100 Level

Trading Is Hazardous To Your Wealth

Portfolio turnover is a problem for investors. It is a much larger problem than most realize. Swensen writes in “Unconventional Success,” “In an industry characterized by a long litany of shockingly dysfunctional behaviours the frenetic churning of mutual-fund portfolios stands near the top of the list. In 2002, the weighted-average turnover of equity mutual-fund portfolios … [Read More...]

Active vs. Passive Decision

Active vs. Passive Management If the decision to handle your own investments is the answer to question #1 in this series, then going Passive is a no-brainer. The evidence for the passive approach to investing is so overwhelming anyone but Warren Buffett taking the active route needs to study statistics. Goldie and Murray write, "The Efficient Market Hypothesis asserts that no investor will … [Read More...]

300 Level

Portfolio Changes

This morning I walked through the Strategic Asset Allocations for each portfolio and lowered the bond allocation to something close to 10% in each portfolio. The reason for making this Tactical Asset Allocation change is tied to my concern interest rates will rise. With rates as low as they are, the probability of them going lower is very low as they are not going below 0%. It makes sense to push … [Read More...]

How Are Your Stocks Doing?

Using Morningstar and Yahoo-Finance to compare stocks and ETF performance. Here is an exercise that will prove informative to investors who construct portfolios using stocks. Follow these instructions. Make up a list of the stocks in your portfolio. Go to Morningstar and determine which asset class or style box each stock occupies. Type PAYX in the Quotes option and then scroll down the … [Read More...]

200 Level

Active vs. Passive Investing: Part 3

Section Three of the Active vs. Passive paper deals with the non-trivial problem of how to measure portfolio returns.  This is a nasty problem for mutual fund money managers as clients are moving cash in and out of their portfolios at different times.  This cash flow has nothing to do with the managers style of management.  To comply with the Association for Investment Management … [Read More...]

Value Oriented Portfolio

Last evening a value oriented portfolio was mailed to me so I thought I would run it through a Quantext Portfolio Planner analysis.  Unfortunately, three of the thirteen ETFs have "short records."  This simply means the data does not extend back a minimum of three years. The ETFs with limited data are: MGV, VXUS, and VSS.  Nevertheless, here are the results. To view this … [Read More...]

400 Level

“Delta Factor” Bond Projections

Periodically, I'll post the "Delta Factor" projections for a few bonds used in a number of the portfolios tracked here at ITA Wealth Management.  Few changes occur over time and that is why these projections are posted infrequently.  In the following table of ten ETFs, I used a 50-month time frame so as to bridge the last bear market while not exceeding accurate data for … [Read More...]

Risk-Parity Portfolio: What Is It And What Does A Risk Portfolio Look Like?

Reducing Risk Through Risk-Parity Risk-Parity: Have you heard of the term or seen reference to this style of portfolio construction?  Join the crowd if this is new to you, even though the Risk-Parity idea has been around for quite a few years.  Risk-Parity is an alternative approach to portfolio construction where assets are allocated based on risk rather than allocation according to … [Read More...]