Shiller P/E Implied Market Return
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A low P/E 10 bodes well for the next 20 years of investing, whereas a higher P/E 10 suggests a lower expected return.

How Is the Shiller P/E Calculated?
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The Shiller P/E ratio is computed by taking the current price and dividing by the average inflation-adjusted earnings from the previous 10 years.

Why Is the Regular P/E Ratio Deceiving?
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The highest peak for the regular P/E was 123 in the first quarter of 2009. It was much higher than the historical mean of 15, yet it was the best time in recent history to buy stocks.

The Shiller Ten-Year P/E Ratio
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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.

Style Boxes and the Efficient Frontier
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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.

$ ?s: Dividend Portfolios Carry Hidden Risks (Part 2)
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Q: Do you recommend dividend-paying stocks? If not, what investment strategy do you recommend for retirees like me who are seeking income from our portfolios?

Asset Allocation and the Efficient Frontier
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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.

$ ?s: Dividend Portfolios Carry Hidden Risks (Part 1)
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Dividend investors are too easily lulled into the temporary comforts of portfolio income.

Capital Gains Tax Rising
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Starting in 2013, pending further legislation, the capital gains tax will go up to 20%.

The Efficient Frontier
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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.

Buffett is Winning $1M Wager with Hedge Funds
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Buffett estimates that he has a 60% chance of winning. This is in line with statistics suggesting that low cost funds beat high cost funds more than half the time.

Double-Taxed Dividends: Going Up
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The qualified dividend tax rate is currently at a maximum of 15%, as are capital gains. Starting January 1, 2013, dividend tax rates will go up to the investor’s ordinary income rate.

Value: The Third Factor of Investing
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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.

Size: The Second Factor of Investing
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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.

CAPM: The First Factor of Investing
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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.

$ ?s: Secondary Annuities Are Second Class
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Once you buy this product, you’re stuck. All structured settlement transfers must take place through a court order…

Freedom Investing 2012
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Now at year end, I will review how freedom investing fared in 2011 and in the decade since 2002.

In My Dream I Explained Why 2011 Was Not a Financial Mulligan
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I had a dream in which I saw a map similar to the one above and I heard myself explaining why 2011 was not a financial mulligan

Are All ETFs Created Equal?
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Much of the recent conversation about ETFs has to do with the hidden risks of “synthetic ETFs,” risks which are not present in their mundane relatives known as “physical ETFs.”

Mailbag: How Do You Measure How Far Out of Balance a Portfolio Is?
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We compute an asset allocation deviation or “out of balance” number for each household’s primary retirement assets and rebalance to lower this number.

Foolish Ideas
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“Successful active management is a fantasy stoked by the financial services industry.”

$ ?s: Investment Advice for Those Who Don’t Need the Money
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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?

Indexing Works
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“Many investors think active managers can shift out of stocks in time to stem losses in bear markets. Not true.”

Debt, Uncertainty and Volatility in 2011
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The world markets groaned as the burden of the rising American debt and the European deficit weighed down more productive countries.

The House That Bogle Built
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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.

The Devil’s Invention
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“A blindfolded chimpanzee throwing darts at The Wall Street Journal can select a portfolio that can do just as well as the experts.”

Being Reasonable
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“One of an advisor’s greatest challenges? Directing client expectations – and meeting them with portfolio performance.”

Book Review: The Investment Answer
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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.

The Talmud Strategy
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“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.”

$ ?s: The Quagmire of Socially Responsible Investing
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Q: I would like to see a portion of my investments make a difference in the world. Can you suggest an approach to socially responsible investing?

Dangerous New Rules if You Use Average Cost Accounting for Mutual Funds
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New rules go into effect January 1, 2012 which change the way you need to compute the cost basis for mutual funds if you use average cost accounting. We recommend you change the method you use to something which allows better tax management.

Investing Mostly in Bonds Means a Lower Lifestyle in Retirement
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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.

Mailbag: My Home is 32 Times What I Paid for It. Isn’t that an Investment?
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Although the house does not pay me any money on an ongoing basis, I think it will represent a very good return on my money invested should I decide to sell.

Is My House an Investment?
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Just because something costs a lot doesn’t mean it is an investment. An investment is something that pays you money.

Money ?s: Shorting Uncle Sam’s Debt
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Q: Is it now time to short Treasuries? What do you think about using inverse ETFs to play the inevitable bear market for U.S. bonds?

Mailbag: Which is Better, Vanguard Mutual Funds or ETFs?
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There are four minor advantages to using exchange traded funds instead of mutual funds.

The Disaster of Closed-End Mutual Fund IPOs
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Investors in this year’s fund IPOs should be protesting. Investors who got suckered by brokers have been massacred by fees and poor performance. Their total losses — hard to believe — total about $1 billion.

Money Questions: Benchmark Your Retirement Savings
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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 … Read More

Mailbag: Is There a Certain Roth You Recommend?
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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?

Mailbag: Which of These 401(k) Investment Choices Do You Recommend?
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I’m in my 20s and I’m just getting started in the working world. Which of the attached 401(k) investment choices do you recommend?

Mailbag: Which Investments Should I Fund First?
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I’m in my 20s and I’m just getting started in the working world. I would love to start funding my Roth and 401(k), but I have no idea where to begin!

Money Questions: Fleeing to Fixed Income
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What advice do you have for someone who is considering a strategy shift toward fixed income?

What Happened To the Dollar This Summer (2011)?
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Currency movements changed direction this summer and the dollar strengthened for a season.

Stock Funds Shed $29.29 Billion
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Investors pulled $83.31 billion out of stock funds during the summer months. Stocks drop when there are more sellers than buyers. And when there are outflows like this stocks drop precipitously.

What Happened This Summer (2011)?
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This summer many things that should do better over a long-term investment strategy did not. This situation is not unusual for one quarter’s worth of time. Such a result only makes reversion to the mean much more likely in the coming quarters.

Money Questions: Insights on I Bonds
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Q: I am receiving some extra cash as a result of maturing CDs. I want to make a safe investment that is protected against future inflation. We do not need this money, and so I am interested to know what you think of purchasing I bonds for our grandchildren. I have heard they can be tax free if used for college.

Radio: How to Win the CNBC Million-Dollar Portfolio Challenge
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David John Marotta was featured on radio 1070 WINA’s Rob Schilling show on September 13, 2011. The topic was the CNBC million-dollar portfolio challenge, and how it does not emulate a good real-life investing strategy.

How to Win the CNBC Million-Dollar Portfolio Challenge
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CNBC’s million-dollar portfolio challenge begins next week. Participants can trade a fictional account of stocks and currency. Prizes are given over each of the 10 weeks, and then a grand prize winner is awarded a million.

The Hedging Game
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“Structured products’ risk-reward ratio is worse than you think.”

Market Skid May Prompt Roth IRA ‘Do-Overs’
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Marotta’s Roth segregation technique of conversion and recharacterization was featured in InvestmentNews magazine.

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