100 Level

Fama & French’s Three-Factor Model

This is a revision of a blog I posted over a year ago. In 1992, Fama and French broke out their three-factor model and changed the way we construct portfolios. Again, quoting from Hebner as to how the three-factor model advanced the relationship between return and risk as it relates to a portfolio. “The Fama/French model added two other fundamental determinants. Fama and French sought to … [Read More...]

Working With The Basic Portfolio

Eventually I plan to move more of the ITA portfolios toward the following 20 ETFs.  In some portfolios I need to broaden the diversification and in others I need to reduce the number of securities in an effort to simplify.  Reducing cost is another motivation as all but two of the following ETFs can be purchased free if one is a TD Ameritrade client.  The two exceptions are GTU and VHT.  In this … [Read More...]

300 Level

Portfolio Performance – 20 August 2010

For some reason, I expected to see greater decline in the Internal Rate of Return (IRR) values this week.  In a number of cases, the portfolios picked up a little ground on the performance of the VTSMX. Obviously, this is due to the broad diversity of the asset classes held in the portfolios. In a few cases, the ITA Index increased significantly and that is due to the addition of … [Read More...]

New Feature To Be Added To ITA Wealth Management

A new feature or service will be added to ITA Wealth Management sometime over the next six weeks.  For those investors who choose to add individual stocks, such as high yield or "Piotroski stocks," a new analysis will be added.  This is software I use several years ago, but never included it in the ITA offerings. … [Read More...]

200 Level

Swensen Six With & Without Stocks

Benefits to Super Charging Portfolio With Stocks Two portfolios are displayed below.  In the first we have a portfolio made up of only six ETFs.  I call this the Swensen Six. To point out some critical features, note the projected average annual return of 7.89% or 7.9% rounded.  This is based in the assumption the S&P 500 will return an average annual return of 7.0%. The … [Read More...]

Retirement Rule #4: Maximize Contributions to Employer Retirement Savings Plan

If you are fortunate and work for an employer who has any sort of matching savings plan, by all means take advantage of this offer and maximize your contribution.  To do otherwise is to leave good money on the table.  For example, assume your employer will match dollar for dollar any contribution you make to a saving plan up to 4% of your salary.  Further, assume you are earning $40,000 per year.  … [Read More...]

400 Level

Reference Portfolio Analyzed

Using an array of ETFs, primarily commission free with TDAmeritrade, I ran a Momentum-Optimization Model (MOM) analysis for the purpose of showing new and experienced investors how the MOM can be used  to manage a portfolio.  Not everyone will be interested in this model as it does require more monitoring than the buy and hold approach. Consider MOM to be one level up in sophistication as … [Read More...]

ITA Risk Reduction Update

Photograph: One of the "Painted Ladies" in Eureka, California The broad market is taking a 3.5% hit today, not a trivial move to the downside.  Those of you following the ITA Risk Reduction (ITARR) model now have the opportunity to see the benefits in action.  While we are not fully employed with this model, holding off with VEU and VWO purchases worked quite well as both ETFs … [Read More...]