At this crisis point in history - what could possibly create these rare and extraordinary gains?

An Arizona multi-millionaire's revolutionary initiative is 
helping average Americans  find quick and lasting stock market success.

Since the Coronavirus came into our lives this slice of the stock market has given ordinary people the chance to multiply their money by 96% in 21 days on JP Morgan.

Investing, Stocks  | January 22, 2019

I was just asked recently by a young professional group here in the Cleveland, Ohio area, to discuss the benefits of passive index-style investing. When writing this article, news came out that the famous passive index fund founder had suddenly passed. Even though I didn't personally know Mr. Bogle, I have come to appreciate his common sense approach to investing over the years. On his last CNBC interview, he told the financial news giant that he felt this was a good time for investors to re-balance their balanced portfolio to a little more bonds and a little less stocks. He never once made a market timing call, or never once told investors to be all in stocks. In this business, you have to appreciate such straightforward advice that sometimes is really hard to get. I don't work for Vanguard or receive any compensation for their products, and actually don't use them much for my clients. However, I have used plenty of his simple portfolio models that you can find on Vanguard's website here, which can help any type of investor figure out where he or she should park money. One last thing you will notice on his website, all of his models are stocks and bonds. No precious metals, commodities, bitcoins, internet coins, or other peculiar investments.

When making this article and thinking about my upcoming young professional presentation, I wanted to make a portfolio that was so simple to use, but would focus on managing risk while staying invested 100% of the time. Let us dig in and take a look at this favorite portfolio of mine for any age group for that matter.

The 60% S&P 500 Low Volatility ETF & 40% iShares Barclays Aggregate Bond Index ETF produced a positive annual return since 2012.

When building portfolios for clients, I always want to see a more linear, a more balanced approach to investing vs. an investment portfolio that looks like an EKG chart. That way, if you're retired, or just starting off at investing, it is something you could implement fairly quickly and easily.

Year60/40 Portfolio with the SPLVS&P 500 Portfolio

As you can see from the above table, if you have bought the S&P 500 and just hung on to it, you are doing really well! However, it is always when stocks start becoming volatile, the S&P 500-only style of investors start asking questions on whether or not they should have a little more balance. I like to think those investors who have been in the game long enough, just like Mr. Bogle, know it is way too risky to own just one asset class over the other. When adding the S&P 500 Low Vol ETF (SPLV) by Invesco, the investor really takes hold of simple risk management as well.

The Max Drawdown for the Portfolio was a -4.12% vs. the S&P 500 of -13.52%.

When looking at drawdowns over the past six or seven years, you can see that we did not really have that many. We have had some smooth sailing for years, but with the market weather turning, the S&P 500 just had a drawdown of over -13.52% in the last quarter of 18.' For any investor new to investing like my young professional group, or those who are just retiring this quarter, your account would have been upside down already. Let us take a look more specifically at the ratios to see why this portfolio is a lot less volatile than just owning the S&P 500 (SPY).

Drawdowns for The Balanced Portfolio

Aug 2016Nov 20164 months7 months-4.15%
May 2013Aug 20134 months6 months-3.96%
Dec 2018Dec 20181 month-3.37%
Aug 2015Aug 20151 month3 months-3.16%
Feb 2018Feb 20181 month6 months-3.03%
Jul 2014Jul 20141 month2 months-2.54%
Sep 2018Oct 20182 months3 months-2.49%
Mar 2015Jun 20154 months5 months-2.47%
Jan 2014Jan 20141 month2 months-0.93%
Sep 2014Sep 20141 month2 months-0.77%

Drawdowns for The S&P 500-Only Portfolio

Oct 2018Dec 20183 months-13.52%
Aug 2015Sep 20152 months10 months-8.48%
Apr 2012May 20122 months5 months-6.63%
Feb 2018Mar 20182 months6 months-6.28%
Jan 2014Jan 20141 month2 months-3.52%
Dec 2014Jan 20152 months3 months-3.21%
Aug 2013Aug 20131 month2 months-3.00%
Jun 2015Jun 20151 month2 months-2.03%
Oct 2012Oct 20121 month4 months-1.82%
Oct 2016Oct 20161 month2 months-1.73%


As you can see from the above chart of the S&P 500 drawdowns, the overall index is still officially in a drawdown. Another very important notice is the balanced portfolio has never had more than a -4% drawdown as well. This is important to any investor, at any age, and any risk tolerance.


As you can see from the above data, owning simple balanced ETFs that include the S&P 500 Low Volatility ETF and iShares Core Total U.S. Bond Market ETF (AGG), you too can produce alpha. For any investor, this is crucial for long-lasting returns. It manages your emotions and keeps you investing in a more long-term way. No more guessing at which asset class to buy, you buy both of them at all times. If I only had read Mr. Jack Bogle's books before listening to a local stockbroker, I would have saved some money from my rookie investing ways when I myself tried my hand at timing asset classes. Young or old, do yourself a favor and own a simple balanced portfolio like this one.

Additional Disclosure: Ortner Capital consults clients on owning the above ETFs. Please consult your own advisor on your specific risk tolerances and objectives.

A revolutionary initiative is helping average Americans find quick and lasting stock market success.

275% in one week on XLF - an index fund for the financial sector. Even 583%, in 7 days on XHB… an ETF of homebuilding companies in the S&P 500. 

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