Dave, What’s The Best Way To Implement Aspen’s Model Portfolio?

Hello Dave,

With your model portfolio how do you advise starting to allocate to it?


Larry B. – La Quinta CA


What a fantastic question! And the answer is…it depends. But there are 4 guidelines which will help you address your personal situation.

Guideline #1

First, if an account is already fully invested and assuming that there are no immediate tax consequences for switching positions into the recommended model portfolio, the investor may choose to switch it over to the model portfolio all at once. This type of scenario might happen when someone moves their 401K from an employer’s control to his/her own, or he/she has been managing his/her own IRA in a strategy that is underperforming the benchmark. The account can remain fully invested with this new allocation and since it is a tax-deferred account there are no immediate tax consequences.

Guideline #2

Another scenario may be an account that is taxable and has taxable gains in it. In this case, what we do is try to move out of current positions in such a way that gains will be minimized and then move this amount into the model portfolio allocation. At times the investor ends up holding those positions that have embedded gains until he/she is ready to recognize those gains and pay the capital gains taxes.

Guideline #3

Third, an account may be in cash. In this case, an investor may at times enter the portfolio in a few tranches, or chunks, if you will. The investor might allocate a third of the account today and wait for a market selloff of 5% or more, then allocate another third or the last two-thirds. Sometimes you end up waiting a long time for the selloff and can miss significant moves. Currently, we feel the market is in for more volatility and will present opportunities to enter long positions at a discount. If there were another large selloff that takes out the lows of 2530 on the S&P futures, an investor could add to the model portfolio allocation on the long side.

Guideline #4

Lastly, our approach here at Aspen is to allocate a percentage of our overall portfolio to our Alpha Trades. Each investor decides how much to allocate to these trades. Our performance numbers illustrate the returns using a 20% allocation of an overall portfolio to the alpha trades. However, an investor may choose to allocate 30%, 50%, or more of his/her portfolio to the alpha trades. We feel that a tactical approach using alpha trades can lower overall portfolio risk and as we have seen over the past four years, it can increase returns.

So, the answer to the question is not a simple one. Each investor must consider a number of factors in deciding how to allocate to the model portfolio. Hopefully the guidelines presented here will help.

Here’s What’s Clear….

There is little doubt that 2018 is shaping up to be a traders market. Volatility is on the rise as are interest rates…two developments that have been absent from the market for many many years. That is likely not a good recipe for holding a traditional mix of stocks and it certainly points to many trading opportunities in the months and years ahead.

Stick with us…we will keep you ahead ahead of the curve.

Hope that helps,



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