diversification

Signs of Leadership Change: Growth vs. Value Stocks

This is an excerpt from Growth vs. Value Stocks: Signs of Leadership Change on ETFguide TV with Lance McGray at Advisors Asset Management. This episode examines: Signs that could trigger a leadership change between growth and value stocks Capturing growth and value without sacrificing quality  Understanding how diversification within strategies works Positioning your portfolio for …

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3 Diversification Errors

Portfolio diversification is an investment strategy designed to limit risk by spreading money across multiple asset classes and securities. Most financial literature along with your local financial advisor will agree that diversifying your investments is a prudent thing. But while diversification may seem like a straightforward process, it isn’t. And some investors and their advisors …

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A $1.3 Million Portfolio Report Card for JPG in Maryland

What are the hallmarks of a well-built and financially sound investment portfolio? For some, it’s simply owning the top performing stocks or mutual funds (Nasdaq:AMCPX). For others, it’s owning the funds or ETFs (NYSEARCA:SCHB) with the lowest cost. And yet for many others, their definition of a well-built investment portfolio is to own whatever securities popular …

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Your Investment Portfolio’s Missing Piece

The framework for an architecturally sound investment plan is to have a core portfolio built upon core asset classes. Like the foundation of a building, your portfolio’s core must be built on a solid and stable footing. While there are many things within your investment plan that are optional, this isn’t one of them. Before …

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Portfolio Exam: A Hyper-Aggressive $1.29 Million Portfolio with Flaws

It’s commonly and incorrectly presumed that people with large investment portfolios are smart investors. But as counterintuitive as it may sound, this false presumption is simply not true. How do I know? Because I’ve analyzed and graded many multi-million dollar investment portfolios ($27 million is the largest one I’ve graded so far this year) using …

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Does Diversifying Damage Performance?

During the 1849 California Gold Rush people sold all their possessions to chase gold (NYSEARCA:IAU). A small minority hit the jackpot, but most did not. Back then, the few people that did get wealthy by not diversifying were the hyper-extreme exception, not the rule. And it’s the same today. In retrospect, investors that overstuffed their portfolios …

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A Risky $1.31 Million Portfolio that Flunks on Cost

A few months ago the NASDAQ Composite Index (Nasdaq:ONEQ) eclipsed 5,000 for the first time since March 2000. Put another way, we are all 15 years older since the NASDAQ’s first dance with all-time highs, but are we smarter? What did we learn from the first meltdown that can help us cope with future meltdowns? …

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Portfolio Chart 1

Portfolio Report Card: A $1.23 Million Portfolio Built on the Wrong Foundation

From an observer’s viewpoint, the individual with a good sized investment portfolio (say above $1 million) doesn’t have much to worry about. They’ve got lots of money and that’s all that matters. Unfortunately, this misinformed view isn’t just dead wrong, but it incorrectly presumes the person with a large portfolio has done everything right. Is it true? (AUDIO) Listen …

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Retirement Plan

Q&A: Is Buying a Multi-Asset Fund Near Retirement a Good Idea?

Multi-asset class funds and ETFs are designed to invest across various asset classes like stocks, bonds, commodities, real estate, and other alternatives. In the ETF marketplace, examples of these types of multi-asset class funds are the Multi-Asset Diversified Income ETF (NYSEARCA:MDIV), iShares Core Growth Allocation ETF (NYSEARCA:AOR), and the iShares Morningstar Multi-Asset Income ETF (NYSEARCA:IYLD). (Audio) Portfolio …

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Portfolio Report Card: A $850,613 Portfolio with Sluggish Results

Your investment portfolio is nothing more than a reflection of who you are. In other words, it’s a personal statement about how you approach financial risk, investment cost, diversification, and taxes. If you’re disorderly when it comes to these aspects of your investment plan, the unwelcome consequences will be a disorderly portfolio with disorderly results. …

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Beware of Skewed Performance Comparisons

Many people and fund companies still use inappropriate benchmarks for measuring investment performance. Instead of getting truthful results, investors are given a distorted perspective of performance which leads to mistaken conclusions. (Audio) Ron does a Portfolio Report Card on a $26.9 Million Investment Account The mutual fund industry’s (NasdaqGS:MORN) widespread use of peer group comparisons is …

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Portfolio Report Card: A $294,439 Retirement Plan with a Tax Threat

Some of us got started late at saving and investing for retirement. And while the financial services industry enjoys browbeating people who lack discipline, got distracted or got into trouble and temporarily paused saving money, I think empathy is due when empathy is warranted. This week’s Portfolio Report Card is for K.E., a 60-year old …

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3 Symptoms of a Poorly Diversified Portfolio

What is diversification? How is it obtained? Why does it matter? In his book Capital Ideas Evolving, the great Peter L. Bernstein put it this way: “The future is always uncertain. Consequently, risk management is fundamental to the whole process. Indeed, risk management is the only part of the process under the control of the investor. …

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Monster Tax Bills

Portfolio Report Card: Analyzing a Self-Managed $1.45 Million Investment Plan

What are the hallmarks of a well-built investment portfolio? Low cost, broad diversification, tax-efficiency, risk compatibility with the owner, and performance that matches or beats an apples-to-apples yardstick. My latest Portfolio Report Card is for a married couple, C.J. in Orange County, CA. He is 57, she is 58 and they asked me to grade their …

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Portfolio diversification

Portfolio Report Card: A Poorly Designed $863,309 Advisor Managed Account

How can a person tell the difference between a healthy and unhealthy investment portfolio? Naturally, it’s by how well (or poorly) a portfolio does at addressing crucial areas like taxes, cost, diversification, risk, and performance. Here’s the problem: Poorly constructed portfolios are usually ignorant about these first four things, which explain why unsatisfactory performance results …

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Binocular Man Searching

Q&A: How Many ETFs Do You Need for a Well-Rounded Portfolio?

Q. How many ETFs do I need to own to have a balanced and diversified portfolio? – C.L. in Plano, TX A. One of the common investing fallacies is that the number of holdings within your investment portfolio should increase as your portfolio’s value increases. This is wrong. Why? Because having a well-rounded investment portfolio is never …

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Portfolio Report Card: One Doctor’s Sick $503,929 Retirement Plan

Some illnesses can go undetected for many years. Others are accompanied by obvious warning signs like coughing, sniffling, shortness of breath, and other red flags. Similarly, we can distinguish between a healthy investment portfolio versus a sick one by how each deals with important matters like taxes, investment cost, diversification, risk, and performance. My latest …

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Roller Coaster Ride 2

Portfolio Report Card: A Risk Heavy $696,000 Investment Plan

Your investment portfolio is nothing more than a reflection of you. Put another way, it’s a personal statement about how you view risk, taxes, diversification, and investment cost. If you’re negligent in building an investment portfolio that fails to correctly address these key areas, your performance results are likely to suffer. My latest Portfolio Report …

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PRC Calculation

The Long-Term Investing Fallacy

The financial services industry likes to preach the benefits of compounding returns and long-term investing. Have they overstated or even misstated their cause? It’s common for industry types to illustrate unrealistic long-term time horizons of 100 or 200 years of equity returns (NYSEARCA:DIA) to prove that we should be long-term investors. The problem with this …

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