100 Level

Basic Financial Principles To Consider When Building A Portfolio

Basic financial principles to consider when building a portfolio include the following. Diversity across global markets Orientation toward equity or growth Inflation protection Low correlated assets Diversity across global markets will include both developed international markets and emerging markets.  To provide the necessary growth for retirement, the portfolio will need … [Read More...]

Solving Investment Problem #5: It is too late to start saving.

Balderdash!  It is never too late to begin saving for retirement.  Yes, it is preferred to follow "The Golden Rule of Investing" and start saving as early as possible, but it is never to late to begin.  Let me illustrate with a short story. I know of one family that had almost no savings by age 57.  The house was paid in full, but savings for retirement were close to … [Read More...]

300 Level

Preparing for the Gauss Portfolio Review

Prepping for the Gauss shows some changes are recommended.  That becomes apparent when one examines the Efficient Frontier graph shown below.  We need to increase ETFs that have a greater probability of bringing returns to the Gauss.  The second and third screenshots will help identify those ETFs. The following material is not available for publication elsewhere on the Internet. … [Read More...]

Second Run of Suggested Portfolio

I mistakenly dropped two securities from a recently submitted portfolio.  Here is an update of that analysis.  Once more, I approximated the percentage of shares held in the portfolio. Efficient Frontier:  The current portfolio lies quite close to the optimized portfolio.  This suggests few changes are needed.  Nevertheless, recommendations are coming in the third screenshot. Security … [Read More...]

200 Level

Portfolio Performance: 7 October 2011

While the past week was positive for all the portfolios on an absolute scale, large-cap stocks continued to perform better than globally diversified portfolios.  Therefore, portfolios tracked by the TLH Spreadsheet either remained even or lost a little ground to the VTSMX benchmark.  Tough times in Europe are not helping ETFs such as VEU or emerging markets, VWO. The following data … [Read More...]

Active vs. Passive Investing: Part 6

Section Six of the Active vs. Passive Investing paper includes a number of salient points.  The author begins his argument with this position. "The academic research seems to avoid addressing this issue head on.  There are always very good reasons to disregard their conclusions due to methodology.  One really objectionable practice is to pretend to be measuring … [Read More...]

400 Level

Portfolio Risk: Advantages of Semivariance

Semivariance: Preferred Risk Measurement Portfolio risk is given lip service, but rare is the investor who takes pains to actually measure the risks involved in the makeup of their portfolio. It is common to hear an investor indicate they have a well-diversified portfolio if it is made up of more than 15 to 20 stocks. The correlation between the investments might be a mystery, yet the claim is … [Read More...]

Gauss Portfolio Review: 22 May 2012

Photograph: Annular solar eclipse taken by my friend and fellow physics teacher, Dave Cross.  Image taken near Redding, California on May 20, 2012. As one of the five ITARR portfolios, the Gauss is an important test model for risk reduction.  Of the eight critical asset class represented by specific ETFs, the following are priced below their 195-Day Exponential Moving Averages and … [Read More...]