ITA Wealth Management

Investors interested in seeing what a sample “Creme List” looks, examine the following table.  The stocks for 1/9/2009 are now available for Premium readers as well as those fairly priced.

The following stocks are not recommendations but rather a list of stocks for further investigation.

Creme List

Premium subscription available for $6.99 per month.

Investors who are using ETFs to populate their portfolio(s) will find this site of interest. In pointing out this excellent site I want to send a word of caution to readers.  Do not get caught up in all the esoteric ETFs available to investors.  A few guidelines are in order.

• Look at the expense ratio and keep it as low as possible.
• Are you able to find the asset class covered by a Vanguard ETF?  Vanguard has some of the lowest expenses available.
• Does the ETF have a minimum of a three-year record?  We sometimes violate this rule when it comes to commodities as that asset class still has what we call a “short record.”  GSG, for example, is closing in on its third birthday.
• Is the ETF nothing more than a managed or enhanced index fund?  Some of these go under the guise of Fundamental Index Funds.  If one uses such an ETF, know what the manager is doing and check their past record.
• If adding an ETF to the portfolio, does it truly diversify the portfolio and how do you know.  We use the QPP software program to check out the correlation factors.  Premium clients receive help with such questions.
• Is the ETF liquid?  In other words, is the daily volume sufficiently high?  Compare the volume with one of the “Big Six” ETFs from either iShares or Vanguard.

If you are not familiar with the “Big Six,” do a blog search for the six asset classes that make up this group.

For portfolios around $100,000, eight to twelve ETFs are sufficient to build a well diversified portfolio.  When the portfolio moves above $200,000, investors may want to expand the number of ETFs in order to include alternative investments such as timber (PCL) or specialized energy areas of wind (FAN) and solar (TAN).

Guidance for portfolio building can be found at this site.  Take the Risk Capacity Survey and then look at the types of funds and the percentage allocated to the different asset classes. Note the portfolios tilt toward value and small-cap.  Use this information as a guide in building your own portfolio.

Lowell Herr

Photograph: Wine tasting by candlelight in Wuerzburg, Germany.  Image captured by Beth Appel.

Premium subscription available for $6.99 per month.  “Creme List” for 1/9/09 to appear tomorrow.