Editor’s note: This was originally published at MebFaber.com and is reprinted here with permission. The first part of this reprint explains Meb’s basic portfolio allocation philosophy and was published in 2014. The second part is a January 2015 update. You can hear more of Meb’s thoughts on the market at the Annual Symposium in March where he is scheduled to make a presentation.

Every time Peyton Manning steps up to the line of scrimmage he is prepared to audible. He has spent thousands of hours of film study to get ready for nearly every situation. So when he shouts “Omaha”, he isn’t panicking or reacting emotionally, he is simply instituting a reaction to calculated probabilities from many years of experience and study.

The same should be true for your portfolio. Do you have a plan? Or do you simply have a portfolio for today, that you will emotionally react to if and

Editor’s note: Riccardo Ronco is scheduled to make a presentation at the Annual Symposium in March. He provides research to institutional investors and will be sharing his latest research ideas at that time.

If you like a pure long-only, fully invested momentum strategy for US equities, there is an ETF for that – the iShares MSCI USA Momentum Factor ETF (MTUM).

It is a young ETF that started trading in the summer of 2013, but if you check in the DES field on your Bloomberg terminal you can see the underlying index, M2US000$. This index goes back to 1988 and that is great news because we can compare its total return against the S&P 500’s total return (see Figure 1). Both time series have been normalized to 100 starting in January 1988. You get still a 50% drawdown in the 2008-2009 period, but it has beaten the S&P 500 by 2.33 times

“When an investment is not going the way you thought it would, it’s important to sell it and take the loss.”

That lesson makes sense. By taking a loss, you preserve capital for the future. Avoiding the bulk of a decline means you have more capital to put to work after the bear market ends and that should allow you benefit more from the bear market.

In addition to being logical, this lesson was proven mathematically by Crestmont Research. As the chart below shows, if an investor had perfect timing and always sold at the top, they would only need to capture 27% of the upside to match the market performance. The chart shows the size of the loss in percentage terms on the x-axis and the amount of upside capture required to match the market average on the y-axis. For example, if you suffer through 40% of the decline

Cynthia Kase, CMT, MFTA, has decades of experience in the markets and understands how to consistently win. She has developed a number of new tools in the past few years and recently shared some of those tools in a webinar that is available at her web site.

Cynthia provided a preview of some of the ideas in the webinar in “Technical Analysis Keeps Traders on Track,” an article published in the January 15, 2015 issue of Bloomberg Brief: Technical Strategies that offered an example of the value of stops. For that article, she applied some of her tools to an analysis of Apple (AAPL).

A fundamental trader’s goal might be to hold AAPL as long as possible without ever experiencing a decline of more than 5%. To meet their risk management goals, the trader would need to apply technical analysis to close positions when necessary. The chart below shows one method for

Editor’s note: Bucket investing is a well-known financial planning concept. Technical analysts might discover their techniques can be applied within this framework to improve returns for the client and to increase business opportunities for the analyst. This article details the bucket approach and includes references to behavioral finance heuristics that contribute to its success. Readers will readily see how technical analysis can be applied within the various buckets.

Designing an asset allocation approach to meet a client’s financial objectives often is cited as the most important component of the investment advisory process. Despite the advent of Markowitz and Modern Portfolio Theory, this process cannot be easily reduced to a financial engineering problem. Economists have long made a key assumption within their models that is highly flawed for the purposes of simplifying the mathematical implementation: they assume that human beings only make rational decisions.

Nobel Prize winner Daniel Kahneman, a renowned expert in

“There are really only two good feelings in investing. One is being in the market when it is going up, and the other is being out when the market is going down.” Jim Rohrbach

Jim Rohrbach is the President and founder of Investment Models®, Inc. He is a Registered Investment Advisor and has written a weekly stock market time newsletter for the past 37 years. His career as a market timer began after a 25-year career with AT&T where he held various operations and staff management positions. After that, he turned his attention to the stock market and has developed two Market Timing RIX® Indexes. With these indexes, each day he