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  • Portfolio Construction Using Asset Allocation, Momentum And Efficient Frontier Analysis [View article]
    Moosb,

    The software used to generate the Efficient Frontier data is written by Peter Hoadley. It is called a Financial Add-In and requires Excel to operate. The cost is approximately $140. This link should help.

    http://bit.ly/1FQ0nCp

    Lowell
    http://itawealth.com
    Mar 22, 2015. 12:29 PM | Likes Like |Link to Comment
  • Portfolio Construction Using Asset Allocation, Momentum And Efficient Frontier Analysis [View article]
    Packer Man,

    VTI has certainly been the place to be over the past six years. No argument from me on that point. The unknown question is - will it repeat over the next six years? Projections are it will not.

    Lowell
    Mar 22, 2015. 09:58 AM | 1 Like Like |Link to Comment
  • Portfolio Construction Using Asset Allocation, Momentum And Efficient Frontier Analysis [View article]
    BlueOkie,

    Are you looking for an Efficient Frontier graph as shown in this blog post?

    http://bit.ly/1FPRTex

    While this is for a different portfolio, the variations is not all that great. Other than not setting the origin to (0,0), the graph is not misleading. Efficient Frontier graphs based on "real" portfolios generate curves that rarely match theoretical graphs we see in text books.

    Lowell
    http://itawealth.com
    Mar 22, 2015. 09:57 AM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Tbeartoo,

    I should have used "High Yielding" rather than "Highest Yielding" in the title.

    Lowell
    Feb 16, 2015. 02:16 PM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Marty941,

    You are right. I am so accustomed to looking at TLT that I mixed up the tickers. One needs to be more careful working with individual stocks compared to dealing with ETFs where such events are smoothed over many stocks.

    One metric in the spreadsheet that I did not play up is the far right-hand column titled, Absolute Acceleration. You will notice that most of the dividend stocks are showing a slowing of growth. When this happens, I go slow with new additions.

    Lowell
    http://itawealth.com
    Feb 13, 2015. 02:19 PM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Rog,

    While most of the portfolios I watch over have yields in the order of 2.5%, it is possible to increase that if income is the goal.

    Lowell
    Feb 12, 2015. 11:17 PM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Rog,

    95% of the ETFs I purchase are commission free so that holds down expenses.

    The portfolios on the ITA site can be used as examples for readers. I manage no portfolios for Platinum members and most readers are do-it-yourself investors.

    To buy more shares on dips, one needs cash. That comes from additional savings, dividends, or sale of existing holdings. Index investing is no different from DGI investing. The momentum model (use of SHY cutoff) has the ability of providing cash from the sale of under-performing securities.

    The research is very clear when it comes to index investing vs. actively managed mutual funds. Over the long run index investing wins and that issue is settled. What is not settled, and likely never will be for lack of data, is whether or not individual investors selecting dividend growth oriented stocks perform better than the market. If this can be shown to be true then one needs to reexamine William Sharpe's "The Arithmetic of Active Management" premise.

    Lowell
    Feb 12, 2015. 08:05 PM | 1 Like Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Catmangog,

    I'm very familiar with the DGI approach to investing. Here are a few advantages I see to this investing model.

    1. Followers seem to be savers.
    2. Dividend Growth Investors (DGI) are patient, not emotional.
    3. Since securities are held longer than one year on average, there are tax advantages that can add up to 2% per year to the portfolio.
    4. DGI investors have an investment plan and stick to it.

    These are some characteristics I've picked up from reading articles and comments from DGI investors. Not all will apply to all, but these seem to be general trends. Having said this, all these characteristics can apply to index investors as well as dividend stock pickers.

    As for the 2001-2002 and 2008 Great Recession, the "SHY cutoff" model works like a charm. I was using a similar model back in the October 1987 crash.

    Lowell
    Feb 12, 2015. 04:36 PM | 1 Like Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Catmanrog,

    It is an incorrect assumption to infer I use SHY as a benchmark. SHY is used as a cutoff ETF. As for benchmarks, I rely on two and they are; VTSMX or Vanguard's Total Stock Market Index fund and a customized benchmark called the ITA Index. This customized benchmark is built for every portfolio and reflects the performance of the Strategic Asset Allocation (SAA) for each portfolio. This is not easy to explain in writing without knowing how the portfolio tracking spreadsheet works and what I mean by a SAA plan.

    Yes, I've heard of David Fish etc. Yes, I've explained, use, and report on this model on a regular basis. Each portfolio is reviewed every 33 days and performance results are posted each week and that post includes portfolio performance, benchmark performance, performance trends, and three risk measurements. They are: Information Ratio, Sortino Ratio, and Retirement Ratio. Disclaimer: It is very hard to outperform the U.S. Equities market.

    Correct in that I do not hold any of these dividend aristocrats as I primarily use non-managed index ETFs to populate portfolios as all the data I've been able to locate does not bode well for individual stock selection. This is not to say no one can do it.

    I hope this clarifies and enlightens rather than inflame.

    Lowell
    Feb 12, 2015. 03:04 PM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Lynn,

    Even VTI would be sold if it is found to be below SHY in performance.

    Lowell
    Feb 12, 2015. 02:09 PM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Marty,

    Remove TLT from the list if you consider it to be an outlier, or at least limit the percentage you want to allocate for the portfolio.

    What I am finding is that investing in ETFs (I use commission free with TDAmeritrade) that are outperforming SHY and avoiding those that under-perform SHY improves the return trend with respect to benchmarks. I need more data to see if the trends continue. In addition, a good correction of 10% to 15% would further test the model.

    Lowell
    http://itawealth.com
    Feb 12, 2015. 01:10 PM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Lynn,

    If you are suggesting using VTI as the cutoff ETF, that will work so long as VTI is performing quite well. The reason for choosing SHY is the low volatility as that tends to work well in both bull and bear markets. VTI is not adequate as a "circuit breaker" in bear markets.

    Lowell
    http://itawealth.com
    Feb 12, 2015. 01:04 PM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Retirement,

    SHY is the cutoff or "circuit breaker" ETF. Think of it as a reference point where one does not invest in a security that lies below SHY on the ranking scale. In the current situation, as shown in the above ranking table, SHY would hold zero shares as we have plenty of stocks and ETFs performing well above SHY.

    Perhaps I did not make this clear.

    Lowell
    http://itawealth.com
    Feb 12, 2015. 09:24 AM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    George,

    Assuming dividends are not needed for income, they are reinvested when the portfolio is reviewed. I tend to reinvest in the top two ranked securities at the time of the review.

    Personally, I primarily use ETFs as my securities of choice as I can come up with low correlated ETFs with a global outreach. If income is desired, one can load up on high yielding ETFs, assuming they are outperforming the cutoff ETF, SHY.

    Lowell
    http://itawealth.com
    Feb 11, 2015. 05:40 PM | Likes Like |Link to Comment
  • Dividend Aristocrats: 12 Highest Yielding Stocks For Retirement [View article]
    Brian,

    I have a friend who has a program written in R that works for back-testing. I submit the data and he runs the tests. I'll just add that we find uncertainty to be a major issue when it comes to back-testing. The return and volatility measurements are highly dependent on the securities selected, starting and ending dates, look-back period, review periods, etc. Back-testing, when carefully examined, is close to "black magic." I think it takes an engineer with a background in uncertainty to appreciate this.

    Instead of relying so much on back-tests, I am meticulously tracking 14 portfolios using both passive and active management models. These are real portfolios in the sense that real money is invested. Internal rates of return are measured as well as several benchmarks. Each portfolio has its own customized benchmark that is modeled after the Strategic Asset Allocation plan laid out for each portfolio.

    I'll leave it at that as this is likely more than you wanted to know.

    Lowell
    http://itawealth.com
    Feb 11, 2015. 05:32 PM | Likes Like |Link to Comment
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