When setting up a Basic Portfolio, investors want to include at least the "Big Six" asset classes from the U.S. equities market. Then add some bonds, developed international markets, emerging markets, and REITs. For larger portfolios, commodities, international REITs, and international bonds are common additions. Remember, this is a basic or core portfolio.
This blog entry will show how the Delta Factor can play a role in improving portfolio performance. Right now we place risk or uncertainty in the background, but not completely forgotten. To gain confidence in the merits of the Delta Factor we need to see what a Basic Portfolio looked like near the last market high and low. Let's first see what the different classes were telling us back on October 1, 2007 when the stock market was near its recent high. Before getting into the details, here is a QPP analysis of the Basic Portfolio.
Note that the portfolio does not look to shabby. The Return/Uncertainty ratio could be higher, but overall, it looks acceptable considering I did nothing special with the asset allocation plan.
Note that I consider this Critical Information.
Platinum membership available for $5.00 per month. Membership fees are contributed to MEDA Trust. Search the term for more information.