100 Level

A Random Walk Down Wall Street: 10th Edition

Burton G. Malkiel's "Random Walk" Book Every investor should have "A Random Walk" on their bookshelf, ready to pull off, read, review, study, and read again.  Burton Malkiel gets it right.  Build the core of the portfolio using index funds or index ETFs.  If you want to sprinkle a few individual stocks into the mix, go ahead.  That is where the … [Read More...]

Five Rules of Investing

  Basic Rules of Investing* A Review   Rule #1: Develop a Portfolio Policy. While there are many sub-rules within this fundamental rule, at least begin with some sort of policy. This may require a lot of reading and I recommend a number of good books on this site. Put in the advanced time reading and it will save you heartache and thousands of dollars over a lifetime. All … [Read More...]

300 Level

Sample 4 ETF Portfolio

Another Platinum member asked for an evaluation or analysis of this four (4) ETF portfolio. Efficient Frontier:  This EF graph is instructive as one can easily see how the four ETFs are influencing the final outcome.  IEF and TIP dominate the portfolio and move the current (diamond dot) mix of ETFs down in the lower left portfolio of the graph.  Increasing percentages to SPY and EFA would … [Read More...]

Mosaic Portfolio Lookback – June 30, 2008

June 30 of 2008 was a period when the market was in a deep funk, and sinking.  In the following analysis we put the Mosaic Portfolio in that situation and analyze it, now knowing what happened.  What were the signals at that time?  Since the end of the first quarter, the projected return dropped slightly and the Return/Uncertainty ratio declined.  The diversification percentage … [Read More...]

200 Level

Why Sector Allocation Is Diversification Deficient

There are investors who build their portfolios around sectors instead of asset classes.  The following optimization shows why sector allocation comes up short when it comes to portfolio diversification.  As a reminder, asset classes cover all sectors, but sectors do not cover all asset classes. … [Read More...]

Schrodinger Portfolio Faces Off Against Similar DFA Asset Allocation

The Schrodinger Portfolio is our premier passively managed portfolio that has been operational since 12/01/2000.  Looking back over the past five years (6/29/2007 - 6/29/2012), how well has this portfolio performed when compared to a portfolio made up of DFA mutual funds with a similar asset allocation plan?  The results are rather stunning in favor of the Schrodinger. Schrodinger … [Read More...]

400 Level

VNQ: A Look At The Technical Indicators

Vanguard's REIT ETF, VNQ, is part of every portfolio I track and due to its importance merits close attention. I track a number of technical indicators for each ETF in the portfolios and here are a few of them. One of the first metrics I examine is my own "Delta Factor" which is a reversion-to-the-mean projection of how well an ETF is expected to perform with respect to the broad … [Read More...]

Point & Figure Scaling: Why Use Percentage Instead of Traditional Option

A situation arose this morning regarding whether X's or O's are showing up in the right-hand column of the Vanguard's emerging market ETF, VWO.  If the scaling is set to 'percentage' O's are found in the right most column.  However, if the scaling option is set to 'traditional,' X's show up in the right-hand column.  Which is preferred?  To … [Read More...]