Possible Enhancement of ITA Risk Reduction Model

Is it possible to improve on the basic ITA Risk Reduction model?  Of course it is, but the question that immediately comes to the fore is how complicated does one want to get when it comes to reducing risk.  To review the original ITARR model, click on this link.  Once readers have the basic ITARR model in mind, take a look at the StockCharts graph for the VNQ ETF as shown below.

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Einstein Portfolio Review: 15 November 2011

Over the last few months I've watched portfolio after portfolio slowly lose ground to the VTSMX benchmark.  What is going on and why is this happening?  The asset allocation plans for the eight portfolios available to Platinum members contains international holdings such as developed international markets (VEU), emerging markets (VWO), and international REITs (RWX).  If one compares the performance of those ETFs with Vanguard's Total Market Index Fund (VTSMX) the separation we are observing begins to become apparent.  International holdings stagnated while possible solutions in Greece and Italy receive attention. International holdings are rebounding more slowly than U.S. Equities and I see this price separation as the primary reason the ITA portfolios are not keeping pace with the VTSMX benchmark.  While a reversal will eventually come, had we been using the ITA Risk Reduction (ITARR) model with all portfolios, we would not be falling behind the VTSMX, at least to the degree we are in this economic cycle.

Below is the latest analysis of the Einstein Portfolio.

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