The Global Diversified Aggressive portfolio invests in multiple asset classes including domestic, broad international and emerging market equities; fixed income Exchange Traded Funds; commodities and energy; real estate; and foreign exchange. I use both individual stocks and ETFs, and may employ leverage, tactical positions, and inverse index ETFs.
At Oceanic, I seek to develop prudent allocations and employ assets with lower correlation to domestic equities.
Rebalancing attempts to trim exposure during rising markets and increase exposure during pullbacks.
I will occasionally use leverage in this portfolio.
Technical analysis is used in an attempt to time my entry and exit points. When the technical market conditions confirm the fundamentals, I will tactically change allocation percentages to commit more to out-of-favor assets or pare down exposure to what I believe are overpriced assets.
My research focuses on asset allocations, as well as selecting what I personally believe are the right stocks within those allocations.
My asset class research primarily focuses on investment performance correlations over various horizons.
I then look at each sector fundamentally once a proper asset allocation has been established. I tend to favor “category killer” companies that benefit from strong competitive barriers, have high liquidity and price transparency.
At Oceanic, I conduct my own research and also purchase outside institutional research. Our sources include The Gartman Letter, Financial Times, Bloomberg, Barron’s and The Dow Theory Letter, among others.
My goal is to achieve "diversification optimization.” In my efforts to achieve it, I study the relative performance and historic correlations of different asset classes and sectors. I typically select non-traditional and uncorrelated assets in an effort to offset portfolio risk and volatility and to try to stabilize returns.
This portfolio typically will have 10 to 15 positions, with individual weightings anywhere from 5 to 30%. I rebalance actively, so that all assets classes are kept within 2 to 5% of their original allocation percentage. Additionally, I will use tactical allocation strategies in 5 to 10% of the portfolio when market technicals align with our core strategy.
This portfolio uses a mix of individual stocks and ETFs. Typical allocation will be 40 to 60% in equities as a whole, with approximately half of that allocated to domestic positions and half to international (developed and emerging.)
This strategy may employ leverage, as well as inverse ETFs as hedges or diversification strategies. As much as 5 to 10% of assets may be invested strategically.
I seek to maintain our sell discipline on both the upside and downside. I establish near-term sell thresholds for each new position.
On the downside, I will not typically close out a position entirely unless a loss of 5 to 10% occurs early on the investment horizon. I will first look to trim positions and rebalance allocations.
On the upside, if a position achieves 50% or more of a targeted gain, I may look to trim the position back to the original invested amount, simultaneously reducing the allocation.
Although my overall focus is strategic, this portfolio employs tactical strategies as well. I look for opportunities to add to our returns during stressful or calm markets by buying or selling volatility as we see appropriate. These opportunities will likely be highlighted when both the fundamental and technical conditions for an asset class align. I seek to take advantage of this alignment by increasing or decreasing exposure to the relevant asset class.