Debating which investing style, passive or active, is the superior method is unlikely to end soon. The research is too conflicting and exceptions still exist. The difference of opinion has a long and acrimonious history – and it continues to this day. Before we enter the debate and provide some opinions, it is important to […]
Goofus vs. Gallant
As a small boy, my family subscribed to a magazine called “Children’s Activities.” Each issue contained a story of two characters, Goofus and Gallant. We all wanted to be like Gallant, although we frequently found ourselves behaving like Goofus. Here is another Goofus/Gallant tale, this time with help from a publication written by the late […]
The True Cost of Professional Management
What is the true cost of professional management if the fees run somewhere between 50 and 100 basis points? To figure this out let’s use 90 basis points (0.9%) charged by one well-known financial advisor as it is about average for the industry. We need to make a few more assumptions and one is the […]
How to Construct a Portfolio
If you are relatively new to investing or if you have been building a portfolio by selecting individual stocks and find you are under performing the market and wish to switch to index investing, how does one construct a portfolio? Index investing is actually much easier and less stressful than stock picking. Here are the […]
Advisors Do Not Add Alpha
ITA Wealth Management is all about learning to manage your own portfolio instead of hiring a professional money manager. Here is added evidence that consultants and advisors are not adding alpha to some of the most recognized portfolios in the land. Check out this PDF file, “The Futility of the Endowment Model.” There several […]
What Is A Good Sortino Ratio?
Before answering the above question, one needs to know what the Sortino Ratio is measuring. Here is the Wikipedia definition. To keep this idea as simple as possible, write down the equation, S = (R – T)/DR. S = Sortino Ratio. The R is the Internal Rate of Return (IRR) for the portfolio. If you […]
Retirement Planning Mistake #1
Mistake number one in my book is failure to save or to not follow The Golden Rule of Investing. Open up a spreadsheet and run your own calculations for the following classic comparison. As a nineteen year old you have the foresight and financial opportunity to save $2,000 per year for eight years. After saving […]
Retirement Planning Mistake #2
Prospective investors carry too much credit card debt. This mistake is a corollary of Mistake #1. Stay out of credit card (CC) debt. Mistake #2 is not so much an investor mistake, but rather a mistake of bad management as it has nothing to do with managing a portfolio. If one ever aspires to be […]
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