100 Level

Sixteen ETF Portfolio

Low Risk Sample Portfolio Below is a modest sixteen (16) ETF portfolio that covers all the basic asset classes. The portfolio is projected to perform at a rate approximately 1% greater than the S&P 500 with a lower risk. The Diversification Metric (DM) at 37% is just a tad below our goal of 40%. With a little tweaking, would could likely elevate the DM. However, we need to keep in mind these … [Read More...]

Risk Management: How To Reduce Losses

On page 167 of Mebane T. Faber and Eric W. Richardson's book, "The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets" we read, "Our research has shown that returns are lower and volatility is higher when asset classes are below the 10-month moving average."  What investor is not interested in reducing portfolio volatility while increasing returns.  And possibly more … [Read More...]

300 Level

Valuation Stocks: Looking for Undervalued Companies

This morning I planned to post a list of what I call "Valuation Stocks" or a small collection of companies that meet particular valuation standards.  Below is the list of stocks that passed the numerous screens.  Unfortunately, the program crashed before I was able to capture a screen shot of the screens.  When I downloaded a clean copy of the program, my screens were … [Read More...]

ITA Index: How to Initialize

The ITA Index is a customized benchmark found within the TLH Spreadsheet.  It makes little sense to compare portfolio performance of most portfolios with the very popular S&P 500 benchmark (VFINX) as most portfolios include asset classes other than large-cap stocks.  ITA portfolios, for example, include developed international markets (VEU), emerging markets (VWO), bonds (BND, HYG, … [Read More...]

200 Level

Pay Attention to Your Portfolio: Sample Portfolio Included

Whether you are a beginning or experienced investor, it is important to review and update your portfolio annually if not monthly.  ITA portfolios are reviewed and updated every 33 days.  The updating difficulty is highly dependent on what securities are used to populate the portfolio.  If individual stocks are used the task is more onerous as each stock needs to be reviewed in detail.  Further, … [Read More...]

A Challenge to Active Management

Active vs. Passive Management Scores of papers and blogs have been written about the merits of passive vs. active management.  I've contributed my share and here is one of my earlier posts.  Readers will find more articles by moving over to the right sidebar and looking up Passive vs. Active blogs.  There are over 25 posts on this subject. When you read about active management outperforming … [Read More...]

400 Level

“Delta Factor” Equity Projections

Photograph: Fish trap used to catch juvenile salmon and steelhead that are making their way to the ocean. A recent question regarding whether or not VWO is a buy or a sell prompted me to run a Quantext Portfolio Planning (QPP) analysis on my list of equity ETFs.  Below is the the "Delta Factor" projection data table showing the five ETFs that have the greatest probability of doing … [Read More...]

Sortino Ratio: What Is It?

The following discussion of the Sortino Ratio may get a little "heavy" for some readers.  However, this information is very important for the serious investor, so stick with me and follow along.  Users of the TLH spreadsheet are familiar with the Sortino Ratio as one of the worksheets is built specifically to calculate this number.  The equation is quite simple but very … [Read More...]