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 SMI’s Fund Upgrading Strategy Evolves: Introducing Upgrading 2.0 for details.
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.
How SMI Strategies Put the Best Team on the Field
Balancing the competing goals of growing capital while also defending against losses is perhaps the most challenging aspect of investing. It’s easy to assemble a portfolio that will earn big gains in a bull market environment, just as it is easy to build a defensive portfolio to withstand a bear market. But constructing a portfolio that can successfully navigate both environments? That’s hard.An Upgrading Overview: Easy as 1-2-3
Why Upgrade?
SMI offers two primary investing strategies for “basic” members. They are different in philosophy, the amount of attention they require, and the rate of return expected from each. Our preferred investing strategy is called Fund Upgrading, and is based on the idea that if you are willing to regularly monitor your mutual-fund holdings and replace laggards periodically, you can improve your returns. While Upgrading is relatively low-maintenance, it does require you to check your fund holdings each month and replace funds occasionally. If you don’t wish to do this yourself, a professionally managed version of Upgrading is available.
SMI also offers an investing strategy based on index funds called Just-the-Basics (JtB). JtB requires attention only once per year. The returns expected from JtB are lower over time than what we expect (and have received) from Upgrading. JtB makes the most sense for those in 401(k) plans that lack a sufficient number of quality fund options to make successful Upgrading within the plan possible. Here are the funds and percentage allocations we recommend for our Just-the-Basics indexing strategy.
DAA – July 2020 Update
There are no changes to the DAA lineup for July. 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 July are (in order of current momentum):
Sector Rotation – July 2020 Update
There is no change to the official SR recommendation for July. 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.
July Issue Release Timing
The stock market suffered a second significant sell-off today, its second in the past 10 sessions. The S&P 500 is basically flat for June at this point, closing today at 3,050 after ending May at 3,044.
State of the Markets After 100 Days
It's been 100 days since the WHO officially declared COVID-19 to be a pandemic. I'll leave the medical/political sides of that to others, but it seems like an appropriate time to update some big picture thinking about the state of the financial markets.
Making Sense of a Manic Market
The stock market is currently working through its third "once in a generation" crisis in the past 20 years.
There was the Tech Bubble in the late-1990s that culminated in the bear market of 2000-2002. The loose-money policies pursued during that period arguably created the conditions for the inflating of the property bubble, which culminated in the Great Financial Crisis of 2007-2009, with levered subprime mortgages wreaking havoc throughout the globally interconnected financial system. And now, following a decade of near-zero interest rate policy, and a resulting wave of massive debt issuance by corporations (and governments), we are dealing with the fallout of the COVID-19 crisis.
The massive debt load incurred over the past decade is an important thread that we'll return to.
First though, to quickly recap where things stand, we saw a -35% decline from peak to trough in the S&P 500 in Feb/March, followed by an incredible bout of liquidity and fiscal support from world central banks and governments, which has created an equally dramatic rebound in stocks. The Nasdaq, led by the handful of "FAANGM" tech giants, blasted through the 10,000 level for the first time ever this week. The S&P 500 and small-cap Russell 2000 indexes remain below their all-time highs by -5% and -13.8% respectively. But the markets have rallied incredibly from their lows of just 10 weeks or so ago, and have recently actually been showing signs of speculative frenzy of the type unseen since the late 90s' bubble.
Gold Mining Stocks Update
SMI has never been a trading service and I'm not about to wade into those waters now. But I've gotten a few questions about what I meant regarding buying the gold mining stocks on a market pull-back, so I wanted to clear that up.
DAA – New Recommendation for June 2020
There is one change to the DAA lineup for June. 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 June are: