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Short-Term Tactical Model

A dynamic sector-based investment strategy

Objective

The Short-Term Tactical Model (STTM) takes a sector-specific approach to stock investing. It analyzes current economic and financial conditions and positions the portfolio in the sectors of the market that are expected to perform the strongest. Because the STTM sacrifices diversification in exchange for higher expected returns, it is both our most volatile and highest performing investment model.

Performance

The historical backtested performance of the Short-Term Tactical Model can be seen in the chart below. For comparison, the the performance of SPY (an ETF that tracks the performance of the S&P 500 Index) is included in the chart.

Click here for important disclosures

Model performance represents total returns and includes reinvestment of dividends and interest. No management fees or transaction costs are included. Historical performance is not an indication or guarantee of future performance.

The STTM has been able to outperform the S&P 500 because it does not maintain allocations across all sectors. Rather, the model shifts dynamically between sectors and favors those which stand to benefit from current trends in the economy. The STTM also has the ability to shift the portfolio into bonds when overall stock market conditions are deteriorating.

More information about the STTM's historical backtested performance is available in the two charts below. The first chart shows excess return (alpha), which represents the model's ability to deliver returns above its benchmark (the S&P 500 index). The second chart shows annual returns.

These two charts demonstrate the value-add over an indexed portfolio, as well as the model's ability to minimize drawdowns during bad market environments. Additional performance data can be found in the table below. If you have any questions about the STTM's performance or would like to discuss using the Short-Term Tactical Model in your portfolio, please reach out to us.

Strategy

Compound Annual Return

Alpha1

Beta1

Standard Deviation

Maximum Drawdown

Sharpe Ratio

Short-Term Tactical Model
12.47%
9.31%
0.29
12.3%
-18.6%
0.93
STTM (Net of Fees)
11.34%
8.20%
0.28
12.2%
-18.6%
0.85
SPY (S&P 500)
7.45%
0.00%
1.00
17.8%
-50.8%
0.41
AGG (Bonds)
4.60%
N/A
-0.04
3.6%
-11.2%
0.85
60/40 Stocks/Bonds
6.49%
1.47%
0.50
8.8%
-23.9%
0.59

Data for 22-Year Period (2000 - 2021)

1

Benchmarked against the S&P 500

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Hypothetical, backtested or simulated performance results have inherent limitations. Simulated results are achieved by the retroactive application of a backtested model, itself designed with the benefit of hindsight. The backtesting of performance differs from the actual account performance because the investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are achieved. Alternative modeling techniques or assumptions might produce significantly different results and prove to be more appropriate. Past hypothetical backtest results are neither an indicator nor a guarantee of future returns. Actual results will vary from the analysis. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, expressed or implied is made regarding future performance.