Sleep Easy

DYNAMIC TACTICAL ASSET ALLOCATION AMONG A BASKET OF NON-CORRELATED AND MAJOR MARKET ETFS.

Strategy Description

The Sleep Easy model is a global asset allocation model.  It chooses from among six distinct asset classes:  cash, corporate bonds, U.S.stocks, International stocks, Emerging markets, and gold, plus two inverse funds.

It selects the top two scoring ETFs and uses our “downside risk protector” strategy to move into cash or short-term securities when markets are down.

The model is rebalanced monthly.

The Sleep Easy model uses inverse ETFs as a hedge during periods of market weakness.  As a result, it is a good compliment to Focus 3 which does not contain any inverse funds.

Definitions

Sharpe Ratio – the average return earned in excess of the risk-free rate.  A higher Sharpe Ration is better

Risk-Free Rate – represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.

Sortino Ratio – another measure of risk that takes into account the downside deviation of the asset.  A higher Sortino Ratio is better.

What is Drawdown?

Drawdown is the measure from the highest high to the lowest low or peak to trough during a specific time period.  It is an important measurement of risk.  A larger drawdown requires a more significant increase in the security to recover.

Volatility measures the change in the price of an investment.  The higher the volatility, the higher the difference between the high and the low of an investment’s price.

The 12 Month Rolling ROR is the compound rate of return for the last 12 months.  The rate of return is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s cost.

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