Last month felt like one for the record books. Broad equity indices rose without resistance throughout the month as if all was well with the world. The markets fell a little at the very end of January but even with that decline, my tactical asset allocation strategy which uses ETF’s rose 6.69%.
Volatility remains on the low side but did increase and is pushing the limit for me to be prepared to reduce leverage. Currently, I am using 30% leverage and have been doing so for some time. Interest rates are low and volatility, until now, has been low so it has been an opportune occasion to use margin.
It is at times like this when my equity chart moves ever so continuously higher that I remind myself to not confuse a bull market with brains. Conditions have been exceptional for a tactical asset allocation strategy such as mine and I used margin responsibly and it paid off. Let’s keep in mind that we, as investors, should focus on process over outcome. Every month I report the outcome but it is the underlying investing process that is truly important.