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Lowell Herr

 
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  • Dividend Growth Investors: Do They Have A Point Or Is It Too Close To Call? [View article]
    Robert,

    "The Portable MBA in Investment" is a collection of essays edited by Peter L. Bernstein. In this book is a long essay by Nancy Jacob, 'Evaluating Investment Performance.' I highly recommend the book and this essay in particular as it points out a series of standard requirements for benchmarking a portfolio and one is that the benchmark be investable.

    Lowell
    Sep 2 11:57 AM | Likes Like |Link to Comment
  • Dividend Growth Investors: Do They Have A Point Or Is It Too Close To Call? [View article]
    Whatever is the most appropriate index. Is the "S&P Dividend Aristocrat Index" investable?

    Lowell
    Sep 2 11:46 AM | Likes Like |Link to Comment
  • Dividend Growth Investors: Do They Have A Point Or Is It Too Close To Call? [View article]
    Giorgiolb,

    The one thing I would add to the "show us your portfolio" is an accurate tracking of an appropriate benchmark. For dividend growth investors the S&P 500 works. Most affordable portfolio tracking software does not include this essential factor.

    Lowell
    http://itawealth.com
    Sep 2 07:57 AM | Likes Like |Link to Comment
  • Dividend Growth Investors: Do They Have A Point Or Is It Too Close To Call? [View article]
    "To arrive at the same amount of desired income upon age 65, the S&P 500 would have to double the amount of portfolio value I need. Instead of a $3 Million portfolio, I would need $6 Million if invested in the S&P 500."

    Chowder,

    You would not need $6 million unless you will not be drawing from the principle. Most retirees will draw money from the overall portfolio, not rely strictly on dividends.

    The other option is to build the portfolio through both dividends and capital growth, and then upon retirement convert to a dividend oriented portfolio and live off the dividends.

    Lowell
    Sep 1 10:39 AM | Likes Like |Link to Comment
  • Dividend Growth Investors: Do They Have A Point Or Is It Too Close To Call? [View article]
    I am unable to respond to a comment placed in the last few days. The writer asked for some specific security recommendations as they are recently retired. This link lays out an asset allocation plan that will not fit everyone, but it does provide a model of how to begin constructing a portfolio.

    http://bit.ly/1rHO0ns

    The first screenshot is the Dashboard and the percentages with the white background are the target percentages. In a number of portfolios I also include an asset class for Precious Metals and another for International Bonds.

    The second screenshot is the one readers may find interesting as the "critical" ETFs are identified as those that can be used to populate specific asset classes. While these are not stock recommendations, this second table provides examples of how one can build a diversified portfolio.

    Lowell
    http://itawealth.com
    Aug 31 03:52 PM | Likes Like |Link to Comment
  • The Swensen 6 Portfolio: How To Reduce Risk And Trounce The Market [View article]
    Dataman,

    Is the spreadsheet available? Not yet. I've not made the spreadsheet available to Platinum members of my blog, but will likely do so sometime over the next few months. Right now several of us are working on addition options, testing variations of the "SHY cutoff" model.

    Lowell
    Aug 31 11:16 AM | Likes Like |Link to Comment
  • The Swensen 6 Portfolio: How To Reduce Risk And Trounce The Market [View article]
    The Basic Example within this explanation will explain the third metric.

    http://bit.ly/o4iX7Q

    Lowell
    Aug 30 12:36 PM | Likes Like |Link to Comment
  • 9 Dividend Aristocrats Reward Investors [View article]
    Hardog,

    I was not familiar with the yield being subsidized. Here is the best I was able to find on the Internet.

    "The 30-Day SEC Yield is computed under an SEC standardized formula based on net income earned over the past 30 days. It is a "subsidized" yield, which means it includes contractual expense reimbursements and it would be lower without those reimbursements.

    2 The Unsubsidized 30-Day SEC Yield is computed under an SEC standardized formula based on net income earned over the past 30 days. It excludes contractual expense reimbursements, resulting in a lower yield. "

    Lowell
    http://itawealth.com
    Aug 25 01:56 PM | Likes Like |Link to Comment
  • The Swensen 6 Portfolio: How To Reduce Risk And Trounce The Market [View article]
    "Back testing is fine as long as completes a major cycle - ie, both rising and falling interest rates."

    DD,

    If we use recent history such a cycle requires nearly 40 years of information. I have neither the historical data or energy to fulfill this requirement. (g)

    Lowell
    Aug 24 01:14 PM | Likes Like |Link to Comment
  • 9 Dividend Aristocrats Reward Investors [View article]
    IT,

    If one is looking for value stocks, then I recommend moving to VOE and VBR. I use those two ETFs in numerous portfolios. Since it is difficult for the average investor to select individual value stocks, going the value route with ETFs makes sense for me.

    Lowell
    Aug 23 05:20 PM | 1 Like Like |Link to Comment
  • 9 Dividend Aristocrats Reward Investors [View article]
    Bikerguy,

    I'm assuming it was a current list as I googled Dividend Aristocrats. I thought about doing a random selection of stocks such as every 9th or 10th stock until my group of nine were filled. Maybe next time.

    Lowell
    Aug 23 09:05 AM | Likes Like |Link to Comment
  • 9 Dividend Aristocrats Reward Investors [View article]
    Galicianova,

    The SHY model does reduce portfolio volatility and that may be important for some investors.

    I have yet to run an analysis where the portfolio review is every 33 days, my normal period for reviewing portfolio. Your statement is certainly true based on the results presented in the article.

    Lowell
    Aug 23 07:49 AM | 1 Like Like |Link to Comment
  • The Swensen 6 Portfolio: How To Reduce Risk And Trounce The Market [View article]
    Nbrege,

    This is not the place to produce all the equations.

    Metric 1 is the performance over the most recent three months or 91 calendar days.
    Metric 2 is the performance over the most recent six months or 182 calendar days.
    Metric 3 is a 10-day mean-variation.

    Lowell
    Aug 22 08:39 PM | 1 Like Like |Link to Comment
  • Dividend Aristocrats Reward Investors [View instapost]
    I'm still in the process of simplifying the Aristotle. As "unwanted" ETFs drop below SHY in performance they will be sold out of the portfolio and the cash will be reinvested in the top performing ETFs. This will likely take a few review cycles.

    Lowell
    Aug 22 05:50 PM | Likes Like |Link to Comment
  • The Swensen 6 Portfolio: How To Reduce Risk And Trounce The Market [View article]
    "I do not trust back tests, they can be gamed to prove whatever you want."

    Hardog,

    I too am skeptical of back testing. Here are a few of my concerns in the above example. In the Swensen 6 plus SHY example we end up with 20% allocated to VNQ and 15% to TLT. Those two ETFs benefited from declining interest rates. That appears to be over, at least for the next 10 years as I expect rates to rise. Keep in mind the allocations we not mine.

    The second benefit in the above study was the Great Recession. Using SHY as a cutoff is a risk reducer and it works quite well in bear markets. The deeper the decline the more effective the model. If one takes this diversified portfolio of six ETFs and starts the analysis in March of 2009, it will not keep up with the total U.S. Equities market (VTSMX). I've shown that with many portfolios.

    In this study there was no finagling to make the results look good. I took third party recommendations and pushed the data back as far as possible.

    As mentioned in another reply, I'm testing these basic principles going forward. That is the true test as to whether this risk reducing model is effective. In the short term the results are positive.

    Lowell
    Aug 22 07:17 AM | Likes Like |Link to Comment
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