ITA Wealth Management

Launching a new portfolio, such as the GLW, requires two major decisions. 1) How many asset classes should be included in the portfolio and exactly what are those asset classes? 2) What percentage of the total portfolio do we place in each asset class? These two decisions impact the return on the portfolio more than stock selection, market timing, tweaking via tactical asset allocation, or applying technical analysis.

Click on this link to view the current asset allocation plan for the GLW Portfolio. Note that the asset allocation plan is tilted toward value over growth. We are playing a probability game with historical data, as we believe value will out perform growth over the long term. This has been the historical case and we have no reason to believe this will change in the near future. Bonds are included as we want some protection to damp out what may be a volatile market. The portfolio is somewhat aggressive in that we allocate 27% to the international market in three asset classes. Ten percent may be high for domestic REITs at this time, but if we are patient in the development of this portfolio, we think we can slowly add to this asset class as it is at or near the market bottom.

Below is the asset allocation plan in tabular form. Questions are most welcome.

Lowell Herr

Photograph: Peruvian vendor in the Sacred Valley