AAII 2013
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Follow-up information for 2013 AAII presentation “Dynamic Portfolio Construction in the Context of Comprehensive Wealth Management.”

Mailbag: What Are Some Stocks that Are Undervalued as of the Beginning of 2013?
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Here are some large cap stocks with very low 12 month trailing P/E ratios.

Should I Invest IRA Funds in Real Estate? ($ ?s)
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Q: I am looking for a way to get into the distressed real estate market. What recommendations do you have about investing IRA or 401(k) funds in rental houses?

Tax on Dividend-Paying Stocks Rising to 74%
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With the enormous increase in the taxation of dividends, high net worth investors may be tempted to abandon dividend-paying stocks entirely. This is not necessary.

How Should I Go About Picking Conservative Investments for My 401(k)? ($ ?s)
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As you get closer to the hole with each shot (this could be too much of an assumption for those hack like me) you can focus on precision over power.

Why Invest in the Emerging Markets?
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Four reasons not to abandon a brilliant allocation that includes emerging markets simply because of short term fluctuations.

Vote Marotta As the World’s Next Great Investing Columnist on WSJ’s MarketWatch.com
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MarketWatch is seeking a top-notch writer who will bring a fresh perspective on money to the world’s investors. We believe that fresh perspective ought to include the idea of freedom investing.

How are Foreign Stocks Doing Compared to Stocks in the United States? Fall 2012
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Sometimes the medium term trend seems to weigh more heavily in our minds than the long or short term trends.

How Keeping Your Money “Safe” Might Lose Half of It in 16 Years
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“Anyone who’s bought gas, paid a medical bill or sent a child off to college recently knows that the Consumer Price Index doesn’t tell the whole story of inflation.”

Valuable Property
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“Real estate investment trusts should be much more than an optional selection in a balanced investment portfolio.”

Muni Forecast: Lots of Clouds
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“A growing link between municipal bond and U.S. stock performance could be very bad if equities fail to rise robustly over the next few years.”

Investing In Gold
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Direct ownership of gold has become more popular, despite some lingering fear that the government could again ban private gold ownership. With ongoing concerns about the global financial system and gold hitting a record high, many people are interested in this “safe haven.”

Technology Sector Doing the Best YTD, Energy the Worst
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Sector rotation would suggest that we are still at the beginning of a market recovery. This is probably the bottom of energy stocks.

Even with Low Interest Rates You Should Have an Allocation to Bonds
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“Investors may hold fixed income securities to reduce portfolio volatility, generate income, maintain liquidity, pursue higher returns, or meet a future funding obligation.”

Emerging Market Bond Funds
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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.

How Have Emerging Market Equities Performed?
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I was on the radio today and someone called in claiming that Vanguard Emerging Market ETF (VWO) had done nothing but go down in value.

Investing in Gold and Silver Coins
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A large number of people in the United States are worried about our profligate spending and the resulting devaluation of our currency. They are worried about politics and socialism and the economy.

Mailbag: I’d Like to Withdraw Money from My IRA to Purchase Physical Silver
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Precious metals will, on average, just keep up with inflation, but your after tax return would mean you fell behind inflation by the 28% tax you must pay.

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?

Rebalancing Asset Classes and Subcategories
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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.

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.

Burton Malkiel Picks Bonds as ‘Worst Asset Class for Investors’
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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.

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.

Your Portfolio Needs Rebalancing
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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.

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.

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 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?

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?

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.

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

‘Go Fishing’ in the Calm Sea of Bonds
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Adding bonds to an all-stock portfolio can boost returns and lower volatility, especially in choppy markets. Bonds should be a small but important part of your gone-fishing portfolio allocation.

Global Fixed Income (International Bonds): Hedged or Unhedged?
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International bonds now make up more than 35% of the world’s investable assets, and yet many domestic investors have little or no exposure to these securities.

‘Go Fishing’ With Hard Asset Stocks
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Hard assets have been one of the most significant asset classes over the last decade. From all indications, it will continue to be a critically important investment category to protect your portfolio from the effects of inflation and the continuing devaluation of the U.S. dollar.

Radio: Why Real Estate Should Be In Your Portfolio
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David Marotta discusses why real estate should be part of a portfolio asset allocation.

An Overseas Gone-Fishing Portfolio
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Even in our gone-fishing portfolios we suggest investing more overseas than in the United States. For most investors, foreign stocks will be their largest and most important allocation. Including the right mix of foreign stocks will help you relax and go fishing no matter which foreign seas are in turmoil.

‘Gone Fishing’ American Style
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Creating a gone-fishing portfolio begins with a top-level asset allocation. We use six asset categories. The three for stability are short money (maturing in less than two years), U.S. bonds and foreign bonds. The three asset categories we use for appreciation are U.S. stocks, foreign stocks and hard asset stocks.

Revisiting the Advice to Buy Real Estate
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In 2010 I published a column entitled “Now’s Still the Time to Buy a House.” Investing is like chess in slow motion. It is important to review your moves to see how they turned out. Sometimes they don’t turn out well. Our prediction about real estate, however, was brilliant.

Where in the World Should You Invest?
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Finding countries where you can plant your investments in fertile soil may be one of the most important asset allocation decisions you make for the next several years.

Gold May Drop If Political Winds Change
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Perhaps dire predictions are correct and we are headed to Armageddon. If you want liquid assets in such a catastrophic situation, try buying cases of Jack Daniels. It is cheaper, keeps just as well and will fetch more in trading value.

Avoid the “Ring-of-Fire” Countries
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A few months ago Bill Gross, co-founder of PIMCO and the country’s most prominent bond expert, singled out those countries heaping significant deficits on their mountain of debt and called them “The Ring of Fire.” We recommend that you reduce your investments in these countries.

Should you invest IRA Funds in Real Estate?
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Real estate could be a great investment right now.

Now’s Still the Time to Buy a House
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Everyone is expecting real estate to underperform the stock market for many years going forward.

Investment Strategies Part 4: Don’t Rebalance at the Sector Level
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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.

Investment Strategies Part 1: Rebalance into Stable Investments in an Appreciating Market
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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.

Gold Mining Companies Glitter More Than Bullion
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Gold may glitter, but it is still better to own the mine.

For Now, Avoid Real Estate Investment Trusts
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Just over two years ago, we warned our readers that real estate prices might be peaking and ready to correct.

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