100 Level

Establishing An Investment Philosophy

Before buying a stock, mutual fund, ETF, or any other investment, it is best to think through what you want your portfolio to accomplish.  For most savers, the portfolio is expect to grow in size and eventually throw off sufficient income to see one through their retirement years and perhaps pass something on to children and a favorite charity.  Exactly what is my investment … [Read More...]

Benchmarking a Portfolio: Essential to Portfolio Management

Waterford, Virginia ITA Wealth Management readers know I am passionate about portfolio benchmarking and portfolio risk analysis.  To my knowledge, there is no better software program for the small investor than the TLH Spreadsheet, provided to all Platinum members.  We use two primary benchmarks in this spreadsheet, although four are available.  One is Vanguard's Total Stock … [Read More...]

300 Level

Portfolio Performance and Benchmarks

A few days ago there was a brief discussion concerning portfolio performance as it related to the ITA portfolios.  The question raised was, why are so many ITA portfolios lagging the VTSMX index fund?  The fundamental answer is that the VTSMX is not an appropriate benchmark unless the portfolio is only made up of U.S. stocks.  Note that VTSMX is comprised of stocks in the U.S. Equity market where … [Read More...]

Maintain Control of Portfolio

It is so easy to add bits and pieces to a portfolio to where it is out of control.  Several of the portfolios I track are in or getting close to this condition.  What happens is that an investor picks up information on a stock or ETF that appears too good to be true and that investment is added to the portfolio.  Sometimes the addition is in such a small percentage that it will … [Read More...]

200 Level

Five-Year Analysis of “New Portfolio”

As promised, Platinum members can see the asset allocation for a portfolio designed to take advantage of the economy when it is in a growth stage while defending against inflation, and to a lesser degree, deflation.  While the portfolio is not recession proof, there are aspect to the following list of ETFs that will buffer against a recession. … [Read More...]

Which ETFs To Use When Constructing A New Portfolio

Which ETFs do I recommend for different asset classes when putting together that first portfolio?  The first move is to decide which asset classes to use.  Twenty-five months ago I posted this Asset Allocation blog and little has changed over that time.  One error in the table is the position of VEA.  That ETF should be included in the Developed International Equities box rather than the Emerging … [Read More...]

400 Level

The Condition of Bonds Using Delta Factor

What is the current condition of bond ETFs and should they be part of the portfolio?  To examine this question one method of analysis is to apply the Delta Factor.  When I run a reversion-to-the-mean analysis on bonds, I use AGG as the reference or standard.  For equity ETFs I use the VTSMX total stock index fund.  In the following table each bond ETF is compared with the … [Read More...]

Sample Portfolio For Fidelity Clients

The following portfolio represents a sample of commission free ETFs available through Fidelity.  The efficient frontier shows an asset allocation plan that is so close to an optimized portfolio that the diamond and red dots are no different on the graph. Efficient Frontier:  The indicator for the optimum portfolio lies behind the diamond dot.  The Return/Risk ratio is just a bit over 0.5, quite … [Read More...]