Moving Money In, Moving Money Out

Timing of Moving Money in and Out of Accounts Tracking Focused 15 Investing  

Once you have decided which Focused 15 Investing model portfolio to track, you will need to determine how quickly to move money into the account. Most people find it most comfortable to move to a new investment program gradually.  Consider moving 1/3 or 1/4 of your assets every several weeks  and make movements subject to the Plant/Wait/Harvest phases indicated below.   

Also, consider the difference in aggressiveness between your current portfolio and that of the Focused 15 Investing model portfolio you plan to track.  Please call me for a discussion of this topic.

Money Moving Phases 

In general, there are more opportune times to move money in and out.  On the weekly publication, I indicate three different phases of the model portfolio's expected short-term return pattern.  They are based on the same metrics used in the investment approach plus other subjective factors.  Please keep in mind that these are just rough estimates.

The phases provide a general guide for moving money into the account (plant) and moving money out (harvest).

Plant  - Better for moving money of an account tracking a Focused 15 Investing model portfolio.  Hold off taking money out if practical.
  • "Plant 1" - This is the first part of the planting phase.  The market may still be vulnerable and declining for a few weeks.   
  • "Plant 2" - This is the second part of the planting phase.  The market may be gaining in resilience and moving higher.   
Wait - Phase between planting and harvesting.
  • "Wait" - Consider holding off moving money in or out.  
Harvest - Hold off moving money in.  Of course, this is the phase for moving money out
  • "Harvest 1" - This is the first part of the harvesting phase.  The market has short-term resilience and may still be moving higher but may soon experience a short-term peak.     
  • "Harvest 2" - This is the second part of the harvesting phase.  Short-term resilience may decrease and prices may decline more sharply within a few weeks.     
Assuming you decide to move 1/3 of your money in every 3 weeks and a hypothetical pace of moving through the Plant, Wait, and Harvest sequence, we get the following example:
  • Week 1 - Phase indicated in weekly publication: "Plant 1." Move 1/3 of your assets to the target weights.  
  • Week 2 - Phase: "Plant 1." Do nothing.
  • Week 3 - Phase: "Plant 2." Move another 1/3 of your assets. 
  • Week 4 - Phase: "Wait." Do nothing.
  • Week 5 - Phase: "Wait." Do nothing.
  • Week 6 - Phase: "Harvest 1." This would have been a week to move money in, but the market conditions are not right.  Do nothing.
  • Week 7 - Phase: "Harvest 1." Do nothing.
  • Week 8 - Phase: "Harvest 2." Do nothing.
  • Week 9 - Phase: "Wait." Do nothing.
  • Week 10 - Phase: "Plant 1." Move final 1/3 of your assets into the target weights. This is the next opportunity.
Another option is to move money all at once during the appropriate Plant/Wait/Harvest phase.  This means moving money in during the planting phase and moving it out in the harvest phase. This approach is easy in that it does not require long term planning and execution. I tend to use this approach. The downside is that you are more exposed the returns of the specific time you make the move and may feel regret about the decision to move money at that specific time.
Please note that one should trade to bring your account into alignment with the target weights in all of the phases.  These phases relate only to moving money in and out of the account.

Also, these phases are applicable to any stock-oriented account, not just those tracking Focused 15 Investing model portfolios.