This is a test of OptimumV from Todd Tresidder of Financial Mentor.
Backtested results from 1987 follow. Results are net of transaction costs – see backtest assumptions. Learn about what we do and follow 100+ asset allocation strategies like this one in real-time.
Logarithmically-scaled. Click for linearly-scaled results.
Tresidder has requested that we not disclose the OptimumV ruleset. To be clear: we know the rules and we’ve independently tested those rules with the same level of rigor you’ve come to expect of us, but we cannot disclose those rules to members.
While we value transparency on principle, Tresidder’s strategies have proven themselves out of sample, and we think most members will extend latitude.
Tresidder’s strategies are only available at Allocate Smartly. He uses our platform to support his community, and in exchange, our members can follow his strategies as well. Any other replication you find online is just a bad guess based on the limited information that has been publicly shared.
About this strategy:
OptimumV is based on a similar core algorithm as Tresidder’s Optimum3, the most widely followed strategy on our platform. But whereas the original Opt3 is agnostic to economic conditions and considers every asset equally, the new OptV tilts the portfolio towards assets best suited to the current economic state.
That introduces a unique risk, because as investors with even a pittance of experience know, economics and investment returns sometimes diverge. We expect that over the long-term OptV will outperform Opt3 because those broad economic relationships will continue to hold, but OptV will sometimes lag in the short-term.
Consider the current market. OptV is performing well this year because it has overweighted diversified commodities (PDBC), which are highly correlated to oil prices. That’s been a winning call based on market fundamentals, but at some point that trade could unwind quickly and OptV could trail in the short-term until it adapts.
Our advice remains the same as it is with any strategy:
Investors should never go all in on any single strategy. Investors should combine multiple diverse, robust, high-quality strategies together (into what we call Model Portfolios) to limit the risk of any single strategy underperforming. This helps to smooth portfolio returns, and ensures investors stay the course (and sleep better at night).
A big thank you to Todd Tresidder of Financial Mentor:
Todd has been a valuable contributor to our platform, and he’s a smart strategy developer. He’s written an educational series for his community describing his approach to using our platform, including how he selects strategies and builds Model Portfolios.
He does a good job describing our platform in terms that the less geeky investor can understand. If you find yourself overwhelmed by our platform, we highly recommend visiting FinancialMentor.com and taking his educational series for a spin.
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