My Investment Framework
My goal is to create a complete picture of the investment environment, much like a weather forecast provides a complete picture of the weather. I do this in three steps:
Step 1: What is the weather right now? (The Current Market Environment)
First, I need to understand the current conditions. Is it sunny and calm, or is a storm already overhead? To do this, I monitor over 40 of the world's most important financial markets every single day—from stocks and bonds to currencies and commodities. I treat them like a network of weather stations. By observing whether these markets are collectively behaving in a way that signals confidence ("risk-on") or fear ("risk-off"), I can determine the market's current mood, or what I call the "market regime."
Current Example: Right now, my network of "weather stations" tells me that market conditions are favorable. I call this environment Summer, which is a "risk-on" or "sunny" day for investors.
The Four Economic Seasons I Track
Understanding these helps me adapt investments to the current environment.
Summer (Goldilocks)
"Not too hot, not too cold" economy.
- Stocks (Tech)
- Bonds
- Commodities
Spring (Reflation)
A booming, "risk-on" economy.
- Stocks (Cyclicals)
- Commodities
- Govt Bonds
Fall (Stagflation)
Sluggish growth, rising prices.
- Commodities
- Stocks (Value)
- Long Term Bonds
Winter (Deflation)
A classic recession.
- Quality Bonds
- Cash & USD
- Stocks
Step 2: What is the long-range forecast? (The Economic Outlook)
Next, I look beyond today's weather to forecast the climate for the next 3 to 12 months. I use powerful models that analyze the fundamental drivers of the economy, focusing on the two things that matter most: the direction of economic growth and the direction of price inflation. This helps me anticipate whether the current sunny conditions are likely to last or if clouds are gathering on the horizon.
Current Example: My long-range forecast sees the weather changing. Over the next 3 to 12 months, my models predict a shift to a more challenging climate I call Fall, where economic growth slows down while prices remain stubbornly high.
Step 3: Are there any specific hazard warnings? (The Key Risks)
Finally, even on a sunny day with a mixed forecast, I need to watch for specific dangers, like a hurricane forming offshore. I have specific tools that monitor for these kinds of risks. I look for signs of investor complacency, like everyone crowding into the same investments, which can signal a sudden downturn. I also closely watch the actions of policymakers, like the Federal Reserve, for potential mistakes that could harm the economy.
Current Example: I currently have two major hazard warnings. First, my models show a moderate risk of a significant market downturn over the next year because investor positioning has become crowded. Second, I see a growing risk that the Federal Reserve may be too slow to support the economy, which could create a "growth scare" that spooks investors.
How the Outlook Creates the Model Portfolio
My base model portfolio for the typical growth investor is a direct reflection of this three-part outlook. I invest for the sunny weather I have today, but I also carry an umbrella and an emergency kit for the potential storm ahead. Note that this can be dialed up or down based on an investor's risk tolerance.
My Current Model Portfolio (as of August 9, 2025)
| Asset Class | ETF Ticker | Allocation | Purpose |
|---|---|---|---|
| US Equities | SPY | 30% | Invest for the current sunny day |
| International Equities | ACWX | 15% | Invest for the current sunny day |
| High-Yield Bonds | HYG | 15% | Invest for the current sunny day |
| Bitcoin | IBIT | 15% | Prepare for the coming storm |
| Gold | GLD | 10% | Prepare for the coming storm |
| Cash | Cash | 15% | Emergency kit for sudden hazards |
Positions for Today's Sunny Weather (SPY, ACWX, HYG - 60% of Portfolio): Because my analysis shows the current environment is positive for investors, the majority of my portfolio is in assets that perform well during good economic times. This includes US stocks (SPY), international stocks (ACWX), and higher-yielding corporate bonds (HYG). My quantitative models confirm that these assets are currently in a strong uptrend.
Positions for the Coming Storm (GLD, IBIT - 25% of Portfolio): Because my long-range forecast sees a future of higher inflation and my long-term view is that government policies will gradually lower the purchasing power of the US dollar, I hold a significant allocation to Gold (GLD) and Bitcoin (IBIT). These are considered "real assets" that can act as a financial storm shelter, protecting wealth over the long term.
The Emergency Kit (Cash - 15% of Portfolio): Because my hazard warnings show a risk of a sudden "growth scare" or market downturn, I hold a meaningful amount of cash. Cash protects capital during a storm and, more importantly, provides the resources to buy great assets at a discount after a downturn occurs.
For those seeking an income strategy, I also offer the Macro Insurance Strategy, which is designed to generate income by intelligently selling market insurance.