100 Level

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...]

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...]

300 Level

Low Risk Portfolio: Part II

A variation of the low risk portfolio posted yesterday is found below.  Since VCLT has a limited historical record, I removed it from the portfolio and added 5% through HCP, another dividend paying stock.  Both projected return and risk are a little higher in this portfolio as compared to the one posted yesterday.  Since the changes were so slight, the variations in the key metrics … [Read More...]

Madison Portfolio Review

Since the last Madison update 33 days ago, shares of TLT, RWX, and DBC were sold and the available cash was used to pick up shares of VTI - all in keeping with the Momentum-Optimization Model (MOM).  Of the eleven portfolios tracked here at ITA, the Madison is one of three where all the transactions are not available to Platinum members. Madison Dashboard:  The 26% allocated to international … [Read More...]

200 Level

Active vs. Passive Investing: Part 2

If you missed the first in this Active vs. Passive series of blog posts, I suggest you go back to this entry and print out the article, Active vs. Passive Investing Returns: Does Passive Outperform?  The second major point of the article focuses on indexers changing the subject and setting up straw-men arguments. "Indexing (passive) is the most appropriate strategy for retail … [Read More...]

Which Family of ETFs Should I Use?

Question sixteen (16) in this blog entry asked the following question.  "If one prefers Vanguard ETFs, but one's investment service company does not offer commission-free Vanguard ETFs, then is the best option to choose equivalent commission free ETFs that are offered (iShares)?"  Yes, is my answer, and others can chime in with your ideas. Vanguard, Barclay Global … [Read More...]

400 Level

Asset Allocation for ITARR Model

What does the Strategic Asset Allocation (SAA) plan look like for investors using the ITA Risk Reduction (ITARR) model?  Keep in mind that you can use the general ITARR principles laid out in a prior blog post.  The following screen shots are examples for the Madison Portfolio, another candidate for the ITARR timing model.  Below is the SAA plan if one populates the portfolio using … [Read More...]

Bullish Percent Indicators Show Positive Market Trends

Markets Are Bullish Bullish Percent Indicators (BPI) show increasing strength this week.  Everyone of the major markets improved as ITA readers can see in the following graph.  It is going to be interesting to see if this positive trend can be maintained throughout the summer months.  Don't plan on it. Move down to the 7/6/2012 row and compare each number with the number … [Read More...]