Whether you are a new investor or a veteran, VectorVest’s Model Portfolios give you a turnkey, complete trading system to help you achieve your financial goals. Even if you are a dedicated, full-on Do-It-Yourself investor, you can use any of the Model Portfolios as a guide or simply a source of reliable trade ideas.
We have five Model Portfolios in Canada, all uniquely designed to align with different trading styles, timing systems and financial goals. Each trading system has well-defined rules. Let’s look at their performance from inception January 3, 2012 to the close of Tuesday, August 25, and also YTD. The results do not include dividend payments, which would be substantial in the Conservative and Retirement portfolios with the benefit of compounding over several years.
#1 Aggressive—31.01% ARR since inception; and 29.87% YTD.
#2 Conservative—30.22% ARR since inception; and 20.04 YTD.
#3 Retirement—21.12% ARR since inception; and 0.40% YTD.
#4 Conservative—24.69% ARR since inception; and (-5.13%) YTD.
#5 Prudent—39.45% ARR since inception; and 22.18% YTD.
While all the portfolios have performed exceptionally well since inception, #1, #2 and #5 have managed the fastest recovery after the COVID-19 collapse.
THREE WAYS TO TRADE THE MODEL PORTFOLIOS
- FOLLOW THE TRADING SYSTEM PRECISELY
This means setting up your portfolio to follow the rules as close as possible without deviation. You can follow trades in the Action Plan or set up alerts for buys and sells, so you don’t miss any. Be aware, when you commit to pursuing a model portfolio precisely, you give up a certain amount of control in anticipation of achieving results as good as the portfolio’s historical results. You must be prepared to follow the rules through the inevitable ups and downs. One thing you can and should do when you are starting a new portfolio, is wait for a “fresh” buy signal in terms of the market timing before you start stepping in. PROS: You remove the emotion from your trading, and remember, investors who follow a rules-based trading system will almost always outperform someone who doesn’t have a plan and doesn’t follow rules. CONS: You can’t use your judgement when your research shows that unexpected news or events will negatively impact your portfolio, or at least you think it will.
- USE THE TRADING SYSTEM AS A GUIDE
You may wish to incorporate additional rules or flexibility to make adjustments or allowances along the way. For example, when you perceive the market is overbought at a certain MTI level and most likely to retreat, you might decide to tighten your Stop-Prices or simply sell a few positions to minimize losses or lock in profits. PROS: You could outperform the Model Portfolio, but even if you don’t, you might feel better having reduced the risk of a significant loss and freed up cash for a safer entry. CONS: You will not achieve the same results as the Model Portfolio; you might do better, or you may do worse by second-guessing and selling too soon. You have now put judgement and emotion back into the equation. It is not as easy and relaxing as simply following the portfolio rules.
- PICK AND CHOOSE STOCK IDEAS FROM THE MODEL PORTFOLIOS
Use the Model Portfolio of your choice or more than one to find and analyze trade ideas from the stocks being purchased by the portfolios. PROS: When a portfolio has a good track record of adding winning stocks, it can be a real time-saver and profitable to pick and choose the best ideas. CONS: When you don’t have specific rules for buying and selling, you risk letting emotions and bad decisions affect your portfolio performance.
As a follow-up to this week’s Essay, I have created a short video to highlight the trading systems of our Model Portfolios. In the video, I will show you the features and performance record of our five Model Portfolios and the Money Makers Model in our US software. CLICK HERE watch the video and learn more about the THREE WAYS TO PROFIT FROM OUR MODEL PORTFOLIOS.