ITA Wealth Management

With all the entries available on this blog, beginning on Valentine’s Day of this year, it now is time to recap some of the fundamental ideas behind this blog. It is best to start with the first entry if one wishes to pick up summaries of the academic research used to build the philosophy behind ITA Wealth Management. This brief summary will need to suffice. Here are a few of the key ideas for the investment philosophy of ITA Wealth Management.

• Follow “The Golden Rule of Investing.” Save as much as you can as early as you can. Search these words on this blog for useful examples.
• Construct a portfolio around a series of asset classes rather than sectors of the stock market.
• Skew or tilt the portfolio toward value and mid to small-cap stocks. The value tilt is even more important than the small-cap tilt.
• Include international (developed countries), emerging markets, REITs, and commodities in your portfolio.
• If you include bonds in your portfolio, know they are generally a drag on the portfolio even though they will reduce overall risk. Search the word “Bond” on this blog for more discussions.
• Rebalance when the asset classes exceed target percentages by more than 35%. That goes for both the upside and downside of 35%. The 35% target limits are built into the spreadsheet we use to track portfolios.
• Do not chase high flying index funds or ETFs. Stick with your asset allocation plan.
• On rare occasions it may be appropriate to apply some Tactical Asset Allocation (TAA) to the portfolio. This is not something one should do if you are a new investor.
• When looking for entry points or when to purchase an ETF, give some attention to the technical analysis sections of this blog. Again, do a search for technical analysis or click on that theme.

The above ideas will get one started on the basic philosophy of this blog. The best move is to go back to the very beginning entries of the blog and work your way forward. The academic research summaries are found in the early posts.

Lowell Herr

Photograph: Remains of the original Fitzcarralda boat, located in the jungle of Peru.