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Mark Biller

Mark Biller

Executive Editor

Mark joined SMI in 2000. He leads SMI newsletter’s overall content strategy, managing the editorial direction and writing many articles. He led the company’s efforts to create its first web site, helped develop several of SMI’s investment strategies, and has been a contributing author to the Sound Mind Investing Handbook. 

In addition, Mark helped design and launch the three Sound Mind Investing mutual funds. He has served as the Senior Portfolio Manager since the original SMI Fund was launched in 2005. Mark also serves as Senior Portfolio Manager to SMI Advisory Service’s Private Client managed account program.

Mark earned his undergraduate degree in Finance from Oral Roberts University.   

Mark and his wife, Cindy, have three children.

Most Recent Articles

DAA – October 2020 Update

There are no changes to the DAA lineup for October. Read on for the full details.

DAA is a core portfolio strategy designed to help SMI readers share in some of a bull market’s gains, while minimizing (or even preventing) losses during bear markets. The strategy involves using exchange-traded funds to rotate among six asset classes, holding three at any one time.

DAA is a defensive, low-volatility strategy that nonetheless has generated impressive back-tested results when evaluated over full market cycles, demonstrating the power of "winning by not losing."

The recommended categories/ETFs for October are (in order of current momentum):

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Sector Rotation – October 2020 Update

There is no change to the official SR recommendation for October. Read on for the details.

Sector Rotation is a high-risk/high-volatility strategy. While its peaks and valleys have been more extreme than SMI's other strategies, it has generated especially impressive long-term returns, as discussed in Sector Rotation is Risky, But Highly Rewarding.

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Stock Upgrading – New Fund Recommendations for October 2020

Stock Upgrading is a mechanical strategy that typically involves owning recommended funds until they fall out of the top quartile of their peer group, at which point they are replaced by new top-performing funds. However, special defensive protocols are triggered occasionally, which cause the Upgrading portfolio to gradually “de-risk’ by temporarily shifting some holdings to cash. See the January 2018 cover article for more details regarding Upgrading 2.0. The simplest method for picking new funds is to refer to our 1-3 rankings on the Recommended Funds page and invest in the highest-ranked fund in each risk category that is available through your broker.
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The Retirement Investing Challenge: Keeping Up With Inflation While Limiting Risk

The cartoon shows a man looking over his retirement-account statement. The caption reads: “According to your latest figures, if you were to retire today, you could live comfortably until 2 p.m. tomorrow.”
 
Accumulating enough money for retirement doesn’t happen by accident! It requires developing and implementing a realistic long-term plan. We hope you’ll be challenged and encouraged as we review proven strategies you can use as you move toward — and into — retirement.

It’s safe to say that most people would like to have a financially secure retirement. Reaching that goal, however, requires careful planning and diligent effort in the years before retirement. Implementing each of the following can help guarantee financial health and stability during your retirement years.

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Buying Commodities to Hedge Against Inflation Risk

September’s cover article on the U.S. dollar presented two ideas related to commodities. First, the impact of a falling dollar is often initially seen in a rise in commodity prices — specifically at the gas pump and the grocery store. Second, the inflation many expect to (eventually) result from the massive expansion of government borrowing and spending could push commodity prices higher still.

“Real” assets have always been desirable during inflationary periods. Gold and real estate are included as options within Dynamic Asset Allocation largely because of their reputation as inflation fighters. Investing in other real commodities follows a similar idea.

That said, most modern investors don’t have much practice with the anti-inflation playbook, as inflation has been mostly declining for the past 35 years. Here’s an overview of how an investor can easily add exposure to the commodities asset class, and a look at when adding that exposure might be most advantageous.

Tools of the commodity trade

Commodities typically trade via the futures market, but as Austin relates in The Sound Mind Investing Handbook, that’s a complicated and risky market for individuals to participate in. Thankfully, it’s not necessary. When commodities had their last stretch of superior performance as a result of a steadily declining dollar during the 2000s, SMI investors were able to tag along to some degree via their normal Fund Upgrading holdings, as well as Sector Rotation’s trades in Energy stocks. We would hope both of those strategies would again prove helpful should we see a turn toward a more inflationary environment.

That said, investors also have several direct options at their disposal if they want to add commodity exposure to their portfolio. SMI investors are familiar with GLD, the gold ETF (exchange-traded fund). Most other commodities also have one or more ETFs that track their specific performance. But a better way to add exposure to the broad asset class is via a diversified commodities ETF or mutual fund.

While there are many options, our ETF choices are the DB Commodity ETF (ticker: DBC) and DB Agriculture ETF (ticker: DBA). The primary difference is DBA focuses solely on the 11 agricultural commodities, whereas DBC expands on those to include significant oil/gas exposure as well as precious metals. (These ETFs are cheap and easy to buy and sell, they are not tax-friendly. It's better to avoid these if you're investing within a taxable account.)

While these ETFs offer perhaps the easiest exposure to the broad commodities asset class, they’re not necessarily the best way to achieve it. There’s a strong argument in favor of active management when it comes to commodities — not only due to the way the indexes weight the various commodities (particularly oil, which tends to weigh heavily) but also the technical nature of how futures contracts roll from one period to the next. Active managers can potentially add value in both respects.

So one approach might be to add a half-dozen of the top actively managed diversified commodities funds to an SMI Tracker portfolio, along with DBC and DBA. Then let their recent momentum scores determine which fund to use. Leaders will change over time, but our review indicates the following tickers would comprise an attractive group of potential candidates: EAPCX, BCSAX, SPCAX, PCRAX, JCRAX, CMCAX. (Several of these may carry loads at some brokers. Make sure any funds you purchase are either no-load or load-waived at your particular broker.)

Hold that thought

Adding commodities exposure may seem like a great idea, given they have historically been an excellent portfolio diversifier due to their low correlation to stock and bond returns. Plus, they had been great performers (until September), with most of the previously listed funds having gained +15% or so over the three months ending August 31.

However, if the primary reason for adding commodities exposure is to hedge against inflation, adding it now is likely premature. Yes, commodity prices have risen sharply since the economic reopening in May, but those increases were from deeply depressed levels. Even after their recent surge, both DBA (Agriculture) and DBC (Commodity) still had negative year-to-date performance as of mid-September, before falling sharply late in the month.

While the “reflation trade” boosted commodity prices following the global shutdowns this spring, it’s hard to argue that higher inflation is likely until the economy is solidly in recovery mode. Longer-term, as that occurs, a shift toward rising inflation is easy to envision.

But that’s not happening at present. With employment statistics trending in the wrong direction lately and banks having dramatically tightened lending standards, it’s difficult to see inflation becoming an issue until 2021 at the earliest. And as September reminded us, worries regarding a slowing economy can produce sharp declines in commodity prices.

Bottom-line: For those wanting more direct inflation protection than the standard SMI strategies provide, taking a little money out of stocks to put into commodities is an easy way to get it. It’s reasonable to set up a Tracker portfolio now and familiarize yourself with the options, but there’s no rush to add that exposure until the economic recovery is on steadier ground.

Hopefully, that happens sooner rather than later, but we suspect there’s still some tough economic sledding ahead before any inflationary forces begin to be felt.

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Quick Takes on Everything

Okay, maybe not everything. But I always enjoy when an author I like takes a "Lightning Round" type of approach — giving their short take on a number of different topics. Sometimes it'll be a mailbag of reader questions, other times just a list of topics.

SMI used to run a Q&A column in the newsletter each month, which we did away with as we got more interactive on the website with the ability to post questions right at the bottom of every article. This format is a bit like that, except I'm making up both the questions/topics and answers!

Here are the topics on my mind and my hot takes on each.

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Pop?

Over the last three trading days (Thursday, Friday, Tuesday), the tech-driven Nasdaq stock index had its most dramatic selloff since March. I believe I saw somewhere that it was the fastest plunge from an all-time high to -10% correction territory ever, which wouldn't be a surprise given that everything in 2020 seems like it has unfolded at warp speed!

The S&P 500 was down a bit less, but even there, a -7% drop in three days is enough to cause investors to reach for the air-sickness bag.

So how did you handle the market's mini-correction? Were you blissfully unaware? Did it stress you out?

These are important questions, given the potential that what we just experienced was a dress rehearsal for another round of equity turbulence. As fun as August's huge gains were (+9% for Stock Upgrading, +18.6% for Sector Rotation), they were just the latest sign of a market that sure feels as if it's been getting bubbly.

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DAA – New Recommendation for September 2020

There is one change to the DAA lineup for September. Read on for the full details.

DAA is a core portfolio strategy that is designed to help SMI readers share in some of a bull market’s gains, while minimizing (or even preventing) losses during bear markets. The strategy involves using exchange-traded funds to rotate among six asset classes, holding three at any one time.

DAA is a defensive, low-volatility strategy that nonetheless has generated impressive back-tested results when evaluated over full market cycles, demonstrating the power of "winning by not losing."

The recommended categories/ETFs for September are:

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Sector Rotation – September 2020 Update

There is no change to the official SR recommendation for September. Read on for the details.

Sector Rotation is a high-risk/high-volatility strategy. While its peaks and valleys have been more extreme than SMI's other strategies, it has generated especially impressive long-term returns, as discussed in Sector Rotation is Risky, But Highly Rewarding.

Continue Reading

No Changes to Stock or Bond Upgrading for September 2020

There are no changes to Stock or Bond Upgrading this month.

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