Below is the QPP analysis of a portfolio suggested by an ITA reader. The portfolio is made up from a wide array of index funds and ETFs. The projected return of 4.44% immediately indicates this is a conservative portfolio as it is projected to return 2.6% below that projected for the S&P 500. The projected standard deviation is also low at 8.1%, and the Risk/Volatility ratio at 0.55 comes in a little below our goal of 0.60. The diversification metric is 34% or below the 40% standard.
Yesterday I uploaded a "Delta Factor" data table using four years of historical data. Today I am posting another table. I added a few ETFs, but the main difference is that I am using three instead of four years of historical data. Note the major difference in the projections for the future. All the red is due to the analysis beginning with the market in steep decline followed buy a great rise. This is one of those situations were the "stern of the boat" is in a trough and the "bow of the boat" is at the crest of the wave. Expect the ship to level out or expect a so-so market over the next year. The four-year data analysis is looking at a "level ship" whereas the three-year data shows a very different picture. It is difficult to know which picture portrays the more accurate vision for the coming market.
Portfolio Performance Data Table
Finally – this was a better week for the broad equity markets. Once more, large-cap U.S. stocks outperformed the international equities, but overall, most of the portfolios tracked here at ITA Wealth Management moved ahead.
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Investing Made Simple*
Here are a few simple suggestion to get investors off on the right foot. These suggestions apply to experienced as well as beginning investors.
- Educate yourself as you begin to save. You could do a lot worse than visit this blog on a regular basis.
- Save more than you think you will need and begin the saving plan as early in life as possible.
- Build the portfolio around index funds or index ETFs. My preference is ETFs.
- Learn what it means to manage a portfolio. Use the TLH Spreadsheet as your portfolio tracking software.
- Monitor the Internal Rate of Return (IRR) of the portfolio and eventually graduate to where you can measure the Sortino Ratio of the portfolio. Select a benchmark for the portfolio or develop a customized benchmark such as the ITA Index.
- Read several of the Top Investment Books.
- Take out a Platinum membership. It will pay you back.
* Some of these ideas were presented several months ago.