Monthly Asset Allocation

I am inaugurating a new section here which will appear at the beginning of each month. It follows my series of articles on the diversification portfolio. The idea is to review each asset (long bonds, gold, real estate, stocks of developed and emerging countries) and determine for each one what to do. I indicate my target tactical allocation in % and whether the position is cash or invested, according to the principles already mentioned in my series of articles. The target allocation in percent is a course of action to aim for in the medium term (i.e. we are not going to sell or buy a lot of securities in a few days to reach the indicated weighting). It is not to be followed to the letter and must be adapted according to each person's risk weighting.

The indicated weightings of the allocation of each asset are very stable over time. They only change for developed country equities and long-term bonds, but only in the long term, in the event of a substantial change in monetary policies (interest rates). What changes more often, for certain assets, is whether the position should be "Invested", "Light" or "Cash".

In detail:

- for long bonds: either “Invested” via the CSBGC0 ETF, or “Cash”. The tactical allocation is currently 10% and may change in the long term depending on economic policies.

- for gold: invested permanently, via the AUCHAH ETF. The tactical allocation is fixed at 5% (does not change over time).

- for real estate: permanently invested via the SRECHA ETF or, better, directly via real estate shares. The tactical allocation is fixed at 15% (does not change over time).

- for shares in developed countries (split 50/50 between domestic and international shares):

- either “Invested” via the CHSPI (Swiss shares) and SWDA (international shares) ETFs or, better, via shares

- either "Light" (for stocks) or "Cash" (for ETFs). If you have a large stock portfolio, you obviously won't sell all your positions if the signal is bad, but you can lighten it by selling the worst stocks.

- the tactical allocation is currently 65% and may change in the long term depending on economic policies.

- for emerging country stocks: either “Invested” via the DEMSX ETF, or “Cash”. The tactical allocation is fixed at 5% (does not change over time).

So right now it's very simple: all positions are invested! A small downside however on the actions:

- from a fundamental point of view, valuations are very high. Even if the medium-term target tactical allocation is 70% (domestic and international equities, including emerging paid), I am currently in the process of reorganizing my portfolio as already mentioned in previous articles, in order to focus on less exposed stocks (less popular, less expensive and in defensive sectors). I therefore currently have a large cash position waiting to be invested in the hope of finding this kind of opportunity. This requires in-depth research because pearls are rare at the moment. It will certainly be necessary to wait for a market correction to invest all the cash and reach the 70% of the target allocation. I will publish the details of my positions soon.

- I expect a bearish correction in the very short term on stocks, particularly on the American S&P 500 index.