100 Level

American Workers Unprepared

ITA Wealth Management is not so much a blog of how to make money as it is a blog to help investors achieve retirement goals.  According to recent Department of Labor statistics on retirement sufficiency, U.S. workers retiring in the 2050s will have saved only enough in their 401(k) accounts to replace an average of 22% of their pre-retirement income.  What is staggering is that 37% will have no … [Read More...]

A Very Basic Three ETF Portfolios

In response to the keep it simple blog post, here is a three ETF portfolio analysis.  The 30% allocation to bonds (BND) pulls down the projected return to 6.2%.  Allocating that percentage to bonds also holds down the projected volatility to 12.8%.  Note that this simple portfolio outperformed the S&P 500 over the past five years, and did it with a lower standard deviation. With only three … [Read More...]

300 Level

Avoid Losses

There is nothing quite so painful to the long-term investor as watching their portfolio experience a long and precipitous decline. Most of us experienced this in 2000 through 2002 and again in 2008 and early 2009. Diversification did not help all that much in the recent severe bear market. Asset allocation, no matter how carefully designed, did not perform as we expected. All asset classes seemed … [Read More...]

Einstein Portfolio Update: 12 June 2013

Here is the latest information on the Einstein Portfolio.  This review includes the Dashboard, Performance, Efficient Frontier, ETF Rankings, and Buy-Hold-Sell Recommendations.  We begin with the Dashboard. Dashboard:  Precious Metals (GLD) and Commodities (DBC) continue to be priced well below their 195-Day Exponential Moving Averages (EMA) so we are staying on the sidelines with those two … [Read More...]

200 Level

Thinking Through a Basic ETF Portfolio

Thinking through the process of constructing the following ETF rich portfolio several required specific goals be met. This material is not for publication elsewhere on the Internet. The portfolio needed to be simple.  While 15 ETFs are not exactly simple, neither is it overly complicated.  To simplify one could reduce the number of bond and treasury ETFs. All ETFs must be commission free … [Read More...]

Schrodinger Portfolio Faces Off Against Similar DFA Asset Allocation

The Schrodinger Portfolio is our premier passively managed portfolio that has been operational since 12/01/2000.  Looking back over the past five years (6/29/2007 - 6/29/2012), how well has this portfolio performed when compared to a portfolio made up of DFA mutual funds with a similar asset allocation plan?  The results are rather stunning in favor of the Schrodinger. Schrodinger … [Read More...]

400 Level

Retirement Target Return

Retirement Target Return What is the Retirement Target Return (RTR) all about?  RTR is one of the factors found in the Retirement Ratio (RR) risk management equation. ITA Wealth Management readers know the importance of measuring portfolio risk and RTR is part of that process. Here is exactly how RTR is determined. RTR is the sum of the current inflation rate plus the percentage one … [Read More...]

What Is A Good Sortino Ratio?

Before answering the above question, one needs to know what the Sortino Ratio is measuring.  Here is the Wikipedia definition.  To keep this idea as simple as possible, write down the equation, S = (R - T)/DR.  S = Sortino Ratio. The R is the Internal Rate of Return (IRR) for the portfolio.  If you are using the TLH Spreadsheet*, the IRR is calculated for you by the Excel™ SS. T is the … [Read More...]