100 Level

What Are The Disadvantages of Index Funds?

This morning I noticed a reader was searching for disadvantages associated with index funds, so I decided to do a little internet searching to find some of the drawbacks, if any.  As soon as one delves into this question, up pops the issue of passive vs. active investing.  Here are a few resources I located that deal with the question - are there disadvantages to using index funds?  I include … [Read More...]

Exactly What Is The Momentum-Optimization Model?

Exactly what is the Momentum-Optimization Model (MOM) and how does it work?  The very first step in this process is to define what securities one wishes to use to build the portfolio.  This is easier managed and accomplished with index investments vs. selecting individual stocks.  For example, one is likely to choose VTI to always have some role in the portfolio whereas a well-known stock such as … [Read More...]

300 Level

Nine Stocks That Pass The Valuation Stock Screen

Within the American Association of Individual Investors (AAII) "Stock Investor Pro" software program are several valuation measurements.  These valuations include the following. Earnings per share Dividend Cashflow Free Cashflow Sales In the screen shown below, I am looking for companies that are currently priced below each of the five valuation screens.  I … [Read More...]

Portfolio Review – Franklin

Franklin Portfolio Reviewed In contrast to the recent review of the Kepler Portfolio, where the asset allocation plan is in balance, the screen shot below shows a portfolio that is heavily oriented toward large cap asset classes.  To be fair, the Franklin is a very young portfolio and it came with a pre-existing asset allocation condition.  We worked on the Kepler portfolio for several … [Read More...]

200 Level

Portfolio Performance Data: 2 September 2011

Due to migrating the ITA Wealth Management blog from one hosting site to another, I lost the Portfolio Performance data table for last week.  In the process of updating the table this week I observed changes over a two week period instead of the normal one week interval.  All stocks made absolute gains over the last two weeks, but lost ground on a relative scale.  In other words, … [Read More...]

Gauss Portfolio: Updated Dashboard Reflecting Risk Reduction Model

The Gauss Portfolio is now ready for a 30-Day nap.  With all the critical ETFs above their 195-Day Exponential Moving Averages (EMAs), all required purchases were made this morning.  The following Dashboard shows the asset classes are in balance. … [Read More...]

400 Level

Semi-Variance: The Better Risk Measurement

Photograph: Government buildings in Lisbon, Portugal Updating Sortino and Retirement Ratios Risk Management Users of the TLH spreadsheet will want to update the semi-variance calculation in the SR worksheet after the market closes and all the index data is available.  To make sure you have the latest data, wait until at least three hours after the market closes so all the benchmarks are … [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...]