A blended investment style for all markets can lead to high returns with low risk.
Read More...AAII 2013
Follow-up information for 2013 AAII presentation “Dynamic Portfolio Construction in the Context of Comprehensive Wealth Management.”
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Carnival of Passive Investing – #25 – Gingerbread House Edition
Passive investing is like a ginger bread house, a sweet and beautiful harmonious selection of treats which work well together to build your financial house.
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Why invest in the emerging markets?
Four reasons not to abandon a brilliant allocation that includes emerging markets simply because of short term fluctuations.
Read More...How are foreign stocks doing compared to stocks in the United States? Fall 2012
Sometimes the medium term trend seems to weigh more heavily in our minds than the long or short term trends.
Read More...Valuable Property
“Real estate investment trusts should be much more than an optional selection in a balanced investment portfolio.”
Read More...Why We Don’t Rebalance
“Perfectly rational individuals exhibit changing risk aversion that makes it hard for them to rebalance into high-return assets that have had steep price declines.”
Read More...Four Reasons Convertible Bonds Are Flawed
Generally speaking, financial complexity is a curtain behind which the finance industry can extract its fee. When the curtain is pulled back, convertible bonds fail to add value for four specific reasons.
Read More...Risk – Return Decisions
Portfolio construction begins with the most basic allocation between investments that offer a greater chance of appreciation (stocks) and those that provide portfolio stability (bonds). There is no such thing as a safe investment that pays market rates of return.
Read More...Emerging Market Bond Funds
Emerging market bonds are an attractive way to get a higher yield, but historically they have come with higher volatility and a high incidence of default. But that has been changing.
Read More...Marotta’s 2012 Gone-Fishing Portfolio
A gone-fishing portfolio has a limited number of investments with a balanced asset allocation that should do well with dampened volatility. Its primary appeal is simplicity. As a secondary virtue, it avoids the worst mistakes of the financial services industry.
Read More...Marotta’s 2012 Gone-Fishing Portfolio Calculator
A gone-fishing portfolio has a limited number of investments with a balanced asset allocation that should do well with dampened volatility.
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When large cap is relatively cheap it will outperform small cap
Currently large is relatively cheap and small cap is relatively expensive. For that reason, the R1000 or S&P 500 should outperform the R2000 small cap.
Read More...Using Dynamic Asset Allocation to Boost Returns
Think of static asset allocation as where to set your sails and dynamic asset allocation as a way to keep your balance as your boat glides and sometimes bounces through the waves.
Read More...The Shiller Ten-Year P/E Ratio
What we would really like to measure are the changes in price (P) that cause a company with a good long-term track record to look relatively cheap. Economist Robert Shiller created just such a measurement.
Read More...Style Boxes and the Efficient Frontier
The Marotta allocation method is a proportionally weighted allocation based on the square of each Sharpe ratio. Squaring the Sharpe ratio drastically reduces asset categories in proportion to their distance from the efficient frontier.
Read More...Rebalancing asset classes and subcategories
Diversifying your portfolio means finding assets that have value on their own merits but do not move exactly alike. Here are the principles on building and rebalancing asset classes and subcategories.
Read More...Asset Allocation and the Efficient Frontier
Crafting portfolio asset allocations is a combination of art and engineering. Just as a blending of colors can produce cerulean, so a blending of indexes produces a unique shade of risk and return.
Read More...$ ?s: Dividend Portfolios Carry Hidden Risks (Part 1)
Dividend investors are too easily lulled into the temporary comforts of portfolio income.
Read More...Capital Gains Tax Rising
Starting in 2013, pending further legislation, the capital gains tax will go up to 20%.
Read More...The Efficient Frontier
The efficient frontier measures all investments on a scale of risk and return. Risk is commonly placed on the x-axis, and return is placed on the y-axis.
Read More...Burton Malkiel Picks Bonds as ‘Worst Asset Class for Investors’
Even if the overall inflation rate is only 2.25% in the next 10 years, an investor who holds a 10-year Treasury until maturity will realize a zero real return after inflation.
Read More...Value: The Third Factor of Investing
A stock’s valuation is measured on a continuum from “value” to “growth” In broad strokes, value stocks are cheap and growth stocks are expensive.
Read More...Size: The Second Factor of Investing
The second factor of investing is size as measured by a stock’s total capitalization. Over time small cap will outperform large cap even after factoring out measurements of volatility.
Read More...CAPM: The First Factor of Investing
Modeling investment returns seeks to find an equation to predict your expected returns as much as possible. The simplest equation for the markets would be “Return equals 11.71%.” This has been the average return from 1927 through 2010, the zero factor model.
Read More...Roth IRA Recharacterization 2012: Undoing a Roth Conversion
Nearly everyone is an excellent candidate for a Roth conversion this year. You can always undo part or all of a Roth conversion with what’s called a recharacterization, so you can’t convert too much.
Read More...Roth IRA Conversion 2012: A Roth Conversion Calculator
Nearly everyone is an excellent candidate for executing a Roth conversion this year. But it is helpful to have a target amount in mind before you begin.
Read More...The Absolutely Last Chance for a Massive Roth Conversion
A tax tsunami is coming at the end of this year. This will be your last opportunity to safeguard your assets in a lifeboat and avoid getting swamped with taxes.
Read More...Freedom Investing 2012
Now at year end, I will review how freedom investing fared in 2011 and in the decade since 2002.
Read More...Mailbag: How do you measure how far out of balance a portfolio is?
We compute an asset allocation deviation or “out of balance” number for each household’s primary retirement assets and rebalance to lower this number.
Read More...$ ?s: Investment advice for those who don’t need the money
Q: I am a 65-year-old retired widow and I have a large IRA. How should I invest if I don’t need this money?
Read More...Indexing Works
“Many investors think active managers can shift out of stocks in time to stem losses in bear markets. Not true.”
Read More...Debt, Uncertainty and Volatility in 2011
The world markets groaned as the burden of the rising American debt and the European deficit weighed down more productive countries.
Read More...The House That Bogle Built
Learn about the index preferred by the person who invented index funds with the Vanguard S&P 500. And no, it isn’t the S&P 500.
Read More...The Devil’s Invention
“A blindfolded chimpanzee throwing darts at The Wall Street Journal can select a portfolio that can do just as well as the experts.”
Read More...How should we manage a non-profit endowment?
“There exists a timeless and flexible process for successful investment management decision making that is specifically tailored for Investment Stewards.”
Read More...Video: Where Do You Invest? Learn All Six Asset Classes
Most investors invest in only one and a half of the six asset classes. Learn where to invest in all six and how to tilt in each to over-emphasize appropriate categories.
Read More...Being Reasonable
“One of an advisor’s greatest challenges? Directing client expectations – and meeting them with portfolio performance.”
Read More...Book Review: The Investment Answer
When Gordon Murphy, an investment banking veteran, was told he only had six months to live, he decided to use his last days to write a book aimed at changing the way most individual investors think about investing.
Read More...The Talmud Strategy
“Let every man divide his money into three parts, and invest a third in land, a third in business and a third let him keep by him in reserve.”
Read More...Your Portfolio Needs Rebalancing
Most investors do not have a balanced portfolio. And by chasing investment returns they miss the easy money they could make from having a good asset allocation in the first place and rebalancing it periodically.
Read More...Investing Mostly in Bonds Means a Lower Lifestyle in Retirement
In the midst of this turmoil, especially after this past summer’s sharp drop, many investors wonder if they should put all of their investments into something safe and avoid the markets altogether.
Read More...Video: Even Investment Losses Can Save You Money
In the process of building wealth, saving a penny on your taxes is just as important as earning a penny in the markets.
Read More...Is My House an Investment?
Just because something costs a lot doesn’t mean it is an investment. An investment is something that pays you money.
Read More...Money Questions: Benchmark Your Retirement Savings
Q: I just hit the big 5-0, and my retirement date is now in the foreseeable future. How do you suggest I assess the performance of my 401(k) and investment accounts? Do you have any benchmark recommendations? I would like to know if I need to make changes or if I should stay the course. [...]
Read More...Mailbag: Is there a certain Roth you recommend?
I’m in my 20s and I’m just getting started in the working world.I’m also looking at a Roth IRA. Is there a certain Roth you recommend?
Read More...Mailbag: Which of these 401k investment choices do you recommend?
I’m in my 20s and I’m just getting started in the working world. Which of the attached 401k investment choices do you recommend?
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