100 Level

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...]

Ten Cardinal Rules of Investing

  Ten Cardinal Rules of Investing   Below are ten cardinal rules of investing.  If followed, investors will avoid 90% of the problems that plague most investors planning for retirement. 1.  Invest frequently and early in life.  This is The Golden Rule of Investing. 2.  Buy index funds or ETFs rather than individual stocks. 3.  Be patient and don't … [Read More...]

300 Level

Quantext Portfolio Planner Analysis of Faber Ivy Portfolio

As promised, here is the first of several Quantext Portfolio Planner (QPP) evaluations of the portfolios mentioned in an earlier post.  In this QPP analysis I'll look at the Faber-Richardson Five ETF portfolio.  Equal percentages are allocated to each ETF so there is no fudging with the percentages to increase return or reduce risk.  This array of ETFs is a solid starting point … [Read More...]

Manage Your Own Money

  Should you hire a money manager or do it yourself?  Consider the following assumptions and arguments. 1.  As the first given, the portfolio belongs to you, not the hired money manager.  This is an obvious, yet important point. 2.  Assume the advisor fees amount to 100 basis points or 1%.  Fees may be lower, but for ease of calculation, I will use the 1% … [Read More...]

200 Level

Goal Setting

What are your retirement investment goals?  Do you even think about setting goals?  Would this statement fit your situation? "I really would like to be able to pay for my children's education, retire, and enjoy my retirement."  While this statement covers a broad range of expectations, it is not specific.  Over what time frame do you intend to cover or reach these … [Read More...]

Portfolio #2: Ages 26 – 35

Portfolio #2 adds a few more ETFs and gives up nothing in performance.  In fact, the projected standard deviation (portfolio uncertainty) drops from 20.1% to 17.6%.  Diversity is increased from 8% to 29% and the Portfolio Autocorrelation drops two percentage points. … [Read More...]

400 Level

Delta Factor After 400 Point Drop

ITA Wealth Management readers likely want to know what the Delta and Delta Factor projections are indicating after the 400 point drop yesterday.  The buying trend has started, although we still could be early in the cycle.  The reason I think we may be early is that it is not unusual for the Delta Factor to make projections a few months early.  Two time ranges are shown in the … [Read More...]

Current “Delta Factor” Data

With all the work put into analyzing the "Delta Factor," what are the current market conditions telling us if analyzed over several periods.  In the table below, the highlighted row is the standard three-year period used for analyzing DR.  For this snapshot, I wanted to see if different periods made any difference in the outcome. … [Read More...]