100 Level

Preparing for 2012

Investing 101 Twenty-two days until we merge into January and begin to make errors writing 2011 instead of 2012 when dating a check.  Spend the next three weeks preparing your portfolio for the new year.  Check the broker statement and see which mutual funds, bonds, stocks, or ETFs need to be sold out of the portfolio in order to capture tax losses.  This assumes you have losses, … [Read More...]

Ten Biggest Investor Mistakes – # 7

  ITA Wealth Management Mistake #7:  Lack of Portfolio Plan   Do you have a portfolio plan and is it written down?  If you can lay your hands on a plan, you are a rare investor.  What is involved in specifying a Strategic Asset Allocation plan? … [Read More...]

300 Level

Screening For Dividend Stocks

Reducing Portfolio Risk With Stocks If you have been following the recent comments you noticed the recommendation to add a few highly selected stocks to a core of ETFs so as to reduce portfolio risk.  It is possible to find individual stocks that have a low correlation with respect to ETFs such as VTI, VEU, VWO, etc.  Let's see how this works when seven dividend stocks are added to … [Read More...]

Market Performance Impacts Efficient Frontier

Does portfolio performance significantly impact the efficient frontier curve?  To answer this question, I selected over 30 commission free (from TDAmeritrade) ETFs to run a test that included the last bear market and the recent bull market.  The first time frame ran from 3/15/2007 through 3/15/2009.  March of 2009 was the bottom of the great bear market of 2008 and early 2009.  The second run … [Read More...]

200 Level

Portfolio Construction the ITA Way

David Swensen writes in his "Unconventional Success" book, "Construction of a financial-asset portfolio involves full measures of science and art.  The science encompasses the application of basic investment principles to the problem of combining core asset classes in an efficient, cost-effective manner.  The art concerns the use of common-sense judgment in the challenge of incorporating … [Read More...]

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...]

400 Level

Bullish Percent Indicators: 15 March 2013

All the major markets increased in value this week, indicating more individual stocks are turning bullish based on Point and Figure (PnF) analysis.  However, the percentage of stocks is now so high there is little headroom available for future expansion.  If I were to extract one sector ETF out of what can be considered an over-bought market it would be VFH, the financial index from … [Read More...]

Modifying the Faber Global Tactical Asset Allocation Model

As mentioned in the last blog, I highly recommend ITA readers take the time to download and read Mebane Faber's article, A Quantitative Approach to Tactical Asset Allocation. This blog entry explains a number of modifications or variations to the "Faber Model."  Faber uses five asset classes in his Global Tactical Asset Allocation model and they are as follows. U.S Equities or Stocks  -  … [Read More...]