100 Level

If I Were Starting A New Portfolio Today

What would a portfolio look like if I were starting from scratch today?  Here are a few basic principles to consider before making the initial Strategic Asset Allocation decision. Begin by using index funds or index ETFs.  My preference, as Platinum members well know, is to use "non-managed" index ETFs.  Yes, someone needs to make a decision what goes into the ETF, but for practical purposes … [Read More...]

Portfolio Construction the ITA Way

David Swensen writes in his "Unconventional Success" book, "Construction of a financial-asset portfolio involves full measures of science and art.  The science encompasses the application of basic investment principles to the problem of combining core asset classes in an efficient, cost-effective manner.  The art concerns the use of common-sense judgment in the challenge of incorporating … [Read More...]

300 Level

Passive Investing: How to Solve a Complex Problem

Photograph: Tug-of-Toy Photograph:  In memory of Cody, victor in the Tug-of-Toy contest. Passive investing through the use of index ETFs is a solution to a complex problem.  Here at ITA Wealth Management, we guide individual investors through the process of setting up a Strategic Asset Allocation (SAA) plan, maintain it, and monitor it for return vs. a benchmark as well as risk … [Read More...]

“Delta Factor” Projections Merit Caution

This morning I ran into the following article, "Billionaires Dumping Stocks."  Heavy hitters, including Buffett, are shedding U.S. Equity stocks.  After reading this article I thought it prudent to run a "Delta Factor" analysis on a basic portfolio of 20 ETFs.  Platinum readers will find the QPP analysis below and the "Delta Factor" projections for 13 equity and seven bond ETFs. … [Read More...]

200 Level

Retirement Planning Mistake #2

As a young boy my parents read to me every night and Aesop's fables were frequently on the menu.  I still recall the ant and grasshopper story where the ant was busy in the summer preparing for the winter while the grasshopper wasted time foolishly.  The picture from the fable that still lingers is that of a frozen grasshopper the following winter.  That story is fundamental to The Golden Rule of … [Read More...]

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...]

400 Level

How Important Is Portfolio Risk or Portfolio Uncertainty?

The Importance of Managing Portfolio Uncertainty If 2008 taught us one lesson it is that portfolio risk is just as important as portfolio return. In the following analysis I want to examine some of the risk details of the Passive Portfolio (PP) or the Schrodinger Portfolio. At the end of 2007, this portfolio had a value of $234,160 and by the end of 2008, one year later, the value dropped to … [Read More...]

Tilting the Portfolio With Help From the “Delta Factor”

In an earlier post I made the case for using the "Delta Factor" as a "tilting" model.  Since market timing is generally considered to be a losers game, is there use for a probability argument as to when it makes sense to overweight a particular asset class, assuming the investor is constructing a portfolio based on a Strategic Asset Allocation plan?  In the prior post … [Read More...]