What Is A Model Portfolio?

What if….

….you could have your cake and eat it, too? In other words what if you could invest the majority of your money in investments that require modest oversight and ALSO invest in new, exciting opportunities with a bit more risk but with huge potential upside? Well, grab your fork because you can.

How? By employing our carefully crafted Model Portfolio. You have likely heard us talk about it…..you have hopefully heard about its excellent performance yet you may be wondering…what is a model portfolio? How do I use it? Is it right for me and my situation?

What It Is

The Model Portfolio is a guide for Aspen Trading clients who currently manage or wish to manage all of their investable assets. It is a simple yet active approach to growing a portfolio which includes both market exposure and specific, targeted “alpha” trades. The model portfolio is neither passive nor static, and it takes a longer-term view of asset classes (typically weeks to months). The Alpha Trades are shorter-term, concentrated positions in opportunistic stocks and/or asset classes.

For our money-management clients we typically use an 80% allocation to the Model Portfolio, and a 20% allocation to the Alpha Trades. This is the same allocation we recommend to Aspen Trading research clients and our monthly performance numbers are based on this.. As we have said before, an investor’s tolerance for risk may lead her to a different allocation, say, perhaps 60% to the Model Portfolio and 40% to the Alpha Trades.

How You Can Use It

Recently, I had coffee with one of our longtime clients and she wanted to know how she might allocate $450,000 to the Model Portfolio. You all know that in most cases, a stockbroker or investment manager would want to get their hands on the money as fast as possible! But in addressing her question: “Do I go all in or do I invest a smaller allotment over time?” I recommended a tactical approach which requires a bit of patience and careful analysis. 

Although money managers believe you cannot time the market, YOU know that when you invest can make a huge difference in your returns. Moreover, money managers are handling many client accounts and unless your account is unusually large, they do not give your account special attention. Lastly, they want to get you invested quickly so they can start charging fees for their services.

Our approach at Aspen Trading is different. When I say we are tactical it means this– we look at both fundamental and technical factors before investing in our unique style. We consider where we are at in the business cycle. What asset classes may be negatively affected by rising interest rates? What does inflation indicate? Which asset classes are giving technical indications of strength? What is price action telling us about strong and weak asset classes? So on and so on. We then enter the portfolio accordingly.

We would encourage those following the model portfolio to invest tactically per Aspen Trading’s market research and recommendations. For example, if the forecast is for an S&P correction, wait until the forecast turns more positive. And for individuals who are already fully invested in the Aspen model portfolio and alpha trades strategy, you will continue to get management guidance for the various asset classes and advice on systematic rebalancing.

How It Benefits You

The Model Portfolio’s overall performance has been solid. The Alpha Trades have performed exceedingly. In fact, in the market downturn at the beginning of this year, we included some ‘short’  positions and other hedges to protect the less active part of the portfolio from the negative market action. This action alone produced +2% gain over the benchmark.

Have a question for me? Just ask.

Showing 2 comments
  • Jorge Canessa


    The cumulative YTD from the Alpha Trades + Model Portfolio has really caught my eye.

    I just recently started advising my parents on better ways to invest and get more juice for their money.

    Are these returns something which you offer under “Managed Accounts”, meaning zero involvement on the investors part?

    God Bless you man. You are a force for good in the investment world.


    • Dave Floyd

      Thanks for the kind words Jorge.

      The Managed Accounts you reference only include FX trades – it is not the same product.

      However, we are going to be rolling out a different Managed Account product that includes the Model Portfolio + Alpha Trades.

      Likely an early 2019 launch.

      In the interim though, if you simply subscribe to the Stock/Options Service, you get access to the Model Portfolio + Alpha Trades….you then place the trades yourself.

      Take care,


Leave a Comment