100 Level

Retirement Mistake #5: Underestimating Life Expectancy

Not only are we living longer, but we are living healthier lives.  When planning for retirement, what age should one project as the end-of-life year?  When running out retirement projections using the Monte Carlo calculations within the Quantext Portfolio Planner software, I use 100 as the end-of-life year when testing the probability of running out of money.  There are many assumptions that go … [Read More...]

Top 12 Investment Books: A Revised List

Are you looking for high quality investment books?  If so, I have a new list of twelve (12) books to read.  Platinum members are familiar with many of these books as they show up on several lists by going to All Categories and clicking on Books. It is always difficult to hone down the list to as few as 12 books.  There are at least three more I could have easily listed. Other … [Read More...]

300 Level

Return and Risk Relationship

What is the relationship between return of a portfolio and the associated risk involved? Quoting from an “Active vs. Passive” paper I found in my files. “High potential returns always involve high potential risks. There are no low-risk/high-return investments. Investment risk comes in many forms but, to most investors, risk means the potential for losing investment capital and … [Read More...]

Closer Examination of the ITA Index

What are the weaknesses in the ITA Index?  While the ITA Index is a major step forward in meeting all the qualifications of portfolio benchmarking, it does contain flaws.  The concept is sound, but the way it is handled within the TLH Spreadsheet is not completely accurate.  To understand the weaknesses requires the reader to "get into weeds" of the details of how the Internal Rate of Return (IRR) … [Read More...]

200 Level

Starting From Scratch: The Logic Behind the “Swensen Six” Portfolio

When it comes to building a portfolio, David Swensen's general guidelines provide numerous strong starting points.  His portfolio satisfies requirements of numerical diversification, equity orientation, and functional diversification.  While Swensen does not recommend specific tickers in his book, Unconventional Success, he lays out basic guidelines I consider vital to portfolio … [Read More...]

Portfolio Performance – 22 October 2010

The following data table exhibits the latest portfolio performance information through October 22. Two critical measurements are found in the last two columns, the Sortino Ratio (SR) and the Retirement Ratio (RR). Of the ten portfolios tracked using the TLH spreadsheet, most showed a slight decline in the SR and RR values since last posted. Other data to pay attention to is the difference between … [Read More...]

400 Level

Preparing the Maxwell for TAA Action

Platinum members interested in the quantitative approach to improving returns and reducing portfolio uncertainty for the Maxwell take note.  This morning shares of VTV and VOE were sold making room for VTI, VEU, VWO, VNQ, and RWX.  Check out the asset allocation plan below for this portfolio. … [Read More...]

Why Pay Any Attention to the Bullish Percent Indicator?

Are there logical reasons to support paying attention to the Bullish Percent Indicator?  Simply put, the Bullish Percent Indicator (BPI) draws special attention when the market or market sectors are overbought or oversold.  When the BPI exceeds the 70 percent level, it is time to be wary of the market.  Demand is high and supply is low.  Everyone that wants in the market and … [Read More...]