All Asset No Authority trading system

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We’re talking about a simple portfolio that absolutely anyone could follow in their own 401(k) or IRA or retirement account. Low cost, no muss, no fuss. And it’s managed to do two powerful things simultaneously.

It’s beaten the standard Wall Street portfolio of 60% U.S. stocks and 40% bonds. Not just last year, when it beat them by an astonishing 7 percentage points, but for half a century.

And it’s done so with way less risk. Fewer upsets. Fewer disasters. And no “lost” decades.

Last year, 2022, marked the 50th year of this unheralded portfolio, which is termed “All Asset No Authority,” and which we’ve written about here before.

It’s the brainchild of Doug Ramsey. He’s the chief investment officer of Leuthold & Co., a long-established fund management company that has sensibly located itself in Minneapolis, a long, long way away from Wall Street.

AANA is amazingly simple, surprisingly complex, and has been astonishingly durable. It consists simply of splitting your investment portfolio into 7 equal amounts, and investing one apiece in U.S. large-company stocks (the S&P 500 SPX, +2.28% ), U.S. small-company stocks (the Russell 2000 RUT, +2.26% ), developed international stocks (the Europe, Australasia and Far East or EAFE index), gold GC00, +0.04%, commodities, U.S. real-estate investment trusts or REITS, and 10 year Treasury bonds TMUBMUSD10Y, 3.562%.

It was Ramsey’s answer to the question: How would you allocate your long-term investments if you wanted to give your money manager no discretion at all, but wanted to maximize diversification?

AANA covers an array of asset classes, including real estate, commodities and gold, so it’s durable in periods of inflation as well as disinflation or deflation. And it’s a fixed allocation. You spread the money equally across the 7 assets, rebalancing once a year to put them back to equal weights. And that’s it. The manager—you, me, or Fredo—doesn’t have to do anything else. They not allowed to do anything else. They have no authority.

Anyone who wanted to follow this portfolio — this is not a recommendation, merely an observation — could do so easily using 7 low-cost exchange-traded funds, such as the SPDR S&P 500 SPY, +2.29%, iShares Russell 2000 IWM, +2.25%, Vanguard FTSE Developed Markets VEA, +2.76%, iShares 7-10 Year Treasury Bond IEF, +1.29%, SPDR Gold Shares GLD, +1.87%, Invesco DB Commodity Index Tracking Fund DBC, +0.55% and Vanguard Real Estate VNQ, +2.69%.

I discovered that Leuthold publishes a blog reporting on the track record of an AANA portfolio:

Full access to read requires registration, but you can glean the gist of things from reading the snippets.
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