Circumventing The Wall of Worry 

“What we hope ever to do with ease, we must first learn to do with diligence.” 

–Samuel Johnson

There’s an oft-spoken cliché about how markets climb a “wall of worry.” Whether influenced by global upheavals, monetary policy, or evolving market dynamics, uncertainties are inherently part of investing.

Hoping for the conditions to look different is easy to do but simply won’t change reality. What an investor can learn to do with diligence is circumvent their own biases. At Spartan Planning Group, we seek to accomplish this with disciplined execution of our repeatable investing process. Having a precise and robust process keeps us from being derailed when faced with the “wall of worry.”

In this Monthly Note, we discuss what we believe is an important ingredient for outperformance in the context of how our systematic investing process approaches managing risk. In sharing our risk handoff strategy, we describe how we ease away from weakening asset classes without going completely “risk off.”

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

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

Relatively speaking, September has historically been a weaker period for stocks. Also, equities suffered a broad sell-off in August. While fairly uniform in the decline, growth and tech stocks suffered more than their value and dividend-oriented counterparts. Despite the retracement, trends remain positive in the U.S.

While uptrends persist domestically, it’s not so internationally. Foreign developed equities, which have enjoyed mostly uptrends in 2023, and emerging markets moved into intermediate-term downtrends. This weakening will result in exposure being shifted to stronger U.S. equities due to our risk handoff strategy, which is discussed in more detail below. 

Real estate ended its short-lived uptrend over the intermediate term. Both timeframes are now in negative territory, resulting in reduced exposure back to its minimum allocation, where the asset class spent most of 2022 and 2023. Like international stocks, this exposure will be passed along to U.S. equities for now.

Fixed Income & Alternatives

Fixed income returns in August were, in a word, bad. The temporary uptrend in international fixed income died quickly, pushing our allocation back to its minimum alongside all other fixed income segments of any meaningful duration. The recipient of fixed income exposure continues to be ultra-short-term fixed-income instruments.

Gold also saw a trend reversal. The intermediate-term trend returned to negative territory, meaning exposure will decrease. The long-term trend remains positive.

Sourcing for this section:, Growth ETF Vanguard (VUG), 8/1/2023 to 8/28/2023;, Nasdaq Composite ($NASX), 8/1/2023 to 8/28/2023;, Value ETF Vanguard (VTV), 8/1/2023 to 8/28/2023; and, High Dividend Yield Vanguard ETF (VYM), 8/1/2023 to 8/28/2023

    Three potential catalysts for trend changes:


    • Gasoline Woes:  Gasoline prices recently reached their highest levels so far this year, with the national average for a gallon of regular at about $3.82 at the start of this week. That is about 60 cents higher than at the start of the year. The climb in oil prices could complicate the Federal Reserve’s effort to lower inflation to 2% and is already weighing on small-business owners, with companies delaying upgrades, losing workers who do not want to pay more to commute, and charging customers higher prices.
    • Loan Woes:  Restarting a $1.6 trillion federal student loan program is creating confusion. Pandemic relief is ending, and borrowers will start owing interest as of September 1, with the first payments due as soon as October 1. Several issues are complicating the process. First, about four-in-ten loans were transferred to a new servicer.  Also, millions of former students who graduated or otherwise left school during the debt payment pause have never been required to make a payment –until now. This could be a shock to the system when payments begin coming due.
    • No Used Homes: The Commerce Department reported 714,000 new homes were sold in July, at an annual rate, up from totals in June and July last year. Additionally, the National Association of Realtors reported that just 980,000 existing single-family homes were for sale in July, the fewest in the month of July dating back to 1982. The low supply means elevated prices for existing homes and increased demand for new homes.
    Sourcing for this section: The Wall Street Journal, “Rising Gasoline Prices Hit Inflation-Weary Americans,” 8/28/2023; The Wall Street Journal, “Student Loans Are Emerging From Deep Freeze, and Borrowers are Confused,” 8/28/2023; and The Wall Street Journal, “How High a Rate Can Housing Take?” 8/23/2023

      An Ingredient For Outperformance

      “In preparing for battle I have always found that plans are useless, but planning is indispensable.”

      –Dwight D. Eisenhower

      A unique feature of our tactical investment strategies is the process by which we “handoff” exposure among asset classes, from weaker to stronger. 

      Let’s use emerging markets as an example to illustrate our approach. Within our diversified portfolios, our systematic investing rules dictate when to increase and decrease this exposure based on price trends within the asset class. If a downtrend forms and holds, exposure is reduced. That begs the question of where the exposure is sent. Many other risk managers will send it immediately to cash or fixed income. This is a possibility in our process as well if certain conditions are met, but we don’t think it should be the first or only option.

      Instead, we have created a process for systematically moving along a chain of similar assets in search of stronger, positively-trending markets that may offer greater return potential than fixed income or cash. We call this our risk handoff strategy.

      Risk Handoff Strategy

      Going back to emerging markets as an example, instead of moving directly to cash, we will first look at the next closest comparable asset class. Within our portfolio construct, based on volatility and correlation, the next asset is foreign developed equities. If foreign developed equities are in an uptrend, we will move the vacated emerging market exposure there. If not, we will look at the next closest (U.S. equities) and so on down the chain. After all other equity-like options are exhausted, we end up with fixed income or cash equivalents.

      You may be asking why we bother with the additional steps. After all, this process is not without some potential cost in the form of realized capital gain.

      Well, our entire systematic investing process is rooted in a large amount of research over time that backs our conviction in efficacy data. The risk handoff strategy is no different. We believe an opportunity for outperformance exists versus a passive benchmark (and other tactical strategies) when we utilize a simple yet sophisticated series of steps to ease away from weaker assets and ease into stronger assets. Investing reality closely resembles Newton’s 1st law, which states that an object in motion tends to continue in that direction until/unless there is a major outside force, and an object at rest tends to stay at rest until/unless there is an outside force causing motion to begin again. This is not a predictive process but one that leans on the idea that price trends are more likely to persist for some time rather than to end. As we often say at Spartan Planning, we need to be ready for all the “what-ifs” but always deal in the “what-is”.

      Here & Now: Our Handoff to U.S. Equities

      This month’s set of allocation changes offers a great example of what we described above. Both foreign developed and emerging market equities are experiencing downtrends, resulting in a shift of some exposure to U.S. equities.

      During the last decade, there have been long stretches where U.S. equities have vastly outperformed their international peers (even while (or perhaps due to the fact that) the international indices had much more volatility):

      • U.S. – almost 200% return (Total Stock Market ETF Vanguard, VTI)
      • Foreign developed – 53% return (FTSE Developed Markets Vanguard, VEA)
      • Emerging markets – 32% return (FTSE EM ETF Vanguard, VWO)

      Compare those returns to the US Aggregate Bond Ishares Core ETF (AGG), which returned only 12%, and you see the potential value in being able to systematically shift exposure over time to stronger asset classes rather than immediately move to fixed income. We believe this is a key component in maximizing compounding, as well as an area where trend following shines.

      In addition to this long-term perspective about the relative strength of U.S. equities, let’s consider some shorter-term context.

      In last month’s Note, we highlighted how 2023 was the third-best start for the S&P 500 in 30 years. In years that started strong, the average return for the remainder of the year was approximately 9.4%, as highlighted by the graphic from last month:

      Best Starts to the Year for the S&P 500

      Source: GFD, SPY, 2/1/1993 to 7/26/2023

      Given the recent tendency of U.S. equities to outperform other asset classes over both short- and long-term timeframes, we have high conviction in this being the place to handoff international equity exposure in times like now, when emerging markets and foreign developed are in downtrends. Of course, this can’t guarantee anything in terms of outcome, but with our conviction to rely on a methodical process over unpredictable outcomes, we have confidence in the current positioning.

      We hold to the idea that to be different in terms of results (reducing catastrophic risk, reducing overall downside volatility, increasing risk-adjusted returns over time), you must be willing to be different in terms of process. We believe our risk handoff strategy is a great example of this. Being different can feel scary, but the reward comes from seeing how our approach over the long-term aims to best support you in staying on course to reach your goals.



      The Spartan Team

      Sourcing for this section:, Total Stock Market ETF Vanguard (VTI), 9/1/2014 to 8/28/2023;, FTSE Developed Markets Vanguard (VEA), 9/1/2014 to 8/28/2023;, FTSE EM ETF Vanguard (VWO), 9/1/2014 to 8/28/2023; and, US Aggregate Bond Ishares Core ETF (AGG), 9/1/2014 to 8/28/2023
      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