Newton Portfolio Update: 11 June 2012

The following Dashboard and Performance Data is shown below for the Newton Portfolio.  This is one of the more complex portfolios and I am attempting to slim down the number of holdings.  With the market in a "negative state," now is not the time to be selling off assets in a reckless fashion.

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Restructuring Blog

Responding to a comment last week, I restructured the blog by laying out four different levels of information.  It may take a day or two for your browser to clear the cache so you see levels 100, 200, 300, and 400 under Categories.  The goal is to help readers know the level of difficulty found on this blog.  Most investors will want to read through the material contained in levels 100 and 200.  The "upper division" material is found within the 300 and 400 levels.

Separated from the different levels is the individual portfolio information.  In some cases, there will be an overlap.  Music and Miscellaneous are also categories outside the "course" material found in the different levels.

Misc:  The blog was down yesterday do to server issues.  I don't know what the problems were, but it was not an ITA issue.

Review of ITA Wealth Management

The ITA Wealth Management blog originated over four years ago. It was on February 14, 2008 that I wrote my first entry and published it on an old blog site that was hacked. I first began this effort as I wanted to learn something about blogs. I never intended to begin a serious investment blog, so what began as an experiment evolved into ITA Wealth Management. If one is going to write a blog, one needs a message and then hopes to capture an audience of readers. What did I know that might be of interest to Internet readers? Since I had a long experience with investing and had been through several phases that included mutual funds, individual stock selection, and index investing, I decided I could tell my story to those who want to avoid my mistakes.

A side benefit to writing this blog is that I continue to learn more about investing than I thought possible several years ago. In addition, I have made several "Internet friends" who share an interest in working on this investing problem, one for which there is no solution. At best, we try to put the laws of probability on our side, but never are absolutely sure we are doing it correctly. That is certainly one of the risks involved in this endeavor.

When I was teaching physics, I would tell my students that physics is one subject that helps us know what we know. Just saying something is true does not make is so. Regardless of the subject, I find it useful to keep the "clap-trap meter" tuned to the most sensitive setting. Keep asking the question, "How do we know what we know?"

When I lay out the fundamentals of investing, I am asking myself, and you should also ask yourself, is it true what I am writing and reading? For example, let me take an easy one, The Golden Rule of Investing or "Save as much as you can as Early as you can." I don't think anyone can argue with the truth of that statement. We then move on to something a little less certain and that has to do with the importance of asset allocation. Recent Ibbotson studies show AA is not quite as important as it was thought to be back in the late 1980s and early 1990s. Nevertheless, it is still quite important and should not be neglected. Again, ask yourself — is asset allocation important to successful investing?

Chapter 13 in Charles Ellis' 1998 book, "Winning The Loser's Game" is titled 'How to Lose.'  Ellis lists over a dozen mistake investors make that pushes them toward unsuccessful investing. Here are a few of his ideas and as you read each one, ask yourself if it makes logical sense. Don't believe it just because an expert wrote it in a book. The link I provide is for a later edition than the one I own.

  • Not composing — and writing down — your program of saving and spending.
  • Making investment decisions just for tax reasons.
  • Trying too hard — striving to get more from your investments or from your investment managers than they can produce repetitively and reliably over the long term.
  • Not recognizing that inflation is the investor's unrelenting adversary.

The above sure sound reasonable from my experience, but they need to be tested by each reader.

What are a few unique features of this blog and how is it different from other investment blogs?

  • Data of working portfolios is made available to investors. I don't know of another blog that provides quite the same level of detail as one can find on this blog. The information can be tested by readers. Again, this is getting back to the theme, how do we know what we know?
  • Instructions are provided as to how to use and implement the TLH spreadsheet.
  • The TLH spreadsheet provides a method for constructing a customized benchmark, something found only in very expensive software programs.
  • The Retirement Ratio and Sortino Ratio are risk measuring calculations that are not available to the small investor.  At least I have never found anything to measure risk using semi-variance methods.
  • Questions are encouraged and answered in a timely manner.
  • If requested, individual portfolios are analyzed.
  • This is a "how to" working blog.
  • ITA Wealth Management is a source of information for investors who want to dig deeper into the art of investing.

As you continue to follow this blog, keep an open mind, but question everything. Is there evidence to back up the basic principles laid out in these electronic pages? When in doubt or if ideas are not clear, feel free to ask questions. Asking and answering questions is how we all learn. Know that when I write something, I make every effort to state what I believe to be true based on the information I have available.