Below you will find the Columbus strategy highlights for this month.  For more insights and a detailed discussion, including to get the monthly allocations, please download the report by clicking the button at the bottom of this message.

The Certainty of Uncertainties…

  • Year-to-Date, Columbus is up 2.0% while our world allocation benchmark (GMWAX) is down -3.1% and our new 60/40 global stocks/bonds benchmark (VSMGX) is also down -0.2%.  Meanwhile, the S&P 500 (SPY) gained 2.3%.
  • We are adding the Vanguard Life Strategy Moderate Growth Fund (VSMGX) as an additional benchmark for Columbus since it consists of a high-quality mix of 60% US & international stocks blended with 40% fixed income, thereby representing a traditional 60/40 benchmark.
  • Meanwhile, the latest in global market uncertainties are now focused on trade tensions, tariffs, US trading partner’s retaliations and a looming trade war. This argues for a defensive portfolio allocation as the US dollar is likely to gain while causing a headwind for equity markets, especially for large companies with international exposure.
  • We continue to maintain a large position in the US Dollar Bullish Index ETF (UUP). The dollar’s uptrend that started a couple of months ago has been gaining momentum amid the on-going global uncertainties.
  • On the equity market front, small caps have taken the lead but their rally hit a roadblock recently with all the trade tensions headlines.  However, a roadblock doesn’t mean it’s dead so Columbus is keeping a meaningful position in the small/mid-cap stock ETF (VXF) as well as in the Commodities Complex ETF (DBC), which has been in a bull market since late last year.
  • The allocations to gold (GLD), Japanese equities (EWJ) and International Developed Markets equities (EFA) are eliminated and small positions are initiated in Inflation-Protected Treasuries (TIP), Real-Estate (VNQ) and 7-10 Years Treasuries (IEF).  It will be interesting to see how these develop over the summer months as the market continues to navigate through uncharted waters…

I encourage you to download the report and read the discussion in section 6 to learn more about Columbus’ portfolio allocation decisions and the related rationale.

Please don’t hesitate to contact me should you have any questions.

Best regards,

Jean-Marc and the Laplace Insights team

Backtesting Strategies & Overfitting

Strategy backtesting is often used to test an investment strategy from historical stock or ETF information (usually price).  The belief is that if a strategy performed well in the past, then it should continue to perform well in the future.

Read More »