One of the pitfalls of active investment management is the inability to follow the rules of one’s investment discipline. This could be because the investor / manager uses subjective means to determine asset allocation ( thereby “anchoring” off of the “purchase prices” of assets) or because the signals produced by their process’s algorithm occur in a random fashion and can’t be “anticipated” with precision. These biases, along with a lack of robust historical testing and trustworthy empirical results, ultimately lead to cognitive dissonance and uncertainty in many investors’ asset allocation decisions.
The Market Map model was designed to alleviate these pitfalls with the application of “predefined” dates used in asset allocation decisions, which we spell out as “objective 3” in our list of model objectives. In this way, instead of letting ambiguity and purchase price control our decision process, we let “date” control it. In previous posts, we have charted the course of the model’s asset allocation process in real time and have published actionable reminders ahead of the actual allocation dates. The tables below show the definity of the method. The first table shows the historical Equity allocation dates and the second table shows the cash and bond allocation dates. In a perfect world, it would be nice to predefine 100% of the equity allocation dates yet, as shown in the first table, the model comes up with 77% predefined.
…. Model remains in TLT until 9/29/2014
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