A Brief History of ITA Wealth Management

Kipling

As we move into 2017, a brief history of the ITA Wealth Management blog might be of interest.  The idea for blogging began back around 2003 or 2004 as I was looking for something to do in retirement.  The last physics workshop (Project PHYSLab) concluded a 10 year run in the summer of 2001 so I needed a new project.  I was “blog ignorant” and wanted to learn how they were constructed, maintained, and why would anyone blog.  I began messing about with a free hosting site and a generic theme, not really knowing where I was going.  I knew I wanted to work on a problem that involved computers, numbers, yet had no solution.  Investing combined all three of these requirements and I knew a little bit about the subject having co-authored a mutual fund newsletter in the 1980s.  In addition, I have had an interest in investing since the late 1950s, but did not get serious until the early 1970s or right in the middle of a huge bear market.  It was an excellent time to get serious about investing.

I digress.  While volunteering as a neighborhood photographer at a birthday party I met one of the guests and found he was a serious amateur photographer.  We hit it off immediately despite the age difference.  After that first meeting we began to have coffee together about every two weeks.  This new found friend pointed me to WordPress, an open-source software program used by thousands of bloggers to control their sites.  The next important move was to purchase Lisa Sabin-Wilson’s WordPress for Dummies book.  If you ever have the yen to set up a blog, this text is an essential first step.  My first serious investment blog was launched on February 14, 2008.  The emphasis in the early days was passive investing, much along the lines of the Schrodinger, Copernicus, Pasteur, and Bethe portfolios.  The model for passive investing is known as the Strategic Asset Allocation model.

When I first started I already had in hand an early version of the TLH Spreadsheet, named after Jim Thomas (main developer), Bakul Lalla, and Lowell Herr.  The initials of our last names is where the TLH comes from.  This portfolio tracking Excel™ software’s development has its own story.

Back around the turn of the century I was doing a lot of stock picking and had developed a complex spreadsheet for selecting individual securities.  In addition, I was using a commercial program called, Take $tock, developed by Ellis Traub and his son.  Even though I was attempting to find strong individual stocks, my heart was with passive investing and index mutual funds.  ETFs were still in their infancy.  Through an Internet discussion site, I got involved in a small bet with Ellis Traub.  It was a five-year bet that went like this.  I would pay Ellis $100 if his program, Take $tock, generated a return of 15% per year or essentially doubled in five years.  If following his program did not return 15% per year, or double over five years, he would pay me $100.  I figured this was a win – win situation.  I could easily afford to pay him $100 if the portfolio doubled in five years.  The only way I could lose would be for the stocks recommended by the program to tank.  I agreed to put up $100,000 as a test.  Jim Thomas volunteered to monitor me to make sure I was following the guidelines laid out by the Take $tock software.  That is how he came to develop the guts of the TLH Spreadsheet.  The TLH spreadsheet was used to track the performance of the portfolio.  Three other commercial programs were used to track the portfolio.  These provided a check on the accuracy of the TLH Spreadsheet.   To close out this story, I won the $100 bet as the portfolio did not double over the five-year period.  However, it did do very well.  If I recall correctly, the return was somewhere between 12% and 13% per year and this covered the bear market in the early years of this century.  In addition, I had a well-tested portfolio tracking software program, the TLH Spreadsheet.  It was a fun time despite the tech bubble bursting.

Now back to the evolution of the ITA blog.  After the launch in early 2008 I went through two different hosting sites.  Hacks to the hosting sites cost me over 1,000 blog entries.  That is why the archives do not date back to 2008.  Around 2011 I hired a professional web designer.  Some readers of ITA have been with me that long and may remember the first well designed site.  As WordPress continued to improve I needed an update to my website and what you see today is that second major design.

HedgeHunter join ITA in August of 2013 and has made important contributions.  The Kipling SS is his creation and we may see a major revision sometime this summer.  Ernie Stokely and others performed extensive back-testing on the “Rutherford 10” and other portfolios.  Herb, John, Mike and others continue to add value to this blog.  For long-time readers, investment evolution here at ITA is evident.  In addition to the core passively managed portfolio, I’ve branched out in the world of momentum investing.  The two main models are Dual Momentum and Tranche Momentum.  Several portfolios serve as examples to these management models.

Back in the days when I co-authored the mutual fund newsletter, exponential moving averages were a core part of market timing or reducing portfolio risk.  Elements of EMA are found within the current version of the Kipling spreadsheet.  I still dabble in stock selections, but now I am focusing on value-momentum stocks rather than pure growth as I was back in the 1990s.  As I mentioned earlier, investing is a problem without a solution.  Think of it as a probability problem where we are attempting to capture a slight edge to the broad market or ITA Index in our case.

There you have a brief history of ITA Wealth Management as we come close to completing nine years of operation.

PS  I’ve always been a believer in surrounding myself with the best minds possible.  There are many fine thinkers contributing to this blog.