My Home About Me

I use a variation on your ETF-Timing in my IRA accounts, but I'm setting up an ETF portfolio in my taxable account as well, and I'm leaning towards 'buy and hold' (with annual rebalancing) to control the tax implications.

I see significant variation between the choices in your ETF Buy-and-hold portfolio and the ETF-Timing portfolio. Is there a reason for this?

The buy and hold ETF portfolio is based on "The ultimate buy and hold strategy," a combination of large, small, value, growth, US and international asset classes. All of these asset classes have a very long history of paying a good unit of return per unit of risk. The defensive nature of this strategy is based on the percentage of fixed income held in the portfolio.

The ETF timing portfolio applies four different timing systems to exchange traded funds we believe will work well with the timing systems. The timing systems are fully disclosed in an article that includes hypothetical performance from 1972 to 2006. One of the ETFs we use is the NASDAQ 100 (QQQ), an ETF we have never recommended owning on a buy and hold basis. It has worked well with timing but on a buy and hold basis the returns are lower than the S & P 500, at twice the risk.

Your decision to use timing in the tax deferred portion of your portfolio, and buy and hold in the taxable portion, makes perfect tax sense. If you are adding money to your taxable account, use the new contributions to rebalance your asset allocation.

IMPORTANT DISCLOSURE: The specific content of this message is intended strictly for informational and educational purposes. Such content is not based on knowledge of any reader's individual needs or circumstances and should not be construed as investment or tax advice. Any investment or tax decisions made are ultimately the responsibility of the individual.

bailout   Basic Materials SPDR (XLB)   bond trading   bond yields   capitulation   climactic   commodities   credit crisis   Currency ETFs   day trading   Deron Wagner   DJIA chart   economic data   Emini's Nas 100   emini's S&P 500   emini's S&P 500e   ETFs (exchange trade funds)   ETFs (exchange traded funds)   Gold Miners ETF (GDX)   Japanese Yen ETF (FXY)