David Jackson

Explore More Core

Roger, what I love about your articles is how they reflect a real understanding of how investors behave in the real world, as opposed to in theory or ideally.

When I wrote the ETF Investment Guide ( seekingalpha.com/artic... ) my goal was to prove to investors that they could do it themselves. But I received a ton of feedback from investors saying "I still need help, even wtih a portfolio of only a few ETFs".

That seems to be what you're saying in this comment -- that even managing a simple ETF portfolio and rebalancing it is too much for many people, and they might want to look at other options to reduce volatility.


On Apr 07 01:32 PM RogerNusbaum wrote:

> David, two ways to possibly address your question.
>
> One is how lazy does one want to be? also how often would someone
> rebalance? I'm not sure it is economical for people to rebalance
> based on a 5% move, for example. There is some number for each person
> where it does makes sense. With $50,000 total 5% is probably no,
> with $5 million it would be economical.
>
> Despite that it might not be economical people do feel, emotionally
> a 5-10% decline so the right absolute fund could help.
>
> Another thing about rebalancing is that people seem to become reluctant
> to buy more stock when the market drops, just normal human nature.
>
>
> It is possible an absolute fund could lessen the blow for people
> who are not good at rebalancing.
>
> Lastly, its just a theoretical example:-)

Broad International ETFs

Update: We've added Roger Nusbaum's short article "Explore More Core" ( seekingalpha.com/artic... ) to the Further Reading section.

It's short, and asks more questions than it answers, but it touches on a crucial issue: Should you build a portfolio with an All World ETF as the core, supplemented by perhaps one other instrument?

Explore More Core

Roger, can you explain more your thinking on smoothing returns with some sort of absolute return instrument, as opposed to rebalancing?

Broad International ETFs

Update: In the Further Reading section, we've added two articles about building a portfolio from an All World ETF:

BGI's All World ETF Could Fundamentally Change the Way People Invest (Matt Hougan)
seekingalpha.com/artic...

Total Stock Market ETFs vs. Slice 'n Dice (Murray Coleman)
seekingalpha.com/artic...

Broad International ETFs

Update: we just added Barclays' iShares MSCI ACWI (All Country World Index) Index Fund ETF (ACWI) to the list.