Could You Grade the Peter Dag Portfolio?

A reader asked: “Could you give a grade for the Peter Dag Portfolio? He always claims to be in Timer Digest’s top five for market timing year over year.”

There is not enough information at the Peter Dag Portfolio to evaluate meaningfully the forecasting or investment record of its editor, George Dagnino. The seven years of annual returns listed on the home page represent a very short sample that may have a start date favorable to the offeror. The testimonials excerpted are subject to unrepresentative sampling (cherry-picking) and therefore do not support rigorous testing. There is formal research relevant to his emphasis on “stock selection based on sector analysis and business cycles”. See:

“Asset Allocation Driven by Four Economic Phases”: “…adjusting asset class allocations according to key economic indicators may help investors manage risk and/or boost long-term returns.”

“Do the Chemicals and Metals/Mining Industries Lead the Broad Equity Market?”: “…evidence from simple tests indicates that the chemicals industry and the precious metals and mining industry do not reliably lead or lag the broad U.S. equity market. Chemicals (precious metals and mining) tend to move with (independently of) the broad stock market on a quarterly basis.”

“Sector Rotation Based on Monetary Policy”: “…investors can significantly outperform the broad U.S. stock market by rotating into cyclical (noncyclical) sectors when the Federal Reserve discount rate begins falling (rising).”

“Perfect Sector Rotation”: “…realistic assumptions about business cycle predictability make it unlikely that an investor/trader can outperform the broad stock market using a sector rotation strategy. Moreover, an arguably easier-to-time flight to cash during the first half of recessions offers greater potential.”

“Market-Leading Industries”: “…some industries (such as financial and retail positively, and petroleum and metals negatively) lead the overall stock market. However, the indications are not economically significant for traders.”

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