Tactical asset allocation: the three strongest of ten
Ten funds covering stocks, bonds, real estate, gold and commodities. Each month hold the three that have been strongest.
The rule
Rank the funds by their recent returns. Hold the top three in equal parts. If one of them is in a downtrend, keep its part in safe bonds instead.
Why people use it
Asset classes take turns leading, and leaders tend to stay ahead for months. Choosing from many classes gives somewhere to go when stocks fall.
Where it hurts
Leadership sometimes flips abruptly, and the rule finds out only at the next monthly review. It trades often and can underperform plain stocks for years in a steady bull market.
How our bot runs it
Ten funds: SPY, QQQ, IWM, EFA, EEM, VNQ, TLT, IEF, GLD, DBC. The score is the average return over 1, 3, 6 and 12 months. The top three get a third each, if they are above their 210-day average; otherwise that third goes to BIL. Reviewed monthly.
Live account
A virtual $100,000 account that follows this rule. Every trade is on the bot's page.
| Bot | Account | Return |
|---|---|---|
| Top three asset classes | $99,664 | −0.34% |