100 Level

Benchmark Requirements

What are the requirements for a proper benchmark? This issue comes up from time to time and I ran across it again in Richard Ferri's book, "The Power of Passive Investing." Here are the requirements, and I quote from his book. … [Read More...]

Return and Risk Relationship

What is the relationship between return of a portfolio and the associated risk involved? Quoting from an “Active vs. Passive” paper I found in my files. “High potential returns always involve high potential risks. There are no low-risk/high-return investments. Investment risk comes in many forms but, to most investors, risk means the potential for losing investment capital and … [Read More...]

300 Level

Maxwell Update: 29 July 2013

Review time has arrived for the Maxwell portfolio, one of the five test portfolios for the ITA Risk Reduction model.  The Maxwell gained 180 basis points over the ITA Index during the past two months.  Now we need to see some gains with respect to the VTSMX index.  The U.S. Equities market continues to be very strong compared to developed international and emerging markets. Efficient Frontier:  … [Read More...]

Is It Wise To Pay An Advisor For Access To DFA Funds?

Save the Fees Save the fees and manage your own money using low cost ETFs.  You are going to be dollars ahead and here is the evidence.  Let me describe the process I went though to come to this conclusion - and I am not finished with the analysis.  This data is not going to win me friends among DFA advisors. I logged on to one of the premier web sites on the Internet to find … [Read More...]

200 Level

Active vs. Passive Investing: Part 7

Section Seven of the "Active vs. Passive Investing" article is sumarized the following paragraph. "Some indexers never claim passive investing gives superior returns. They claim only that active investors do better than the benchmark some of the time, and worse some of the time, while passive investing gets rid of that risk by equaling the benchmark every time. They admit some … [Read More...]

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...]

400 Level

Point and Figure Checkup

Run each of your stocks, funds, and/or ETFs through a Point and Figure (PnF) checkup using this link.  Do you observe O's or X's in the right-hand column?  If the slope of the line is positive, relax.  However, if you find O's in the right-hand column and the slope of the line is negative, examine closely what is going on.  Is the price of the security above or … [Read More...]

Bonds and Income ETFs: Does It Make Sense To Include In Portfolio?

For several years word on the street was that interest rates would rise and bonds would fall in price.  That has not happened and all the "bond Eeyore's" have been wrong, including me.  With interest rates as low as they now are when will we see a turn?  According to the FED, interest rates will remain low so long as unemployment remains high.  That is the current correlation. What is the outlook … [Read More...]