ITA Wealth Management

Thanks to all the readers of this blog.  In approximately seven months of operation there were well over 200,000 hits and over 10,000 unique viewers.  Rather amazing.  Readership originates from Africa, Europe, China, Australia, and all parts of the United States.

A big thank you to all and be sure to send the web address to at least one friend.

Lowell Herr

The philosophy behind this blog is one of passive portfolio management.  A passive manager is one who lays out an investment plan for the portfolio and this includes what asset classes to employ and what percentage of the money to allocate to each asset class.  As mentioned before, it is easier to establish the asset classes than it is to allocate the target percentages to each asset class.

I recommend every passive manager include at a minimum, the “Big Six” asset classes.  From that base, consider expanding into REITs, International (developed countries), and Emerging Markets.  Now we have nine major asset classes.  How much or what percentage to allocate to each asset class is a very personal decision.  I provide a number of examples both here on the free side of the blog and over on the Premium Content side.

Once a portfolio is fully built and all the asset classes are in balance, the passive manager does little else other than keep records and rebalance the portfolio when necessary.  Don’t rebalance more than once a year unless something very unusual throws the portfolio completely out of balance.  Generally, you will not need to rebalance the asset classes more than once every two or three years.  This is the ultimate in passive management.

For the manager who feels they need to be a bit pro-active when it comes to portfolio management, one might add an individual stock from time to time.  Be sure to keep the asset classes in balance if you are adding individual stocks.  In addition, a semi-active manager may do a little Tactical Asset Allocation (TAA).  This really amounts to market timing, so you better know what you are doing.  Research shows that market timing does not add value to the portfolio.  I do not recommend TAA unless an obvious situation arises.  The REITs situation over a year ago was such an event.

The technical analysis work we do over in Premium Content is something for the semi-active manager.  I don’t spend much time on TA on the free side as it requires a certain level of sophistication.

For the vast majority of investors, it is best to play the role of passive manager and let the markets do their work.  Don’t get fancy and try to outguess efficient markets.

Lowell Herr