Einstein Portfolio Review: 19 July 2011

Photograph:  Taken at a distance and cropped.

Since the last review of the Einstein Portfolio, shares of HYG were sold so as to bring the bond/income asset class back into balance.  Two asset classes are still out of the 25% Threshold range, but we are making good progress with the Einstein.  One limit order is in place for International REITs.  When the order is filled attention will move to the small-cap blend asset class.

The screen shot below shows how well the Einstein is performing, and it is doing very well.  Particularly significant are the high values for the Sortino and Retirement ratios.

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Five Basic Rules of Investing


Basic Rules of Investing

A Review


Rule #1:

Think through why you are setting up a portfolio.  What are your goals?  Develop a Portfolio Policy. While there are many sub-rules within this fundamental rule, at least begin with some sort of Strategic Asset Allocation plan.  Many are given as examples on this blog. The planning stages requires 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 of investing. All investment books are not equal so follow strict reading guidelines.

Rule #2:

Follow “The Golden Rule of Investing.” Save as much as you can as early as you can — and continue to save. Understand compound interest. This rule includes getting out of debt, paying off credit cards every month, and learning to be a miser when it comes to spending money on frivolous items.  Not buying junk is also good for the environment.

Rule #3:

Face the fact that there is a very low probability you will outperform the total stock market. Recognize this fact early in life and become an index investor. Avoid picking individual stocks unless you are an elite investor. In many cases "elite" is defined as someone who trails market returns.  I do offer stock screens including the "Creme List."  Use these lists with great care.  It is best if the majority of the portfolio is invested in index ETFs.  It is also much easier to meet the SSA plan.

Rule #4:

Learn the power of Asset Allocation. Develop a well-diversified portfolio that covers all the major asset classes. Study the concept of correlation and build a portfolio around low correlated asset classes.  Once more, examples are provided on this blog.  To see all the examples, one must be a Platinum member.

Rule #5:

Learn how to monitor and maintain your portfolio. This includes learning how to track the Internal Rate of Return (IRR) for both the portfolio and an appropriate benchmark. Understand the concept of risk and work it into your portfolio monitoring model. Come up with a Return/Risk ratio as we have built into the latest version of the TLH spreadsheet.  I highly recommend serious investors learn how to use the TLH Spreadsheet.  Help sessions are available to Platinum members.

Bohr Portfolio Review: 18 July 2011

Shown in the first slide is the Bohr Portfolio Dashboard from the TLH Spreadsheet.  Overall, this portfolio is in good shape with respect to its Strategic Asset Allocation plan.  Once we are past the debt limit crisis, I plan to gradually build up the International REITs asset class.  Otherwise, this portfolio is well positioned in the various asset classes.  If new cash is added to this portfolio it will be put to use adding additional shares to those asset classes that are slightly under target.  The Large-Cap Value asset class is such an example.  According to my calculations, 64 shares of VTV would bring that asset class into balance.



Platinum membership is available for $5.00 per month.

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