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Lowell Herr

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  • Portfolio Management: Blending Asset Allocation And Momentum [View article]
    Are those real or "paper" portfolios?

    Lowell
    Jan 19 04:43 PM | Likes Like |Link to Comment
  • Bullish Percent Indicators Show Little Change In Markets And Sectors [View article]
    J,

    The heat map for the BPI data is created within Excel.

    Lowell
    Jan 14 06:25 AM | Likes Like |Link to Comment
  • Building And Managing That First Portfolio [View article]
    Bob,

    The Dashboard is what I use as a general guiding model for long-term investing. You may not want to be as aggressive so take note of the small percentage allocated to bonds.

    The problem with buying the top ten is that you end up with a portfolio of highly correlated ETFs. Take a look at this blog post to better understand my point about looking for low correlated ETFs.

    http://bit.ly/1eA8wLv

    Lowell
    Jan 13 10:38 AM | Likes Like |Link to Comment
  • New Tactical Asset Allocation Strategy To Grow Retirement Savings At Reduced Risk [View article]
    Readers following the comments to this article will find this study of interest.

    http://bit.ly/1bWrMzQ

    Lowell
    http://itawealth.com
    Jan 9 05:18 PM | Likes Like |Link to Comment
  • New Tactical Asset Allocation Strategy To Grow Retirement Savings At Reduced Risk [View article]
    Cliff,

    I am using and testing a similar model. I start with approximately 30 ETFs that cover 15 to 17 asset classes. This is to make sure there are a number of low correlated ETFs when compared with U.S. Equity ETFs.

    I then run what is called a "Cluster Weighting Momentum" analysis which breaks the 30 ETFs into 10 clusters, all with correlations generally below 70%. The top performers of each cluster must be outperforming SHY in order to be considered for purchase. A ranking system extracts the best ETF from each cluster, assuming it is performing better than SHY. A percentage is assigned to each ETF that is a candidate for purchase.

    I review portfolios every 33 days. Early results are positive, but it is still much too early to drawn any conclusions. I need to experience a 10% to 15% correction to have a better idea if this model works.

    Lowell
    http://itawealth.com
    Jan 7 04:51 PM | Likes Like |Link to Comment
  • Have Index Funds Become Too Popular? [View article]
    Larry et. al.,

    It appears to me that this passive vs. active management debate occurs on two levels. At the DFA management level the decisions fall into the active management camp while at the investor level, due to not being actively involved in the makeup of the funds, one can assume a passive stance. Of course this depends on the advisor handling the investors funds since access to DFA funds requires an advisor.

    Here is the question I would ask. Does placing a "passive DFA advisor" between the investor and the DFA fund managers constitute passive investing any more than an investor purchasing an actively managed mutual fund directly?

    Lowell
    Jan 7 01:03 PM | 1 Like Like |Link to Comment
  • Building And Managing That First Portfolio [View article]
    My error in not checking the launch date for VOOG. That short history would be one reason for not using it as some of the research I do goes back further than 2010. In some cases I even needed to use iShares such as IVW in order to gain access to more history.

    Lowell
    Jan 6 01:54 PM | Likes Like |Link to Comment
  • Building And Managing That First Portfolio [View article]
    Webapalooza,

    I'll leave that strategy up to deep value investors. The argument against such a strategy is that investments that are dropping in price continue to move in that direction and securities that are performing better continue in that direction.

    Of course there are inflection points and that is why the columns of absolute and relative acceleration are included in the table.

    Lowell
    Jan 6 01:10 PM | Likes Like |Link to Comment
  • New Tactical Asset Allocation Strategy To Grow Retirement Savings At Reduced Risk [View article]
    Does Schwab charge a short-term trading fee for investments held fewer than 30 days?

    Lowell
    Jan 6 10:10 AM | Likes Like |Link to Comment
  • New Tactical Asset Allocation Strategy To Grow Retirement Savings At Reduced Risk [View article]
    Cliff,

    May I suggest you use a portfolio tracking software program such as the TLH Spreadsheet so you can compare the IRR of the portfolio with benchmarks such as VFINX, VTSMX, or VGTSX. The software also has the capability of setting up a customized benchmark. While not a perfect customization, it certainly beats many inappropriate benchmarks.

    I am interested in how your model works out in the future using real money.

    Lowell
    http://itawealth.com
    Jan 6 08:35 AM | Likes Like |Link to Comment
  • Building And Managing That First Portfolio [View article]
    Amruth1,

    When VNQ and RWX move from below to above SHY they will once more be candidates for inclusion in the portfolio.

    Lowell
    Jan 5 10:46 PM | Likes Like |Link to Comment
  • Building And Managing That First Portfolio [View article]
    Misscbd,

    VOOG is certainly another option. VUG carries a lower expense ratio and it has outperformed VOOG (Yahoo! data) over the past five years.

    Dividend ETFs I include as potential investments are: VIG, DVY, VYM, and IDV. REITs also contribute significantly to income.

    Lowell
    PS There is a lot more information on my blog at http://itawealth.com
    Jan 5 03:08 PM | Likes Like |Link to Comment
  • Building And Managing That First Portfolio [View article]
    Alexlega,

    I review every portfolio every 33 days. This rotates the update throughout the month on different days.

    Lowell
    Jan 5 10:03 AM | Likes Like |Link to Comment
  • Has The Market Lost Its Mojo? [View article]
    Joe,

    The first move is to go to cash or invest in SHY. There are times when I will take the cash and invest in ETFs that are doing very well.

    Good question as I was not clear on this point.

    Lowell
    Jan 1 09:05 AM | Likes Like |Link to Comment
  • Have Index Funds Become Too Popular? [View article]
    SanDiego,

    I've found these definitions by Harold Evensky useful.

    "Evensky writes in Wealth Management, “Active Management is the art and science of security selection based on a belief in a manager’s ability to consistently and accurately evaluate current and/or future events better than other investors. The core philosophical basis is that by brains, hard work, and/or technology the active manager can, over time and net of costs, beat the system. As selecting one asset class in lieu of another is an “active” decision, market timing and active asset allocation are subsets of active management.“

    Passive management is a little more difficult to define. Evensky does us a favor by breaking the discussion into index investing and passive investing. Quoting from his Wealth Management book, Evensky writes the following.

    "Passive management is the antithesis of active management. Its core philosophical tenet is that by brains, hard work, and technology, a manager cannot, over time and net of costs, beat the system; he can, however, beat most active managers. Passive management is often assumed to be the equivalent of index management. It is not. Index management is a special subset of passive management. A passive manager may make active trading decisions. His decisions, however, are based on information currently available to all investors, not on an ability to read between the lines or predict future trends and events. Index management is passive management with the added constraint that the manager does not make active trading decisions."

    I hope this helps separate some of the ideas behind active, passive, and index investing.

    Lowell
    Dec 30 08:46 PM | Likes Like |Link to Comment
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