Tweaking the Five-Asset Class Portfolio

"Holy Grail" Portfolio

Investors will find this simple portfolio of great interest.  I tweaked the percentage allocations and inserted Vanguard ETFs where appropriate. Vanguard and iShares ETFs track each other so that was not the key factor in coming up with this portfolio.

Readers will note that I have the hedge ETF, SDS waiting in the wings. I will try to remember to post results if one moves 5% from VTI or IWM over to SDS. It makes quite a bit of difference in the projected SD value.

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Huffington Post Article

Remove the sphygmomanometer from your arm before reading this Huffington Post article on the 10 Biggest Wall Street Lies.

Twenty ETF Portfolio

Ivy 20 Portfolio

Now we move to the most complex of Faber's Ivy Portfolios. This 20 ETF portfolio consists of 13 to 17 asset classes depending on how one breaks down the different ETFs. To keep all of these Ivy Portfolios simple, we invest the same percentage in each ETF. A few of the ETFs in this portfolio have not been operational for a full three years. This required the time frame to be truncated. Note the 6/13/2008 start date or the same starting time we used in the August analysis.

As expected, the projected return is lower than it was in August. The risk is also lower. The projected Return/Risk ratio is the same for both analysis as is the Diversification Metric. Using the make-up of these 20 ETFs, there is so little advantage over the 5 ETF portfolio that it is not worthwhile messing about the additional complexity. One better extract more from the additional effort when putting together a portfolio with this many asset classes.

Platinum memberships are available for the low rate of $5.00 per month. Consider treating yourself to a membership for 2011. Profits from this blog go to begin businesses through MEDA Trust. Thus far 215 businesses have been launched through this effort.

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Sixteen ETF Portfolio

Low Risk Sample Portfolio

Below is a modest sixteen (16) ETF portfolio that covers all the basic asset classes. The portfolio is projected to perform at a rate approximately 1% greater than the S&P 500 with a lower risk. The Diversification Metric (DM) at 37% is just a tad below our goal of 40%. With a little tweaking, would could likely elevate the DM. However, we need to keep in mind these are projections and one dare not get carried away thinking these numbers can be counted on with certainty.

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Top 100 Countdown

Today begins the Top 100 Countdown of classical music selected by the listening audience of Regardless where you are on the globe, you can stream this station through the Internet. Go to Listen Now near the top of the page and then on the next page, click on Stream Live.

I will be updating my Top 100 spreadsheet as the selections are played. Enjoy the greats over the next six days.  The number one pick will be played on New Years Eve. I understand Honorable Mentions will be aired on New Years Day.

Holiday Music

Interested in listening to Holiday music of high quality.  Look no further than this AllClassical URL. Look for Listen Now and then select the Live Stream option.

Portfolio Performance: 24 December 2010

Portfolio Performance Data Table

With the market closed today, this portfolio table is coming out earlier than normal.  The following data shows the updated information for the seven portfolios tracked by Platinum readers, plus the Madison, Euclid, and Maxwell portfolios. A few of the portfolios gained ground on both the ITA Index and VTSMX benchmarks. Overall, the changes were minor.


Portfolio Performance - 12/24/2010

Portfolio Last Update Launch Date Tracking Tool Port. IRR ITA Index Diff Port. vs. ITA Index VTSMX IRR Diff. Port. vs. VTSMX Index IR SR RR
AA-Mosaic 11/30/2010 07/21/1999 Captool 2.08% NA NA -0.41% 2.49% 0.05 NA NA
Curie 12/24/2010 12/26/2007 TLH SS 4.5% 5.7% -1.2% -0.1% 4.6% NA 12.5 3.7
Mosaic2 11/30/2010 07/19/1999 Captool 4.45% NA NA -0.61% 5.06% 0.15 NA NA
Newton 12/24/2010 06/02/2008 TLH SS 9.4% 5.4% 4.0% 6.5% 2.9% NA 3.4 3.4
Passive Port. 11/30/2010 12/01/2000 Captool 4.76% NA NA 0.02% 4.74% 0.69 NA NA
Schrodinger 12/24/2010 12/01/2000 TLH SS 4.9% 9.5% -4.5% 2.7% 2.2% NA 4.3 4.3
Jane 11/30/2010 02/14/1997 Captool 8.78% NA NA 3.03% 5.75% 0.53 NA NA
Einstein 12/24/2010 06/30/2008 TLH SS 14.6% 19.2% -4.7% 11.0% 3.5% NA 6.5 6.5
Gauss 11/30/2010 02/19/1997 Captool 8.96% NA NA 3.0% 5.96% 0.22 NA NA
Kepler 12/24/2010 11/01/2008 TLH SS 20.8% 32.4% -11.6% 20.5% 0.3% NA 0.1 0.1
Scrappy 11/30/2010 08/14/2008 Captool 10.56% NA NA -3.83% 14.39% NA NA NA
Bohr 12/24/2010 08/14/2008 TLH SS 12.3% 16.7% -4.4% 4.6% 7.7% NA 0.8 0.8
Kenilworth 12/24/2010 08/18/2010 TLH SS 27.8% 27.5% 0.3% 53.8% -26.0% NA -0.2* -0.2*
Projects 11/30/2010 12/01/2000 Captool 5.13% NA NA 0.02% 5.11% 1.32 NA NA
Washington 11/30/2010 06/18/1999 Captool 2.8% NA NA -0.19% 2.99% 0.27 NA NA
Maxwell 12/24/2010 12/25/2000 TLH SS 0.4% 2.2% -1.8% 4.0% -3.6% NA -0.2 -0.2
Adams 11/30/2010 06/18/1999 Captool 3.03% NA NA -0.19% 3.22% 0.71 NA NA
Euclid 12/24/2010 06/30/1999 TLH SS 1.1% 2.0% -0.9% 4.1% -3.0% NA -0.1 -0.1
Jefferson 11/30/2010 03/13/2008 Captool 4.87% NA NA -3.41% 8.28% NA NA NA
Madison 12/24/2010 03/13/2008 TLH SS 4.8% 2.8% 2.0% 9.3% -4.5% NA -0.4 -0.4

Platinum membership is available for $5.00 per month.

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Year End Portfolio Hints

This year, the last business day arrives on December 31st and that gives us a chance to balance our portfolios to the nearest penny. At least TDAmeritrade clients have a high probability of receive access to their statements before the market opens the following week.

Go through your portfolio Monday and see if you have any tax losses you might want to capture in 2010. If the loss is small, I suggest not messing with the sale and need to rebalance next year.

Photograph: Saint Nick is resting before the long journey tonight.

Active Managers: How Well Do They Do?

For a little excitement I Googled the phrase, "Active Managers Outperform the Market." Here are a few of the top sites I uncovered with this search.

1. Active Managers' Market-Beatings Claims Debunked. Give the irritating ad time to clear.

2) Active Managers Didn't Outperform in This Bear Market.

3) Active Managers Take a Beating in 2010.

4) Can Active Investment Managers Consistently Beat the Market.

5) Why index funds beat active strategies.

I think readers get the idea. John Bogle got it right when he established index funds at Vanguard.

New Hosting Site

If you are reading this message you have arrived at the new hosting site for ITA Wealth Management. This site should load faster than the old site.  If this is not the case, let me know.

To make sure you pick up all the blog entries, be sure to read material from December 17th through December 22nd on the old site at   From today on, the latest material will be here at


Lowell Herr