How-To-Guide: DIY Investing Tool

How-To-Guide: DIY Investing Tool

February 17, 2015 Tool How-To-Guides
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(Last Updated On: January 6, 2016)

Our DO-IT-YOURSELF Investing Tool is Live!

You can build your own stock selection and asset allocation models using our DIY Investing tools.

How to Access the Tool?

Step 1: Click “Our tools” tab from our main website page.

Alpha Architect Tools
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Step 2: If you already have a username and password, please sign in. If you are new to our tool, just take 30 second to sign up and use it for free!

Alpha Architect Tools Sign in
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Step 3: Click on the “DIY Investing Tool.”

Alpha Architect Tools DIY Investing Tool
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Robust Asset Allocation

 

Our “Robust Asset Allocation” seeks to deliver a low-complexity, high-liquidity, diversified, risk-managed retirement portfolio. This tool provides users the simple “Robust Asset Allocation” weights. Click here to read more.

Robust Asset Allocation_DIY Weights
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Simple Value and Simple Momentum Tool

Simple Value Tool: This tool helps you identify stock opportunities using a simple value strategy.  The list include the cheapest mid and large market capitalization U.S. stock names sorted on Earnings before interest and taxes (EBIT) divided by total enterprise value (TEV), or EBIT/TEV. Our own research–Quantitative ValueHorse-Race paper, and our simulation study–as well as others, have shown that enterprise multiples are one of the most effective valuation metrics.

Note: You may also hit “Market Cap” to sort these stocks by market cap, or hit “EBIT/TEV Percentile” to sort them by EBIT/TEV Percentile. The stock list is updated at the start of each month.

DIY Investing_Simple Value
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Simple Momentum Tool: This tool helps you identify stocks using a Simple Momentum Strategy. Click here to learn about Momentum. This list includes the top U.S. stocks (Mid and Large Cap) sorted on the cumulative total return from months t-2 through t-12. Names are updated each month.

Note: Similar as Simple Value, you may sort the stock names based on different metrics and download the list to your own computer.

DIY Investing_Simple MOM
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 Simple Asset Allocation Tool

Simple Asset Allocation: This matrix provides allocation weights for a given asset class (in columns) and a chosen allocation model (in rows). The four model asset allocation strategies are “Risk parity“, “Momentum“, “Equal Weight” and “Moving-Average“. We also provide “combination” strategies that incorporate elements from several asset allocation algorithms.

A description of the asset classes and models are outlined below:

IVY 5 ASSETS
  • SP500=Standard and Poors 500 Total Return Index
  • EAFE=The MSCI EAFE Total Return Index
  • REIT=FTSE NAREIT All Equity REIT Total Return Index
  • GSCI=S&P GSCI Total Return Index
  • US_10Yr=Merril Lynch US Treasury 10-Year Treasury Futures Total Return Index
MODELS
  • risk_parity=unlevered risk parity for IVY 5.
  • risk_parity_ma=unlevered risk parity for IVY  with 12-month moving average trading rule.
  • mom=equal-weight IVY 5 shifted by relative 12-month momentum.
  • mom_ma=mom strategy with 12-month moving average trading rule.
  • risk_parity_mom=unlevered risk parity weights for IVY 5, adjusted by relative 12-month momentum.
  • risk_parity_mom_ma=unlevered risk parity weights for IVY 5, adjusted by relative 12-month momentum, with a 12-month moving average trading rule.
  • ew_index=equal-weight IVY 5.
  • ew_index_ma=equal-weight IVY 5 with 12-month moving average trading rule.
SOURCES

Risk Parity Background:
http://www.cfainstitute.org/learning/products/publications/faj/Pages/faj.v68.n1.1.aspx

Momentum Background:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1726443

Equal-Weight Portfolio Background:
http://www.theivyportfolio.com/

Moving-Average Background:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=962461

 

USING THE SIMPLE ASSET ALLOCATION WEIGHTS

All the weights are dynamic and will be updated at the beginning of each month.

The table below shows the suggested weights as of 01/04/2016, which are the weights that apply for the month of January 2016.

DIY Investing_Simple Tactical Allocation
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The DIY Investing Tool is available here.


Note: This site provides NO information on our value investing ETFs or our momentum investing ETFs. Please refer to this site.


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Please remember that past performance is not an indicator of future results. Please read our full disclosures. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Alpha Architect, its affiliates or its employees. This material has been provided to you solely for information and educational purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such. The factual information set forth herein has been obtained or derived from sources believed by the author and Alpha Architect to be reliable but it is not necessarily all-inclusive and is not guaranteed as to its accuracy and is not to be regarded as a representation or warranty, express or implied, as to the information’s accuracy or completeness, nor should the attached information serve as the basis of any investment decision. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from Alpha Architect.


Definitions of common statistics used in our analysis are available here (towards the bottom)




About the Author

Wesley R. Gray, Ph.D.

After serving as a Captain in the United States Marine Corps, Dr. Gray earned a PhD, and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management that delivers affordable active exposures for tax-sensitive investors. Dr. Gray has published four books and a number of academic articles. Wes is a regular contributor to multiple industry outlets, to include the following: Wall Street Journal, Forbes, ETF.com, and the CFA Institute. Dr. Gray earned an MBA and a PhD in finance from the University of Chicago and graduated magna cum laude with a BS from The Wharton School of the University of Pennsylvania.


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