Asset Allocation

See our review of the two pros and nine cons of how Schwab monitors and rebalances portfolios.

It is a great marketing campaign, and the service is a wonderful idea, but the asset allocations of SIPs aren’t actually that intelligent.

“Advisers need to sell their value as keeping their clients from doing the wrong thing at the wrong time.”

“We still have plenty of problems, but we’re much better than France, Britain and Germany.”

A gone-fishing portfolio keeps investing simple.

A review of last year’s 2014 gone fishing portfolio returns.

Keeping your donor advised fund invested could result in more benefit to the charities you support.

There are several important lessons to learn from this graph.

Many investors don’t appreciate asset allocation or understand intuitively how a diversified portfolio can exceed the sum of its parts.

The short answer is, “No.”

You ought to know what it is that you are rebalancing.

A gone-fishing portfolio keeps investing simple.

A review of last year’s 2013 gone fishing portfolio returns.

Here is an asset allocation recommendation for the The University of Virginia Physicians Group 2014 BEST plan.

Age appropriate asset allocation for 2014 using the choices available in the University of Virginia’s TIAA-CREF Tax Deferred Savings Plan (TDSP).

Many people lack the time and expertise to develop an intelligent retirement asset allocation plan.

We have created several asset allocation tools to aid those seeking an intelligently diversified portfolio.

Does it actually make sense that people should buy annuities as much as conventional wisdom says?

Sweden appreciated 11.02% during the month.

A gone-fishing portfolio has a limited number of investments with a balanced asset allocation that should do well with dampened volatility. Its primary appeal is simplicity. As a secondary virtue, it avoids the worst mistakes of the financial services industry.

Five principles from analyzing the last decade of returns.

Investing $512 in the S&P 500 at the end of 1979 grew with reinvested dividends for a total return of $19,323.19.

A blended investment style for all markets can lead to high returns with low risk.

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

Asset Allocation means always having something to complain about.

Four reasons not to abandon a brilliant allocation that includes emerging markets simply because of short term fluctuations.

Sometimes the medium term trend seems to weigh more heavily in our minds than the long or short term trends.

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

Generally speaking, financial complexity is a curtain behind which the finance industry can extract its fee. When the curtain is pulled back, convertible bonds fail to add value for four specific reasons.

Portfolio construction begins with the most basic allocation between investments that offer a greater chance of appreciation (stocks) and those that provide portfolio stability (bonds). There is no such thing as a safe investment that pays market rates of return.

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.

A gone-fishing portfolio has a limited number of investments with a balanced asset allocation that should do well with dampened volatility. Its primary appeal is simplicity. As a secondary virtue, it avoids the worst mistakes of the financial services industry.

When growth is relatively cheap it should outperform value.

Currently large is relatively cheap and small cap is relatively expensive. For that reason, the R1000 or S&P 500 should outperform the R2000 small cap.

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.

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.

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.

Dividend investors are too easily lulled into the temporary comforts of portfolio income.

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

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.

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.

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.

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.

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

We compute an asset allocation deviation or “out of balance” number for each household’s primary retirement assets and rebalance to lower this number.

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?

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

The world markets groaned as the burden of the rising American debt and the European deficit weighed down more productive countries.

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

Most investors invest in only one and a half of the six asset classes. Learn where to invest in all six and how to tilt in each to over-emphasize appropriate categories.