Dynamic Technology Strategy

This aggressive global momentum investment strategy is designed to invest funds in U.S. based investments including the S&P 500 index, and NASDAQ 100 index (QQQ) heavily weighted in U.S. based technology companies, or internationally in developed foreign markets and emerging markets. This is a particularly aggressive strategy in that it invests all of the funds each month in the top performing index fund. The strategy will switch to the safety of government bonds when performance of equity markets slows down. The chart below is the back-tested performance of the Dynamic Technology Strategy since 1994 (over 25 years) compared to the Vanguard Balanced Fund (VBINX) which holds 60% stocks and 40% bonds.

How does the strategy work?

The Dynamic Technology Strategy invests all of its holdings in one of the indexes below that have the strongest recent performance. The strategy will recommend 100% of funds be held in the strongest performing index when price momentum is strong.

S&P 500 index.
NASDAQ 100 index heavily weighted in technology sector.
MCSI EAFE (Europe, Australasia and Far East) Developed Markets index.
Emerging Markets index.

As momentum slows down, it will switch from holding 100% of the portfolio in equity funds, to holding 50% equities, 50% bonds. When momentum turns negative, it will switch to 100% bond funds.

Like all of our strategies, this strategy is designed to move from risky assets (stock indexes) to safety assets (bond indexes) when the broader indexes show weakness in recent performance. The intermediate-term government bond index (IEF) is used as a source of safety funds.

Asset class	Holding	Description
U.S. Large Cap	SPY	SPDR S&P 500 ETF Trust
Developed Foreign Markets	EFA	iShares MSCI EAFE Index Fund
Emerging Markets	EEM	SPDR S&P 500 ETF Trust
U.S. Technology	QQQ	PowerShares QQQ Trust
Government Bonds	IEF	iShares Barclays 7-10 Year Treasury Bond Fund

Strategy Metrics

Metric	Strategy	Balanced portfolio
Annual Return (20 years)	12.3%	6.7%
Sharpe Ratio (20 years)	0.71	0.68
Max Drawdown	-15.1%	-32.6%
Drawdown Start / End dates	August 2021 to November 2023	October 2007 to December 2010
Max Drawdown length	27 months	38 months

Latest Strategy holdings

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This advanced strategy’s latest recommendations and future monthly updates are available to members with a paid membership. Strategy recommendations are provided at the end of each month. Sign-up today for access to this strategy and all of our other strategies.