Yes, I've been out of it. No, I have no excuse. Don't need one. Its called life. I can happily report that I have successfully moved most of my personal belongings into my new, $416/month cheaper, apartment. There will be more discussion of this in the near future, and its impact on my overall finances. I may also finish my July update, as a few surprises popped up recently which modified the picture but not in an overwhelming way. Or I may just continue forward with the August snapshot. Who knows!?!?
Anyway, I will write again soon. Now, its time to go home, where I have no Internet connectivity, to read documentation and source code for the FIX protocol and watch the end of "Wall Street". (There will be a review coming as well. I've seen the damn movie too many times to not analyze it on this blog.) Depending on how much this caffeine continues powering me, I may work on valuing some multi-unit properties I'm considering putting an offer in on. We'll see!
Cheers!
Wednesday, August 27, 2008
A Response to Teresa Lo
If you've been following things around here for a while, you'll recall that back in April I wrote a post which was effusive in its praise for Teresa Lo's series on building your own investment portfolio. Little did I know that Teresa would comment on that very post. I was honored.
In her comment, she asked me
to which I had no response at the time. There were some other matters that had my attention, so I never really gave the question extensive thought. What I did know was that I liked the satellite portfolio that Teresa describes in the series. So much so that I planned to copy it outright. (What was that about great artists stealing?) While I would imagine that any portfolio that InvivoAnalytics constructs for a client would have slightly different components, the overall idea and simplicity of this portfolio is ideal. I know that I have too many components to my current portfolio, and while I like them all, there has to be a better way.
First, I have liquidated all the holdings in my taxable account. As I've previously stated, I use the aggressive allocation from 401khelp.com for my 401(k). So this interpretation of the satellite portfolio will truly be the "explore" portion of my overall investment holdings, while the "core" remains in my 401(k).
So, to answer the question, I return to the original inquisitor...I have purchased a subscription to InvivoAnalytics.com's Portfolio Strategy service!
Now, this may seem like a cop out, but I considered the following factors. First, I was planning to use the same investments anyway. Two, Teresa and Pete have put in the time and effort to come up with the algos to perform the asset allocation, rebalancing, and other processes which I would otherwise have to implement manually, and their processes are targeted at the same ETFs. Third, I'm busy. I am working on several projects outside of my investing, some of which I've talked about on this blog. There is just not enough time, and consequently not enough value I could add with the time available, to make the investment pay off. The work has already been done, so I should use it. Fourth, I didn't have to pay directly out of my pocket; I was able to pay with blog earnings. Its a minor point, but anything that reduces the friction in this kind of decision is "A Good Thing".
So Teresa, I think you already know the answer to the question by now.
That said, here's the breakdown from Monday:
Also keep in mind that these are not core retirement portfolio holdings and allocations. InvivoAnalytics.com has services for a core portfolio which is designed to be implemented within your primary retirement account, primarily targeted at 401(k)s. As I have mentioned before, I use the aggressive asset allocation from 401khelp.com in my 401(k), with a few tweaks for a more defensive posture in this market (primarily, more international exposure for a greater risk/return profile, more cash, so I have some dry powder, and less real estate exposure for obvious reasons). If you're looking for a core 401(k) asset allocation from Invivo, the Strategic Performance Portfolio is NOT it.
Part 8 of Building You Investment Portfolio discusses some of the details of how the dynamic algorithm works (at a high level).
(Yes, those numbers change every week, so while you're getting a free ride for this past Monday, by next Monday the numbers will be different. You shouldn't buy in the middle of the week anyway, but wait until the next allocations come out next Monday. However, you have to be a subscriber to find out what those will be!)
So all of that said, thank you again Teresa for coming up with these model portfolios and giving me time back to generate alpha in other ways!
Until next time...
In her comment, she asked me
Now that you've decided to reduce the number of asset classes, I was wondering how you plan to allocate the funds? Do you use a certain formula?
to which I had no response at the time. There were some other matters that had my attention, so I never really gave the question extensive thought. What I did know was that I liked the satellite portfolio that Teresa describes in the series. So much so that I planned to copy it outright. (What was that about great artists stealing?) While I would imagine that any portfolio that InvivoAnalytics constructs for a client would have slightly different components, the overall idea and simplicity of this portfolio is ideal. I know that I have too many components to my current portfolio, and while I like them all, there has to be a better way.
First, I have liquidated all the holdings in my taxable account. As I've previously stated, I use the aggressive allocation from 401khelp.com for my 401(k). So this interpretation of the satellite portfolio will truly be the "explore" portion of my overall investment holdings, while the "core" remains in my 401(k).
So, to answer the question, I return to the original inquisitor...I have purchased a subscription to InvivoAnalytics.com's Portfolio Strategy service!
Now, this may seem like a cop out, but I considered the following factors. First, I was planning to use the same investments anyway. Two, Teresa and Pete have put in the time and effort to come up with the algos to perform the asset allocation, rebalancing, and other processes which I would otherwise have to implement manually, and their processes are targeted at the same ETFs. Third, I'm busy. I am working on several projects outside of my investing, some of which I've talked about on this blog. There is just not enough time, and consequently not enough value I could add with the time available, to make the investment pay off. The work has already been done, so I should use it. Fourth, I didn't have to pay directly out of my pocket; I was able to pay with blog earnings. Its a minor point, but anything that reduces the friction in this kind of decision is "A Good Thing".
So Teresa, I think you already know the answer to the question by now.
That said, here's the breakdown from Monday:
- VXF - 16.88%
- EEM - 14.18%
- GSG - 9.92%
- FXF - 28.13%
- TLT - 30.89%
Also keep in mind that these are not core retirement portfolio holdings and allocations. InvivoAnalytics.com has services for a core portfolio which is designed to be implemented within your primary retirement account, primarily targeted at 401(k)s. As I have mentioned before, I use the aggressive asset allocation from 401khelp.com in my 401(k), with a few tweaks for a more defensive posture in this market (primarily, more international exposure for a greater risk/return profile, more cash, so I have some dry powder, and less real estate exposure for obvious reasons). If you're looking for a core 401(k) asset allocation from Invivo, the Strategic Performance Portfolio is NOT it.
Part 8 of Building You Investment Portfolio discusses some of the details of how the dynamic algorithm works (at a high level).
(Yes, those numbers change every week, so while you're getting a free ride for this past Monday, by next Monday the numbers will be different. You shouldn't buy in the middle of the week anyway, but wait until the next allocations come out next Monday. However, you have to be a subscriber to find out what those will be!)
So all of that said, thank you again Teresa for coming up with these model portfolios and giving me time back to generate alpha in other ways!
Until next time...
Wednesday, August 13, 2008
Crazy Random Thought
Given that the stimulus checks have mostly flowed through the system, into people's gas tanks and back to the Middle East, AND that consumers are still hurting, it would be interesting to see what impact is had by the delay. I mean, how much time did those checks buy?
It would be interesting if the real contraction, put off by the stimulus package, starts close enough (but before) the November election to have an impact on the outcome. Will energy markets have calmed down enough by then to reduce the possible pain on the McCain camp (by virtue of his association, however loose, with the sitting President)? Will the run-up to winter combined with increasing unemployment, leading up to the election, favor Obama? Where is the Black Swan?
Just something that came to mind as I prepare to go to sleep for a few hours.
Later, my peoples!
It would be interesting if the real contraction, put off by the stimulus package, starts close enough (but before) the November election to have an impact on the outcome. Will energy markets have calmed down enough by then to reduce the possible pain on the McCain camp (by virtue of his association, however loose, with the sitting President)? Will the run-up to winter combined with increasing unemployment, leading up to the election, favor Obama? Where is the Black Swan?
Just something that came to mind as I prepare to go to sleep for a few hours.
Later, my peoples!
Apologies
I have to apologize to all of the readers of this blog. My connectivity at home has been crappy for the past few weeks, and I haven't had time to troubleshoot it. Considering that I am moving out of my current residence by the end of the month, it really hasn't been high on the priority list to do so. Finding connectivity outside of the home is also troublesome because I'm often on the move and for some reason, in places where I don't have connectivity or I'm not staying long enough to utilize it.
(Don't even get me started on the matter of using connectivity at work. That's more than enough trouble as-is.)
I'm actually preparing some posts about my final July net worth and financials, including my (so far) thwarted attempts at adding options trading to my brokerage account, and a few thoughts on the general economy. So I'm still here, but to paraphrase Gertrude Stein, there's no here here.
Thanks for hanging in there. I'll work on being more communicative about all issues in the future.
(Don't even get me started on the matter of using connectivity at work. That's more than enough trouble as-is.)
I'm actually preparing some posts about my final July net worth and financials, including my (so far) thwarted attempts at adding options trading to my brokerage account, and a few thoughts on the general economy. So I'm still here, but to paraphrase Gertrude Stein, there's no here here.
Thanks for hanging in there. I'll work on being more communicative about all issues in the future.
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