Dear Spartan Client,

“The best preparation for the future is the present well seen to, and the last duty done.”

—George Macdonald


In the book “Extreme Ownership,” Jocko Willink and Leif Babin outline the leadership principles the two men learned during their military service and how they found these tenets to be universal and adaptable to everyday life. When discussing the execution of a plan in the face of intense stress and uncertainty, the two former Navy Seal officers assert, “A particularly effective means to help Prioritize and Execute under pressure is to stay at least a step or two ahead of real-time problems. Through careful contingency planning, a leader can anticipate likely challenges that could arise during execution and map out an effective response to those challenges before they happen.”

We consistently preach about the value of having a plan. In market environments where uncertainty and fear are rampant, the value of disciplined execution is paramount, but the benefits can be difficult to see until after the fact. For us, reacting to the current market environment through a systematic risk management process IS our contingency plan for dealing with the ever-present challenges facing investors, such as risks of catastrophic losses in client accounts due to large drawdowns.

In this month’s Note, we discuss the near-term costs and potential long-term benefits associated with preparation. When forecasts show you are in the possible path of a major hurricane, it can be annoying and time-intensive to get ready (boarding up windows, sand bags, getting equipment ready, etc).  Although annoying, those near-term costs ultimately seem trivial compared to the catastrophic loss that can come with being unprepared for the worst-case scenario. The point is this: You never know the severity BEFORE the event happens, but ignoring the data and not planning ahead of time has the potential to be disastrous.

Below are the asset classes utilized in our portfolios and their model-driven exposure heading into June.  

Square indicates no change month-over-month. Arrows indicate increase/decrease month-over-month. Adjustments can vary across Spartan Strategies depending on each Strategy’s objectives. What’s illustrated above most closely reflects allocation adjustments for the Spartan Growth Strategy. 

Disclaimer: this note is for general update purposes related to the general strategy and approach of Spartan Planning portfolios. Every client’s situation including Risk Profile, Time Horizon, Contributions, and Distributions is different from other clients. Your exposure to any given asset class will depend on your goals, risk profile, and how tactical or passive your risk profile calls for. If there have been changes to your risk profile and/or goals or if you wish to discuss them in more depth, please contact your advisor.

At a Glance: Allocation Adjustments Heading Into June, 2022

U.S. Equities: Exposure will not change, as both the intermediate- and long-term timeframes remain in downtrends.

International Equities: Exposure will not change, as both foreign developed and emerging markets remain in downtrends across both timeframes.

Real Estate: Exposure will decrease as both the intermediate and long-term timeframes go into downtrends.

U.S. and International Treasuries: Exposure will not change and is at its minimum allocation due to downtrends across both timeframes.

Inflation-Protected Bonds: Exposure will not change and is at its minimum due to downtrends across both timeframes.

Short-Term Fixed Income:  Exposure will increase as it takes on exposure from real estate, U.S. equities, foreign equities, and longer-duration fixed income.

Alternatives: Exposure will decrease as gold moves into an intermediate-term downtrend. The long-term trend remains positive.

Three potential macro catalysts for the recent trend changes:


  • Pain at the Pump: Record-high gas prices are starting to take a toll on Americans. The average price for a gallon of regular unleaded gas in the U.S. reached $4.60 on May 26th, a 51% increase from a year ago and a new all-time high. At the end of May, prices rose above $4 a gallon, on average, in all 50 states.
  • Drawing Down Savings: Data from the Commerce Department shows a rise in consumer spending to a seasonally adjusted 0.9% last month, beating estimates of a 0.7% rise in spending. However, the saving rate fell to 4.4%, the lowest in 14 years, from a downwardly revised 5% the prior month, suggesting that many Americans are tapping their savings (that they had put aside during the pandemic and from their stimulus checks) to offset cost increases from high inflation.
  • Slowing but not Stopping: The Federal Reserve’s preferred measure of inflation, the PCE (personal consumption expenditures price index), slowed its increase with a 0.2% increase in April, translating to a 6.3% increase year-over-year. This is down from last month’s all-time high of a 6.6% increase.

Preparing for a Storm

“Better to have, and not need, than to need, and not have.”

—Franz Kafka

If you own property in a storm-prone area or know someone who does, you likely understand that preparation is a necessary cost – but one that is nevertheless occasionally burdensome and annoying. If it’s a vacation home, then perhaps it involves driving hours, gathering the necessary supplies (usually when everyone else is trying to do the same), and spending time/energy getting everything into place. Often the forecast changes, and it turns out all that preparation was for nothing. And since “hindsight is 20/20”, it often can lead you to say “well maybe I just overreacted”. If it’s your main home – it can be your life, and not just your property, at risk. This analogy flips to “should I evacuate early, late, or not at all?”. Sometimes evacuating will feel like the wrong choice if you do so and then the storm misses your home anyways. But ALWAYS if you don’t evacuate and a Cat 5 hurricane hits your house you will regret ever not sticking with the risk-managed decision to have (and stick to) your evacuation plan.

Unlike vacation homes, there is no insurance providing complete coverage for investment portfolios. In addition, forecasting technology for bear markets does not exist in the way it does for hurricanes. Forecasting future market performance is more often filled with ego rather than based on reliable data. And yet, preparation for risk management and disaster management is also critical for your portfolio as it is with your life and property.

There is no way to know if an impending decline in stocks is of the category 1 variety or a catastrophic cat 5. Unlike a hurricane, where one can have an idea of the severity for days in advance (and sometimes a week or more), financial markets provide little warning before some volatility pops its head up. Often times larger, longer drawn-out declines get plenty of warning but are frequently only sidestepped by disciplined, systematic risk managers. Therefore, it is our belief that one must carefully consider all the signs and have a plan to act accordingly. Systematic risk management is a tool for doing just that.

Not all declines are created equal, and some level of risk and downside exposure is inevitable and necessary, but having a pre-determined plan allows us to put all the focus on execution when it is time to act. This year has provided an excellent real-time example.

After enjoying “sunny skies” and mostly smooth conditions in 2021, the clouds began to build and metaphorical storms began in January of this year. As a result, our systematic investing process took the first precautions by reducing exposure to the areas where damage was most imminent and apparent, such as international stocks. Notice we did not board up the house, nor did we ignore the situation altogether and go paddle-boarding. Think of our actions during this time as simply putting the beach umbrella down or securing the lawn furniture and heading inside while the rain clouds build.

The next three months produced a steady decline in conditions, so much so that we again reduced exposure to riskier assets going into May. As we enter June, we have finished our preparation. The shutters are locked, and the sandbags are in place.

While we wait to see the outcome, we rest confidently in the words of Kafka quoted above (“Better to have, and not need, than to need, and not have.”). Our process is designed to keep you on the most likely track to meet your future goals. We believe the effects of further declines will be dampened from their full impact compared to if we had done nothing.  On the other hand, if markets rebound, our process will rotate us back to allocations where we can participate again in those gains.

It is our view that the odds of success in almost any pursuit – be it health, wealth, or maintaining a beautiful property – are optimized by the steady application of fundamentally sound rules. Like most things in reality, these rules occasionally have costs, whether it’s saying no to a piece of cake, an intense hour at the gym, or boarding up windows in the face of a storm that occasionally doesn’t materialize. But for those with their eye on the prize, these near-term costs pale in comparison to the long-term rewards and compared to the catastrophic costs of not preparing and having “the big one” hit.

David Childs, Ira Ross, and Eric Warren

Spartan Planning

Disclaimer: this note is for general update purposes related to the strategy and approach of Spartan Planning portfolios. Every client’s situation including Risk Profile, Time Horizon, Contributions, and Distributions is different from other clients. Your particular exposure to any given asset class will depend on your goals, risk profile, and how tactical or passive your risk profile calls for. If there have been changes to your risk profile and/or goals or if you wish to discuss them in more depth please contact your advisor. This email and the data herein is not a solicitation to invest in any investment product nor is it intended to provide investment advice. It is intended for information purposes only and should be used by investment professionals and investors who are knowledgeable of the risks involved. No representation is made that any investment will or is likely to achieve results comparable to those shown or will make any profit at all or will be able to avoid incurring substantial losses. While every effort has been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Historical data are presented for informational purposes only. Investment programs described herein contain significant risks. A secondary market may not exist or develop for some investments portrayed. Past performance is not indicative of future performance. Investment decisions should be made based on the investors specific financial needs and objectives, goals, time horizon, tax liability, risk tolerance and other relevant factors. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Investors should consider the underlying funds’ investment objectives, risks, charges and expenses carefully before investing. The Advisor’s ADV, which contains this and other important information, should be read carefully before investing. ETFs trade like stocks and may trade for less than their net asset value. Spartan Planning Group, LLC (“Spartan” or the “Advisor”) is registered as an investment adviser with the United States Securities and Exchange Commission (SEC). Registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the Adviser has attained a particular level of skill or ability. Indexes are unmanaged and do not incur management fees, costs, and expenses. Spartan’s risk-management process includes an effort to monitor and manage risk, but should not be confused with and does not imply low risk or the ability to control risk. There are risks associated with any investment approach, and Spartan strategies have their own set of risks to be aware of. First, there are the risks associated with the long-term strategic holdings for each of the strategies. The more aggressive the Spartan strategy selected, the more likely the strategy will contain larger weights in riskier asset classes, such as equities. Second, there are distinct risks associated with Spartan Strategies’ shorter-term tactical allocations, which can result in more concentration towards a certain asset class or classes. This introduces the risk that Spartan could be on the wrong side of a tactical overweight, thus resulting in a drag on overall performance or loss of principal. International investments may involve additional risks, which could include differences in financial accounting standards, currency fluctuations, political instability, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks. Diversification strategies do not ensure a profit and do not protect against losses in declining markets