100 Level

Solving Investment Problem #2: I don’t know where to begin.

For readers or prospective investors who don't know where to begin, one place to start is to click on the Category to the right titled, Beginning Investors.  My second recommendation is to read two short books.  The two easiest investment books that will put you on the right path are: "The Investment Answer" by Daniel Goldie and Gordan Murray and "The Elements of … [Read More...]

Gordon Equation Revisited

Back on December 16, 2009, I wrote the following over on the old blog. Market Return = Dividend Yield + Dividend Growth Rate is known as the Gordon Equation. This simple equation provides a way to predict long-term stock market returns, and we need to emphasize long-term.  Quoting Bernstein from his “Four Pillars of Investing” book, page 57, “…the Gordon Equation … [Read More...]

300 Level

What Should I Do If I Am Holding Cash?

What should I do if I am holding cash?  Is it time to move back into the market, and if so, how should I proceed?  Those are difficult questions considering the S&P 500 (VFINX) increased in value by 87.4% since January 20, 2009.  If one were to follow the Louis Rukeyser analysis, moving immediately into the market is the correct decision.  However, Rukeyser was using data … [Read More...]

Feynman Portfolio Study: Part 5

In Part 5 of the Feynman Portfolio Study I describe a method of "ranking" the assets in the Feynman Portfolio Asset List based on "Momentum". This results in a measure of ┬áthe "Relative Strength" of each asset. Platinum members and regular readers of this Blog will be familiar with the spreadsheets used in the analysis since Lowell uses them regularly. Top "ranked" assets are then chosen for … [Read More...]

200 Level

Asset Allocation Plan for ITA-RR

Below is the asset allocation plan for the new risk reduction portfolio.  Names suggested thus are Dirac and ITA-RR.  This portfolio would be appropriate for investors age 35 to 50 as the allocation to bonds is a tad over 30%. This allocation, combined with the 10% commodity allocation holds the projected volatility under 15%. … [Read More...]

Portfolio Performance Update

This week ended on a strong note with the broad market VTI up over 2% on the day.  However, that move was insufficient to pull the Maxwell and Euclid portfolios into positive territory. Portfolios available to Platinum members continue to do well when measured against the VTSMX benchmark. Only the Kenilworth is lagging and those numbers are exaggerated due to the short period this … [Read More...]

400 Level

Portfolio Risk: Advantages of Semivariance

Semivariance: Preferred Risk Measurement Portfolio risk is given lip service, but rare is the investor who takes pains to actually measure the risks involved in the makeup of their portfolio. It is common to hear an investor indicate they have a well-diversified portfolio if it is made up of more than 15 to 20 stocks. The correlation between the investments might be a mystery, yet the claim is … [Read More...]

Madison Portfolio Review Time

One of the five portfolios using the ITA Risk Reduction model is the Madison.  In preparation for the review we first look at the Dashboard to see if the asset classes are populated properly.  While there are a few out-of-balance classes, the percentages are nothing to worry about.  Most of the asset class are within the 25% Threshold range.  Not only are all eight critical … [Read More...]