It sounds too good to be true…
It’s a simple system that has beaten the stock market – with less risk – going back decades.
Except for a tiny, less-than-1% loss in 2008, when everything went down, this system hasn’t had a losing year, going back to the 1970s.
And now, an even better version of it is available as an exchange-traded fund (ETF). When an investor friend of mine heard about this, he started selling his holdings to invest in this ETF.
Before I get to why, let me back up…
[ad#Google Adsense]My friend Mebane Faber came up with this simple system. I’ve written about it a few times here in DailyWealth. This system is amazing for two reasons…
First, it delivers the investment Holy Grail: higher returns, lower volatility, and much lower “drawdowns.” The drawdown number is particularly outstanding… The WORST fall from peak to trough, going back to 1973, was less than 10%.
Second, it’s incredibly simple for individual investors to follow… You only look at the markets 12 days each year. And there are only five funds to own: U.S. stocks, foreign stocks, bonds, commodities, and real estate stocks.
You have 20% of your portfolio in each of these five asset classes… and you are either in or out of each of them every month. The basic idea is, you own what is going up, and you hold it until it’s not. So you might be only 40% invested one month, then 80% invested another month, depending on the system. That’s it. It takes you maybe an hour a year to follow.
Meb’s latest innovation is an exchange-traded fund. It takes this simple system and makes it even better.
Instead of just holding foreign stocks, for example, he’ll break that down into smaller categories, like Asia. But Hong Kong might be hot while Japan is not. So he’ll break the category down further, into regions, and then countries. So instead of just five funds, Meb’s ETF will hold dozens of them.
This gets what Meb calls better “risk-adjusted” performance. In the academic world, that either means 1) the same returns with lower volatility or 2) higher returns with the same old volatility.
Also, instead of checking the system once a month, you can now take advantage of it with a set-it-and-forget-it ETF.
Meb’s new fund is called the AdvisorShares Cambria Global Tactical Asset Allocation Fund (GTAA). The fund is currently fully invested. Check out how diversified it is right now:
Historically, Meb’s simple system beat the stock market with less volatility. The hope for this new ETF is more great “risk-adjusted” performance – with less volatility than the overall stock market.
Good investing,
— Steve Sjuggerud
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Source: Daily Wealth