Yesterday’s Home Runs Don’t Win the Game Today or Tomorrow 

“History never repeats itself. Man always does.”


As proponents of systematic investing, we often talk about the dangers of overfitting rules to past market behavior. This is a process known as “curve fitting.” We think it’s dangerous for many reasons, one of which is the fact that past market movements are not likely to precisely repeat themselves in the future. As Mark Twain said, “history doesn’t repeat itself, but it often rhymes.”

In our view, human nature is the primary factor that leads to the future rhyming with the past. A person’s reaction to rising or falling market prices is about the only variable that can be consistently expected to repeat. Fear, greed, envy, and a host of other emotions exhibited by the masses participating in the market create cycles and trends that rhyme and are obviously observable. It’s for this very reason we try to strip out the emotion and subjectivity from the way we manage risk for your financial life. We want to employ a systematic approach to our process and remove the human bias or subjectivity to decisions regarding our clients’ risk management. 

In this Monthly Note, we discuss the value of having a systematic investing process in the context of chasing returns and other dangerous investment behaviors. Buying last year’s winners is an all-too-common thread in the investment world, as well as a behavior rooted in human nature. It is our belief that a better approach is to employ a set of simple rules that circumvent these potentially harmful behaviors. 

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

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 static your risk profile calls for. Adjustments can vary across strategies depending on each strategy’s objectives. What’s illustrated above most clearly reflects allocation adjustments for the Growth Strategy. 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.



Equities & Real Estate

After closing March with a three-day advance that caused the S&P 500 Index to climb 3.25%, April’s price activity was tame by comparison. Through the month of April, the S&P 500 held a range within 100 points, a small fraction of the distance it had traveled in the prior twelve months.  To illustrate, the S&P 500’s range in April, as a percentage of the open, is the sixth lowest since 1993.

Parsing out U.S. equity markets:

  • Dividend payers and value stocks were the leaders in April after lagging significantly in the first quarter. Even with this positive monthly performance, value and dividend stocks continue to hover near their 2022 close.
  • Growth stocks, along with small and mid-caps, lagged during the month of April. For growth, this is merely a dent in what has been a bit of a recovery year after 2022’s terrible performance, but mid and small-caps continue to perform more in line with value and dividend stocks.

To sum things up for U.S. equities, higher lows in prices and low volatility have resulted in uptrends for the broader market, which means increased exposure in our strategies broadly. Portfolios will go overweight mostly, as this asset class picks up exposure from weaker real estate securities.

Foreign-developed equities are on pace to lead global equity markets for the month in positive territory. Our portfolios have had a heavier weighting since January in response to this strength and will continue to be in May. On the flip side, emerging markets have reverted to downtrend status after briefly hitting an intermediate-term uptrend. Our portfolios remain at their minimum allocation as a result.

Real estate securities continue to experience downtrends across both timeframes. As a result, all our portfolios remain at their minimum allocation. As mentioned above, this exposure has been handed off to stronger U.S. equities.

Fixed Income & Alternatives

Very little has changed in the world of fixed income since our last update. The middle of the yield curve continues to be strongest from a price perspective, with bonds in duration from three years to 20 years posting intermediate-term uptrends. Treasuries in duration from one year to three years, as well as those above 20 years, continue to experience downtrends across all timeframes. Exposure in our portfolios is underweight, reflective of the weakness, and will not change in May.

Gold’s price moved very little in April but remains in uptrends. It has been one of the leading asset classes for 2023 and, thus, will continue to be at its maximum exposure in our portfolios.

Sourcing for this section:, S&P 500 Index, 3/29/2023 to 4/27/2023; GFD, S&P 500 Index, 1/1/1993 to 4/25/2023, calculation is high for month minus low for month divided by open price for the month;, High Dividend Yield Vanguard ETF (VYM), 1/1/2022 to 4/25/2023;, Value ETF Vanguard (VTV), 1/1/2022 to 4/25/2023;, Growth ETF Vanguard (VUG), 1/1/2022 to 4/25/2023;, Midcap ETF Vanguard (VO), 1/1/2022 to 4/25/2023;, Smallcap ETF Vanguard (VB), 1/1/2022 to 4/25/2023;, FTSE All-World Ex-US ETF Vanguard (VEU), 4/1/2022 to 4/25/2023; and, Gold Trust Ishares (IAU), 1/1/2023 to 4/25/2023

    Three potential catalysts for trend changes:


    • GDP Report:  U.S. economic growth decelerated to a 1.1% annual rate in the first quarter. This marks the second declining quarter in a row, as inflation- and seasonally-adjusted growth was 2.6% in the fourth quarter of 2022 and 3.2% in the third quarter. Projections from The Wall Street Journal for the remainder of the year are flat to slightly negative.
    • Home Prices:  The latest data shows that home prices rose in February from the prior month, breaking a seven-month streak, as buyers began to compete again for homes for sale. Additionally, after rising to 20-year highs last fall, mortgage rates declined in December and earlier this year, which brought home buyers back into the market. The number of homes for sale also remained unusually low, keeping the buyers’ market competitive in parts of the country.
    • Declining Confidence:  The April Conference Board report showed consumer confidence declined in March. Americans’ assessment of current business and labor market conditions improved, whereas expectations for the coming months dropped. Considered together, the measures signal a looming recession.
    Sourcing for this section:  The Wall Street Journal, “GDP Report Shows Economic Growth Slowed in First Quarter, 4/27/2023; The Wall Street Journal, “Home Prices Rose in February for First Time Since June,” 4/25/2023; and The Conference Board, “US Consumer Confidence,” 4/25/2023

      Why ‘Keep It Simple’ Resonates Deeply

      “Yesterday’s home runs don’t win today’s games.”

      –Babe Ruth

      In our update last month, we outlined both a bull case and a bear case for what lies ahead in the markets.

      We wanted to illustrate the folly of making investment decisions based on predicting market behavior. As you know well by now, we are instead avid supporters of designing and implementing systematic investing processes for adapting portfolios in a predetermined way. We think this gives you the best chance of meeting your goals over 10, 20, 30, or 50-year windows, regardless of what transpires in markets. 

      The markets never perfectly repeat past behavior. However, our research indicates to us that there’s enough of a pattern that a rules-based, systematic framework can help with navigation. Especially one that adapts to new outcomes as they happen.

      Markets generally fall into one of three categories of trend:

      1. Up
      2. Down
      3. Sideways

      Different rules applied within these trend types will result in different performance profiles in terms of return, volatility, and correlation in comparison to a benchmark, such as the S&P 500. One set of rules is not necessarily better than another, and any form of repeatable trend following is better than none, in our opinion. 

      The systematic investing rules used in our portfolios aim to capture as much upside as possible. We apply the investing process to a broadly diversified portfolio, and we take into consideration tax consequences and downside risk. 

      A systematic investing process with predetermined rules for each of the previously-mentioned trend environments will usually do part of the work that’s needed to help manage emotions during turbulent times. But we – this includes you, as well as me, as your advisor – aren’t immune to feeling like reacting to market conditions due to feelings of fear, greed, envy, and a host of other emotions because it is embedded in human DNA.

      We see how these predictable human emotions and behaviors are at play throughout the industry. It is almost comical how even financial professionals will fixate on previous performance, constantly chasing the recently best-performing asset rather than sticking with a tried-and-true process. 

      The last three years are a prime example: 

      • Growth and tech: Our strategies have been challenged at various times by the latest hot asset class. A recent example is how growth and tech-oriented factors were top performers at the end of 2021 (their last peak), only to become among the worst performers in 2022. 
      • Commodities: We have also seen firms eschew commodities for years, only to buy them at their peak in 2022. 

      These examples remind us why the acronym KISS (Keep It Simple, Stupid) resonates deeply. Years of working with market data yield a few universal truths, as we see them:

      • Almost all of a given market’s return is produced when it is in an uptrend (we know this sounds obvious, but it conflicts with commonly held sacred cows like often misapplied “the best 10 days rule”)
      • Bad things tend to happen when you hold a market that is in an extended downtrend – note we didn’t say “any down move,” we said “extended downtrend” because not all declines are created equal 

      These ideas and the underlying rules that support them are why we:

      • Will continue to increase large-cap U.S. equity exposure for May
      • Are keeping high exposure in foreign developed equities, but low allocations in emerging markets and real estate
      • Have had almost no exposure to long-duration fixed income for almost two years, but have kept high exposure to relatively ultra-short-duration assets
      • Are at maximum allocation for gold recently

      What we’re building and executing is not flashy. It will not receive high praise in the mainstream. We will probably not be asked to join a speaking circuit. We’re OK with all of that because our goal is to provide a foundation for serving clients, as well as the type of white glove service that almost no one else is providing. 

      No one can guarantee performance, but we can commit to following our systematic investing process with discipline and to provide service marked by its intensity and responsiveness. 

      Our mantra remains: Control what you can and seek to maximize the reward per risk on what you can’t.


      David Childs, Ira Ross, and Eric Warren

      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