my past mistakes and gradually replaced the negative thoughts and feelings with optimism and determination to educate myself so that I would never put myself in a similar position again.
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
It took several years to let go of all my anger, sadness, despair, suicidal thoughts, self-pity and resignation. I came to accept my past mistakes and gradually replaced the negative thoughts and feelings with optimism and determination to educate myself so that I would never put myself in a similar position again.
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”
It took several years to let go of all my anger, sadness, despair, suicidal thoughts, self-pity and resignation. I came to accept my past mistakes and gradually replaced the negative thoughts and feelings with optimism and determination to educate myself so that I would never put myself in a similar position again.
I began to educate myself in areas like strategic and tactical asset allocation, diversification, modern portfolio theory (MPT), the efficient frontier and models - no, not the Victoria Secret kind of models, rather mathematical models. After all, I was a statistics major. I always liked analyzing data - lots of it. I was familiar with terms like mean and standard deviation, variance and covariance, coefficient of variation, skewness and kurtosis, z-scores and t-scores, frequency distributions and normal distributions, moving averages, correlation, regression and more. I studied investment risk analysis - and became familiar with terms like alpha, beta, R-squared and Sharpe ratio.
I subscribed to a number of investment publications that claimed fantastic results for their subscribers. The trouble with most of them is that they rarely (if ever) publish how much risk is associated with their strategies. I had already made the mistake of focusing more on returns than risk and I paid dearly for that mistake. I wasn’t going to make that mistake again.
I set a goal to find or develop an investment model that would provide more consistent returns with significantly less risk than simply buying and holding a well-diversified portfolio. I wanted an investment model that I felt was safe enough to manage my 87 year old mother’s investments and safe enough to manage my own investments for the rest of my life. I didn’t have any intention of turning the investment model into a commercial venture when I started, but simply to develop a system that I could use to manage my family’s investments.
While I built and tested a number of investment models and studied many others, the greatest inspiration for the Sage Investment Strategies Timing Model - or SISTM as I prefer to call it - came from Mebane Faber of Cambria Investment Management. Faber wrote a white paper called A Quantitative Approach to Tactical Asset Allocation which he published in the Journal of Wealth Management. I was fascinated with Faber’s approach and impressed with the model’s back-tested results. I subsequently developed my own version of Faber’s model that incorporated my own enhancements.
While Faber had been successfully using his strategy “real time” for several years to manage portfolios of high net worth individuals, I began using my derivation of Faber’s model - the SISTM - about a year ago to manage my family’s investments. I use the SISTM to manage my 2 IRAs (rollover and Roth), my wife’s 2 IRAs (rollover and Roth), my employer’s Fidelity 401(k) plan, my 87 year old mother’s IRA and my mother’s taxable brokerage account. Like Faber, I developed my SISTM so that it would not involve frequent trading. I didn’t want to spend a lot of time managing 7 investment accounts!
Looking back at the past year, I started using my SISTM just about the time the stock market peaked in October 2007. The timing was fortuitous. In early November 2007 the SISTM generated sell signals on US small cap stocks and both US and international real estate. In late December 2007 the SISTM generated a sell signal on large cap stocks and in late January 2008 it generated a sell signal on international and emerging market stocks. After that, our portfolios stayed around 80% in cash/bonds with 20% in commodity funds. The sell signal for the 2 commodity funds came in mid-August 2008 and early September, while a sell signal for Treasury Inflation Protected Securities (TIPS) came in early October. As the SISTM generated its timing signals I tweaked my portfolios as the SISTM indicated.
The payoffs from using the SISTM were threefold: (1) all portfolios either made money or kept losses to a minimum over the past year - the actual range was from -2.5% to +19.1%; (2) the SISTM controlled volatility - the maximum drawdown in portfolio value from peak to subsequent trough on a weekly basis over the past year ranged between 4.9%-8.3% for the four SIS Portfolios; and (3) I stopped worrying about our investments, felt happier and slept better.
Currently the SIS (Sage Investment Strategies) Diversity Portfolio is 100% in cash and Treasury Bonds, sitting out the slow motion train wreck in global financial markets and waiting for the SISTM to signal better opportunities. The SIS Leveraged Diversity Portfolio and Fidelity Portfolio are similarly positioned. On the other hand, our somewhat more aggressive SIS Long & Short Portfolio currently has several inverse and currency positions that have ratcheted portfolio gains to +15.7% year-to-date and +19.1% year-over-year.
As I talk with friends and colleagues who march to a different (investment) drummer, I hear and feel their pain. I’m empathetic as it reminds me of my own losses and personal agony earlier this decade. Everyone must make their own personal decision about their investment strategy including how much risk they are willing to take.
When I was going through my grief process after the loss of the majority of our personal wealth, I came across several quotes that I wrote down on 3X5 cards and taped in front of me. The quotes have stuck with me over the years and guided me in developing and following the SISTM. I don’t know the source(s) but here they are:
“Loss is inevitable - the essential factor is to control it. A winner is foremost a controller.”
“You must follow a rigid and disciplined plan or you will inevitably lose money overall.”