100 Level

Blog Clues For New Users

If you are new to ITA Wealth Management and are having some difficulty finding your way around the blog, here are a few hints. 1) I just introduced a new Category which you will find in the right sidebar.  Open up the Categories pull-down menu and look for Free Information under Level 100.  Only a few of the free blog posts are identified, but this will get you started. 2) A good way … [Read More...]

Active, Index, Passive or Mosaic Investing

Investing Styles Are you an Active, Index, Passive or Mosaic investor? Answer this question and one focuses at the heart of investing. Rather than answer this question with one blog post, I will strive to define and explain the different styles over a series of entries spanning into next week. While I've written on the subject of investing styles before, I'm sure there are new … [Read More...]

300 Level

“New Normal” Three-Year Risk Reduction Analysis

In the prior blog entry I used five years of data for the QPP analysis of the "New Normal" portfolio when the allocated percentages were based in equal risk rather than allocating assets according to capitalization.  In this QPP analysis I use three years of data instead of five. This blog entry is not for publication elsewhere on the Internet. … [Read More...]

X-Ray of Gauss Portfolio

The following two screen shots are the "X-Ray Analysis" of the Gauss Portfolio by Morningstar.  As you look over these results, how would you improve the make-up of this portfolio?  What ETFs would you add or subtract to improve the quality of this portfolio? I was unable to capture all the information in one screen shot and that is why the information is broken into two … [Read More...]

200 Level

Portfolio Performance: 16 September 2011

After a strong week of market gains, much of the rise was domestic as the international markets, commodities, etc. were a drag on our diversified portfolios.  A few portfolios showed gains in the Retirement Ratio, but the relative performance was lacking when measured against the VTSMX benchmark.  Holding SDS and cash had negative effects on both the Curie and Newton portfolios. To see … [Read More...]

Retirement Portfolio: Part Three

Part three of this series of retirement preparations shows how one might optimize the array of ETFs presented in the earlier two blog posts.  In the following screen shot I set up a number of constraints and one was to hold the Diversification Metric to the 40% standard.  I also included BND, Vanguard's Total Bond ETF in the mix of investments.  Even by forcing none of the bonds to hold more than … [Read More...]

400 Level

Sharpe Ratio: Why I Prefer the Sortino and Retirement Ratios

The Sharpe Ratio is a measure of return-risk for a portfolio or individual investment.  Like many concepts that lend themselves to mathematics, it is easier to understand what the Sharpe Ratio means if written in the form of an equation. S = (R - T)/Sigma    (My editor does not have the correct symbol for Sigma.) Developed by Stanford Professor, William F. Sharpe, the return … [Read More...]

Sortino Ratio

Sortino Ratio: Calculation Steps Calculating the Sortino Ratio is not too difficult assuming you have historical data for the Internal Rate of Return (IRR) of the portfolio and the IRR for a benchmark. Here at ITA Wealth Management our primary benchmark is Vanguard's Total Market Index Fund, or VTSMX. Eventually we plan to move to the ITA Index, a customized benchmark for each portfolio. In … [Read More...]