Portfolio Management

I recently received the following paraphrased questions from a prospective client and here were my replies.

Recently, we lowered the duration of our U.S. Bond portfolio and increased the amount which is inflation protected. This article explains the reasons for this change.

Home bias is the tendency of investors to invest a majority of their assets in companies domiciled in their home country. Recency bias is the tendency for humans to believe that what has happened recently will continue to happen in the future.

We are constantly reviewing our portfolios’ asset allocations in order to bring them more in line with our Investment Committee’s best practices. Here is a summary of our recent changes.

We would expect the switch to Frankiln funds to save our clients 0.11% annually due to the lower expense ratio.

We believe these 26 companies will be an effective weight to add foreign healthcare to our portfolios.

Having a financial advisor who has discretion over your accounts is only a good idea if your financial advisor is covered under the fiduciary duty and is fee-only.

In these ways, rebalancing can be of great value to a long-term investor’s portfolio.

That is not what anyone means by the term “rebalancing.” The misuse of the term on Investment News was glaring.

As a result of new fund additions, we added five new country-specific funds to our Schwab Institutional Intelligent Portfolio asset allocations.

Oddly, this technique might involve selling a bond position in the taxable account for a small capital gain, and buying that exact same position in an IRA in order to keep the portfolio in balance.

“Sell the bounce” is never a good strategy because of the first word.

During a down market like this one, now is your chance both to harvest capital losses as they occur and rebalance your portfolio.

The selection of what products we purchase or avoid for clients is based solely on what we believe gives our clients the best chance to meet their goals.

Check your own funds. You are likely paying too much for your mutual funds.

How to measure the rebalancing bonus and the benefits of staying invested after a market drop.

There is a science to portfolio construction. Selecting a random group of companies is just as bad as selecting a random group of funds.

The Marotta Investment Committee typically builds portfolios with average expense ratios of about 0.24%.

“Think of a stock as a machine that generates cash every few months.” Smaller companies that you have never heard of usually have a better return than the better known larger companies.

Talking about the question “How should you manage your money in 2018?” this show covers a lot of ground over 23 minutes of conversation.

Exact asset location depends on the percentage of a portfolio held in each of the three types of accounts as well as the percentage of the portfolio which is to be allocated to each selected sector. But the boost in after-tax returns is well worth the effort.

Prudent investment practice is as much about knowing what not to do as it is about knowing what to do.

Long term investing does not require making quick emotional responses.

To protect yourself from behavioral errors, write down your investment plan.

Even the most brilliantly crafted investment plan has to be given time to work.

Index investing seeks to track the return of a portion of the market. The opposite is active management.

Portfolio design and rebalancing is both a science and an art. Knowing that rebalancing boosts returns is useless unless you as the investor follow through.

Rebalancing can both boost returns and lower volatility, but most investors do not understanding how.

See our review of the two pros and nine cons of how Schwab monitors and rebalances portfolios.

You ought to know what it is that you are rebalancing.

Adherence to the fiduciary standard is all about process.

This kitten doesn’t time the markets. Be more like this kitten.

“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.”

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.

When choosing between two bond funds with similar returns to team with a stock fund, choose the bond fund with lower correlation with the stock fund you’re selecting

To build real wealth, you need specific wealth management tools.Most families have less than half of the accounts they really need, and young newlyweds often only have a checking account.

Retirement planning consists of a wild scatter plot of potential projections. Navigating successfully through possible outcomes requires regular corrections and adjustments.

Rebalancing between asset classes boosts returns and decreases volatility. But setting your asset classes based on sectors of the economy is not an effective strategy.

In this formula is deep wisdom, both for portfolio construction and for determining which categories are worth regular rebalancing.

Diversifying your portfolio means finding assets that have value on their own merits but do not move exactly alike. A critical investment metric called “correlation” is used to construct a portfolio most likely to meet your personal financial goals.

There isn’t a better time to invest than today. Getting started can be intimidating, but these simple steps will help you through your first few years of investing.

There isn’t a better time to invest than today. Getting started can be intimidating, but these simple steps will help you through your first few years of investing.

A year ago when the markets were all setting new highs, people were asking what they should do with their retirement portfolio. I answered, “Rebalance.” Now that the market is setting new lows, I get the same question, and my response hasn’t changed.

Rebalancing your investments can help boost your returns and minimize risk. This simple contrarian move can help you compound your investment gains over time. With the markets at an all-time high, this may be a good time to rebalance your portfolio.

The markets are brilliant long-term, but short-term they have the IQ of a gnat.

Buy when there is blood on the street and sell on the sound of the trumpet.

Delegating your morality to a fund’s screening process is like using a blunt instrument to do brain surgery.

Market timing is the attempt to switch a significant portion of your assets between different types of investments in an effort to maximize profits. If this is your investment strategy, good luck, because you’ll need it.

Good portfolios have low expense ratios and minimal trading costs.

There is an art to selecting the right investment vehicles for individual portfolios.