Spreadsheet Issues

Most of the spreadsheets hosted on Google Docs are not updating properly.  The data either does not load or in the case of Finviz data it appears it is not current.

The data sources look correct, so I believe the issue is with Google Docs as I have seen similar loading issues with other users’ spreadsheets.

Hopefully things will be functioning again soon. That being said, if anyone has any insight please let me know.

Holiday Week Reads

If you are looking for any last minute gift ideas, don’t forget to review my reading list here or check out other great deals from Amazon.

Things have been a bit hectic for me lately and I am behind on my reading list.  Here a few articles I am catching up on:

Strategies Can Beat The Market, You Can’t – The Irrelevant Investor

From ETF.com: 4 Ways To Build Better ETF Portfolios, Swedroe: Explaining The Value Premium, Swedroe: Ignore Forecasters At All Costs, Swedroe: Skeptical On The Low-Vol ‘Factor’

From Alpha Architect: An Affordable, Tax-Efficient, Long/Short Hedge Fund; Oil Stocks: A Real-Time Case Study in Value Investing; ValueShares Launches International Quantitative Value ETF (IVAL)

Value + Momentum: The Tortoise and the Hare – Millennial Invest

Efficient Frontier “Theory” for the Long Run – AQR

What Investment Success Looks Like To Me – The Reformed Broker

The Promise of Smart Beta – Research Affiliates

“Do you Want to be Right or do you Want to Make Money?” Pragmatic Capitalism

Measuring Tactical Alpha, Part 1 – GestaltU


More on this topic (What's this?) Read more on Wharf (HLDGS) at Wikinvest


Scott’s Investments provides a free “Dual ETF Momentum” spreadsheet which was originally created in February 2013. The strategy was inspired by a paper written by Gary Antonacci and available on Optimal Momentum.

Antonacci has a new book out, Dual Momentum Investing: An Innovative Strategy for Higher Returns with Lower Risk. If you want to see how he applies Dual Momentum to a portfolio strategy I encourage you to read the book.

My Dual ETF Momentum spreadsheet is available here and the objective is to track four pairs of ETFs and provide an “Invested” signal for the ETF in each pair with the highest relative momentum. Invested signals also require positive absolute momentum, hence the term “Dual Momentum”.

Relative momentum is gauged by the 12 month total returns of each ETF. The 12 month total returns of each ETF is also compared to a short-term Treasury ETF (a “cash” filter) in the form of iShares Barclays 1-3 Treasury Bond ETF (SHY). In order to have an “Invested” signal the ETF with the highest relative strength must also have 12-month total returns greater than the 12-month total returns of SHY. This is the absolute momentum filter which is detailed in depth by Antonacci, and has historically helped increase risk-adjusted returns.

An “average” return signal for each ETF is also available on the spreadsheet. The concept is the same as the 12-month relative momentum. However, the “average” return signal uses the average of the past 3, 6, and 12 (“3/6/12″) month total returns for each ETF. The “invested” signal is based on the ETF with the highest relative momentum for the past 3, 6 and 12 months. The ETF with the highest average relative strength must also have an average 3/6/12 total returns greater than the 3/6/12 total returns of the cash ETF.

Portfolio123 was used to test a similar strategy using the same portfolios and combined momentum score (“3/6/12″).  The test results were posted in the 2013 Year in Review.  Next month I will provide updated test results.

Below are the four portfolios along with current signals:

Return data courtesy of Finviz
Equity Representative ETF 1 Year % Total Returns Average of Quarterly/Half/Full Year % Returns Signal based on 1 year returns Signal based on average returns
US Equities VTI 15.48 7.68 Invested Invested
International Equities VEU -0.36 -5.37
Cash SHY 0.46 0.34
Credit Risk Representative ETF 1 Year % Total Returns Average of Quarterly/Half/Full Year % Returns Signal based on 1 year returns Signal based on average returns
High Yield Bond HYG 0.61 -2.33
Interm Credit Bond CIU 3.05 1.27 Invested Invested
Cash SHY 0.46 0.34
Real-Estate Risk Representative ETF 1 Year % Total Returns Average of Quarterly/Half/Full Year % Returns Signal based on 1 year returns Signal based on average returns
Equity REIT VNQ 31.52 18.19 Invested Invested
Mortgage REIT REM 22.33 9.06
Cash SHY 0.46 0.34
Economic Stress Representative ETF 1 Year % Total Returns Average of Quarterly/Half/Full Year % Returns Signal based on 1 year returns Signal based on average returns
Gold GLD -2.62 -2.5
Long-term Treasuries TLT 24.61 16.02 Invested Invested
Cash SHY 0.46 0.34

As an added bonus, the spreadsheet also has four additional sheets using a dual momentum strategy with broker specific commission-free ETFs for TD Ameritrade, Charles Schwab, Fidelity, and Vanguard. It is important to note that each broker may have additional trade restrictions and the terms of their commission-free ETFs could change in the future.

More on this topic (What's this?)
How to Spot a Genuine Momentum Stock
More Sales Momentum For euNetworks in Q2
Infinera Maintained Its Momentum Through Q2
Read more on Momentum at Wikinvest

Monday Readings

It is the holiday season and I have fallen way behind on my regular investment reads.  Below is a list of articles I am catching up on from the past 2 weeks:

Top 50 Trending Stocks

Millennial Investors Don’t Trust The Market – And They Shouldn’t – Read more at Meb Faber Research

Dilution, Index Evolution, and the Shiller CAPE: Anatomy of a Post-Crisis Value Trap – PHILOSOPHICAL ECONOMICS

7 Simple Things Most Investors Don’t Do – A Wealth of Common Sense

Is Bitcoin the Future? John Mauldin

Why the all-weather portfolio is a wash-out – Barry Ritholtz via The Washington Post

Price-to-Book Value Ratios: A Long-Term Winner with Long Periods of Underperformance – What Works on Wall Street

Beat the Average Investor by not Trying to “Beat the Market” – Pragmatic Capitalism

From ETF.com: Swedroe: Know The Risks, Stick To The Plan, The Best Inflation Protection, Passive Investing’s Foundations

Diversification or Deworsification? Dual Momentum

The World’s Dumbest Idea – James Montier of GMO

Alpha Architect: Our Robest Asset Allocation Solution & A Modification to the Flexible Asset Allocation Model

A New Twist on an Easy All-in-One Fund – WSJ (see also Finally a Free ETF from ETF Trends)

High Yield Dividend Champion Portfolio – December Update

The High Yield Dividend Champion stock portfolio has been updated for December. The portfolio is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s Investments.

The High Yield Dividend Champion Portfolio uses a small number of historically relevant ideas to create a simple, yet powerful investment plan. As I previously detailed, “Some studies have shown that the, highest yielding, low payout stocks perform better over time than stocks with higher payouts and lower yields.”

The High Yield Dividend Champion Portfolio attempts to capture the best high yield, low payout stocks with a history of raising dividends. There are numerous ways to rank high yield/low payout stocks. The screening process for this portfolio starts with the “Dividend Champions” as compiled by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years.

To date the portfolio is up over 92% including dividends.  I mentioned in the 2013 year in review that valuation of high yield stocks was a concern. In January’s update I noted that “I have lowered my expectations for future returns of US equities and high yield stocks.” US equities have held up well for most of 2014, while many yield-centric ETFs have trailed overall equity returns:


I added a valuation filter to the portfolio starting in 2014 in an attempt to mitigate concerns over valuation.  We still begin with the Dividend Champion list, which is first sorted by yield and the lowest 50% yielding stocks are eliminated. Eliminating the lowest yielding stocks ensures only stocks with a relatively “high” yield make the portfolio.

The remaining stocks are then assigned a rank based on their yield (the higher the yield the higher the rank), payout ratio (the lower the payout ratio the higher the rank), 3 year dividend growth rate, and price-earnings (P/E) ratio.  Extra weight is given to yield and payout ratio rankings.

I have also created a second portfolio using similar metrics as the High Yield Dividend Champion portfolio. The primary difference is it only requires 10 years of dividend increases and it also hedges the portfolio during unfavorable market conditions. Hedging requires margin, but the portfolio can also be implemented without the hedge. The portfolio is available on Portfolio123 and backtested results were posted in the June update.

The top 10 stocks based on the new ranking system make the portfolio. Stocks will be sold at the re-balance date (generally around the 5th of the month) when they drop out of the top 15 (to limit turnover) and are replaced with the next highest rated stock.

The top 15 stocks based on my ranking methodology are below and displayed in order of their overall ranking (figures are November month-end).

There is no turnover in positions for December:

Name Symbol Yield
Helmerich & Payne Inc. HP 3.92
Chevron Corp. CVX 3.92
ExxonMobil Corp. XOM 3.05
Old Republic International ORI 4.82
AT&T Inc. T 5.20
Eagle Financial Services EFSI 3.48
Tompkins Financial Corp. TMP 3.43
AFLAC Inc. AFL 2.61
Questar Corp. STR 3.17
First Financial Corp. THFF 2.93
McDonald’s Corp. MCD 3.51
Community Trust Banc. CTBI 3.32
Consolidated Edison ED 3.99
Mercury General Corp. MCY 4.48
Sonoco Products Co. SON 3.05

As previously stated EFSI is not purchased due to its low liquidity.

The current portfolio is below:

Current Positions Position Initial Purchase Date Percentage Gain/Loss Excluding Dividends Current Yield Current Allocation
CVX 12/6/2012 2.60% 3.86% 7.96%
MCD 1/3/2014 -0.24% 3.53% 8.37%
ORI 4/4/2014 -9.06% 4.95% 8.79%
MCY 9/5/2014 10.90% 4.39% 10.37%
TMP 8/6/2014 14.75% 3.29% 11.39%
CTBI 5/5/2014 -0.41% 3.30% 12.92%
XOM 4/5/2013 5.40% 2.94% 9.57%
HP 10/6/2014 -25.54% 4.08% 8.35%
T 3/6/2014 4.95% 5.42% 11.71%
THFF 7/7/2014 5.86% 2.88% 10.31%


Below is the portfolio charted against three benchmarks:

Div Champ

More on this topic (What's this?)
Independent thinking for successful dividend investing
Is time spent learning dividend investing worth it?
7 Higher Yield Dividend Growth Stocks
Read more on Dividend Investing at Wikinvest