100 Level

Analyzing Return and Risk for U.S. Equity ETFs

We frequently read investment summaries as follows.  I pulled the following information from Harold Evensky's book, Wealth Management. Size is significant.  Small stocks have higher standard deviations than large stocks. Book value is significant.  Stocks with low Price/Book ratios have higher returns than stocks with high Price/Book ratios. Adjusted for book value … [Read More...]

Portfolio Construction: Asset Allocation Percentages Are Vital To Success

 Photograph: Fisherman in Greek Islands   This Blog is dedicated to helping the beginning investor build and monitor a portfolio.  Here are a few of the basic guidelines. Skew the portfolio toward small-cap ETFs and play down large-cap ETFs.  Evidence for this shows up in the Portfolio Performance data tables. Emphasize value over growth as value outperforms growth … [Read More...]

300 Level

Mosaic Portfolio Lookback – September 30, 2008

Bear Market Analysis of 2008 Investors with a memory of 2008 know that desperation was in everyone's mind.  How far could the market decline and when would it stop?  Continuing with our look-back theme, what information can we glean from the QPP analysis and what were the Delta Index signals? There is nothing I can see in the following data that throws up any warning flags and we … [Read More...]

Benchmarking the Portfolio

Benchmarking Portfolio Establishing an appropriate benchmark for a portfolio is essential if one is serious about investing. Avoiding portfolio benchmarking is an act of self-deception. Exactly what is the purpose of a benchmark and what are the requirements for a fair and reasonable benchmark. Here is one definition of benchmarking.   In the investing world, the S&P 500 is … [Read More...]

200 Level

Einstein Portfolio Review: 22 August 2011

This business week begins with an update of the Einstein Portfolio, an excellent example for the small investor.  This morning I picked up another 30 shares of RWX in an effort to bring International REITs back into balance.  Back on 8/8 25 shares of VEU were added to the Developed International Markets asset class.  Limit orders are in place to pull that class back up to … [Read More...]

Active vs. Passive Investing: Part 12

This is the last in a series of 12 blog posts where I rebut the Active vs. Passive Investing paper.  Section Twelve (12) of the paper contains is a very clever argument.  The conclusion is that retail investors outperform the market.  However, arguments are not the same as evidence.  Nevertheless, here is the argument. If you accept the measurement of passive returns to … [Read More...]

400 Level

Performance of “Ivy Portfolio”

Platinum members who have been following the development of the ITA Risk Reduction model know that I based the ITARR system on the model laid out in Faber and Richardson's book, The Ivy Portfolio, and a modeling system I used back in the 1980s when I was co-authoring an investment newsletter.  ITA readers using the ITARR model will find the following link of interest. … [Read More...]

What Is The Meaning of Those X’s and O’s?

This morning a question was posed as to the meaning of the X's and O's in the PnF graphs.  One good source of information is StockCharts.  Another excellent source is Thomas Dorsey's book, Point & Figure Charting. The older and less expensive version will work fine. At the heart of PnF graphing is the law of supply and demand.  When the demand for a stock exceeds … [Read More...]