Yawn….

That is likely your reaction to this market turmoil if you have been following my global tactical model.

It is risk management at its simplest, and depending on your start date, your portfolio would be 80-100% in cash/bonds right now (with 20% in commodities). There is a little (ok, A LOT of) guilty pleasure watching the market dump while being on the sidelines.

I have received emails from all over the world from people who run their own variants of the timing model, and it is gratifying to see that it is protecting investment capital so effectively this year (and out of sample since 2006). If you were following the model as exactly published in the paper, you would have been UP slightly on the year going into September (but I imagine slightly down with commodities coming off this month). You would be beating stocks by about 20% this year.

I have heard from everyone from little retail accounts to billion dollar hedge funds that have implemented the strategy.

I would love to hear if you are running the tactical model, your particular variant, and how you are doing YTD. Leave a comment to this post.

Here is a comment from reader Paulm recently:

“I’m following a 10-asset class, 130% GTAA model using leveraged funds based on Meb’s white paper. I use a 4-week cycle instead of a monthly cycle. I’m currently 100% in bonds and cash. Took profits on DJP on 8/11/08 and on GSP on 9/08. Portfolio is +2.3% YTD and +4.1% YoY with a maximum drawdown of 4.7% measured on a weekly basis from peak to trough. Compared to a 60% IWB / 40% AGG benchmark, GTAA rocks!”

Let me hear from you!

A simple 5 asset class allocation with ETFs could be:

A simple 10 asset class allocation with ETFs could be: