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You are here: Home / Archives for Portfolio Management

Preparing For Next Week

August 10, 2013 By Lowell Herr

The following material is posted so Platinum members can prepare for the coming week of investing.  I’ll begin with the Efficient Frontier. Efficient Frontier:  I set this portfolio up in such a way that the allocations came close to matching the optimizer recommendations.  That is why the diamond dot approximates the red dot location. Rankings:  […]

Filed Under: Portfolio Management Tagged With: Risk Reduction

Index vs. Passive Investing

September 14, 2013 By Lowell Herr

Harold R. Evensky, in his Wealth Management: The Financial Advisor’s Guide to Investing and Managing Client Assets book, makes a distinction between index and passive investing.  The distinctions can be found at this location.  Few readers are unaware of the differences between active and passive management, but the subtle definitions between index and passive management […]

Filed Under: Passive vs. Active Tagged With: Passive vs. Active Investing

Serious Investors Benchmark Their Portfolio

September 20, 2013 By Lowell Herr

Establishing an appropriate benchmark for a portfolio is essential if one is serious about investing.  Avoiding portfolio bench-marking is an act of self-deception.  Exactly what is the purpose of a benchmark and what are the requirements for a fair and reasonable benchmark. Here is one definition of bench-marking. In the investing world, the S&P 500 […]

Filed Under: Benchmarks Tagged With: Benchmarking

Buffett vs. Steadman

September 24, 2013 By Lowell Herr

For every Warren Buffet there are a hundred Charlie Steadman’s in the investing world.  While nearly every investor has heard of Buffett, few remember Charlie Steadman. Is there a reason for this short memory? “Until he died at age 83 in 1997, Charlie Steadman burned through investors’ assets at a rate unseen in the fund […]

Filed Under: Passive vs. Active Tagged With: Beginning Investors

Diversification Through Correlation Analysis

September 25, 2013 By Lowell Herr

“It’s not the number of assets that determines diversification, it’s the correlation among them.” – Richard Bernstein Diversification through correlation analysis is another step in our efforts to lower volatility while maintaining a respectable return for the ITA portfolios.  In the following example I’ve selected twenty-two (22) ETFs that are frequently used to populate the […]

Filed Under: Portfolio Construction

Correlation Matrix of Critical ETFs

September 27, 2013 By Lowell Herr

As requested in a comment, here is the correlation matrix of critical ETFs used in nearly all the ITA portfolios.  I cut the time frame to 23 months of data so VSS and VNQI did not show up with “short-term” data errors.  Identical percentages were assigned to each ETF with exception of SDS.  The percentages […]

Filed Under: Portfolio Construction Tagged With: Portfolio Construction

How to Construct a Portfolio

October 9, 2013 By Lowell Herr

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 […]

Filed Under: Beginning Investors, Critical Material, Portfolio Construction Tagged With: Portfolio Construction

Finding Low Correlated ETFs

October 18, 2013 By Lowell Herr

In keeping with HedgeHunter’s recent “Cluster Weighting” presentation, finding low correlated ETFs to pair with equity ETFs is essential.  The following correlation matrix shows a mixture of highly correlated securities along with modest and low correlated ETFs.  Only SDS is negatively correlated and that is strictly due to it being a short ETF.  In other […]

Filed Under: Portfolio Construction Tagged With: Portfolio Construction

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