100 Level

Occam’s Razor and Investing

Establish Basic Principles of Investing What does Occam’s Razor* principle have to do with investing? Furthermore, what is Occam’s Razor?  The principle states that “Entities should not be multiplied unnecessarily.” The principle is attributed to the 14th century Franciscan friar, William of Ockham.  Isaac Newton stated the Occam’s Razor another way with this rule. “We are to admit no more causes … [Read More...]

Year End Portfolio Hints

This year, the last business day arrives on December 31st and that gives us a chance to balance our portfolios to the nearest penny. At least TDAmeritrade clients have a high probability of receive access to their statements before the market opens the following week. Go through your portfolio Monday and see if you have any tax losses you might want to capture in 2010. If the loss is small, I … [Read More...]

300 Level

Eight Asset Porfolio

Photograph: When I first walked Devastation Trail in late 1961 or early 1962, there was no vegetation to be seen as it was soon after the eruption. Consider the following portfolio that holds eight assets including cash.  In this analysis, I am using the 20-year treasury ETF, TLT, to represent cash, a substitution that gives the portfolio a slight boost over current money market rates.  … [Read More...]

Updating the Curie Portfolio: 5 October 2011

Below is the standard review for the Curie Portfolio.  Yesterday, all remaining shares of the ultra-short ETF, SDS, were sold out of the Curie.  The two SDS sales gave us a 7.8% Internal Rate of Return (IRR) for this particular ETF. adding value to the portfolio.  For a long time it looked like a loss would result from holding SDS, but the recent major market decline finally brought … [Read More...]

200 Level

Will An All Equities Portfolio Provide Superior Retirement vs. All Bond Portfolio?

We are trying to answer the assertion that the stock to bond ratio does not make a significant difference when it comes to retirement planning.  Yesterday, I posted two blog entries that dealt with the beginning arguments.  Here is the link to the first entry and the link to the second one where I focused on the all bond portfolio.  In this blog post I will show the results of an … [Read More...]

Update of Schrodinger Portfolio: 20 January 2012

The Schrodinger Portfolio was scheduled for an update yesterday, but I got caught up in activities surrounding the Madison Portfolio, one of the ITA Risk Reduction portfolios.  Long-time readers know the Schrodinger as the most passively operated portfolio I track.  It is rare we make a trade in this eleven-year portfolio.  Platinum readers can see the asset allocation plan in the … [Read More...]

400 Level

ITA Ratio*: What Is It Telling Us?

The three classical portfolio performance measuring instruments, all rooted in the Capital Asset Pricing Model (CAPM) are: the Sharpe ratio, the Treynor ratio, and the Jensen's alpha.  The most popular of these performance instruments is the Sharpe ratio so let's take a closer look at it, particularly since it is similar to the Sortino ratio. Sharpe ratio (SR) = (P - R)/SD … [Read More...]

Monthly Review of Gauss Portfolio

Reviewing the Gauss Portfolio this month is a bit different since I made some tactical asset allocation changes.  If you examine the Dashboard (extracted from the TLH Spreadsheet) you will note a few changes.  As a result of the changes, the asset allocation plan appears to be a bit "bloody."  That should change by next month as I have a number of limit orders in place … [Read More...]