Among the more popular portfolios on Scott's Investments has been the ETFReplay.com Portfolio. The strategy has been revised and improved for 2013 in order to make it simpler to follow.

I previously detailed here and here how an investor can use ETFReplay.com to screen for best performing ETFs based on momentum and volatility. I select only the top 4 ETFs out of a static basket of ETFs and re-balance the portfolio monthly. Previously, the static basket of ETFs was 25. This number of ETFs creates a high degree of turnover and also creates cross-over among ETFs that have a high correlations. For example, if you are only purchasing 4 ETFs each month and 2 or 3 of the ETFs are highly correlated, there is little benefit in holding more than 1 of the ETFs.

For 2013 the static basket of ETFs was reduced to 15. From this

Now that I have the capability to work with more than 20 ETFs within the ranking worksheet, I made a list of the critical securities one might use to construct a portfolio. There are three sector ETFs in this group and a special ranking of sector instruments will be

Stocks discussed on the Lightning Round segment of Jim Cramer's Mad Money Program, Friday April 12.

Bullish Calls:

Oasis (OAS): "I like Oasis because it has Bakken assets. If you have Bakken, you are okay by me. I'm going to recommend it right here. Bakken is going to be the biggest (oil play) since Prudhoe Bay."

SPDR Dow Jones International Real Estate ETF (RWX), iShares Dow Jones U.S. Real Estate ETF (IYR): "I like the RWX. I like IYR even better."

Omega (OHI), Health Care REIT (HCN), Ventas (VTR): "Omega is good. It has a 5% yield. I prefer HCN and Ventas, but yours is fine. It has had a run as many other healthcare REITs because of the search and hunt for yield."

EMC (EMC): "I think it is terrific. We were thinking of buying more (for the charitable trust) because we are confident that

Basic financial principles require that long-term investment portfolios exhibit diversification, include potential inflation and deflationary holdings, but still have an equity orientation. The following 20-ETF portfolio meets these requirements although the portfolio is unlikely to hold inflation and deflation securities at the same time.

The following 20-ETF portfolio includes thirteen equity ETFs and seven bond and treasury ETFs. The portfolio is global with exposure to both developed international markets (VEU) and emerging markets (VWO). Domestic (VNQ) and international real estate (RWX) are included. Bonds, treasuries, commodities, precious metals, and sovereign debt are part of the Strategic Asset Allocation plan.

One of the twenty security positions is reserved for the top performing sector ETF, determined by an advanced screening process.

In the following analysis, five years of historical data is included for the optimization and momentum calculations. The U.S. market is projected to grow at 7% annually over the next few

Among the more popular portfolios on Scott's Investments has been the ETFReplay.com Portfolio. The strategy has been revised and improved for 2013 in order to make it simpler to follow.

I previously detailed here and here how an investor can use ETFReplay.com to screen for best performing ETFs based on momentum and volatility. I select only the top four ETFs out of a static basket of ETFs and re-balance the portfolio monthly. Previously, the static basket of ETFs was 25. This number of ETFs creates a high degree of turnover and also creates cross-over among ETFs that have a high correlations. For example, if you are only purchasing four ETFs each month and two or three of the ETFs are highly correlated, there is little benefit in holding more than one of the ETFs.

For 2013, the static basket of ETFs was reduced to 15. From this basket

By Eric Franco

Real estate stocks have now rebounded from the crash during the global financial crisis. But we think valuations are still reasonable, especially as property fundamentals continue to improve in key markets.

Since bottoming in early March 2009, global real estate stocks, as measured by the FTSE EPRA/NAREIT Developed Index, have performed strongly, recovering nearly all the losses suffered during the financial crisis. Now, many investors are asking whether global real estate stocks remain a worthwhile investment. We think the answer is yes.

While global real estate stocks may look pricier than other equities, valuations have only just recovered to levels that are average relative to their own history and they are still attractive when compared with bonds. For example, the cash-flow yield spread to 10-year government bonds remains well above normal.

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The picture is brighter outside the US. Valuations of US real estate stocks

The original "Ivy 20" portfolio laid out an asset allocation where equal percentages (5%) were allocated to each of 20 ETFs. What would such a portfolio look like if it were optimized? The following three slides help readers through the optimizing process and what ETFs to buy, hold, or sell.

Efficient Frontier: The Return/Volatility ratio for the equally allocated "Ivy 20" is shown by the diamond dot. Higher up the Efficient Frontier curve is the optimized portfolio where the Return is 2% points higher with an increase in Volatility from a little over 6% to slightly under 9%. There is quite a separation between the two portfolios. The optimized portfolio carries a higher Return/Volatility ratio, as one might expect since we are pushing for a higher return.

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ETF Rankings: The following data is extracted from optimization software and the output is laid out in the

There are two portfolios I monitor regularly here on Seeking Alpha, one for dividend income stocks (The Team Alpha Retirement Portfolio) and the other for aggressive growth (The Young and Restless Retirement Portfolio). I am often asked about a simple retirement portfolio that would take far less monitoring, while still offering a decent income.

I have identified 5 ETFs which I feel could offer a balanced approach to total investment management, easily monitored, and a fair income stream. While these investments do not have the high rate of returns as our two portfolios, they do offer a more financially secure future (and present) for those of us who are willing to make the trade off of higher returns for less "work".

Here are the 5 I believe could work fairly well: First Trust DJ Global Select Dividend (FGD), SPDR DJ Wilshire Intl Real Estate (RWX), WisdomTree

If you have never heard of fundamental index ETFs you might want to read Robert D. Arnott's book, The Fundamental Index: A Better Way to Invest. Jason C. Hsu and John M. West are co-authors. Check out this link to find out a bit more as to how these ETFs are constructed. Rob Arnott's creditability in the world of investing and ETFs in particular is considerable. This Seeking Alpha link provides a guide to many of these managed ETFs. As I am working my way up to my current 20 ETFs I've been ranking ETFs and the list below is primarily made up from the fundamental ETFs found in the Seeking Alpha article. One of the negatives to fundamental ETFs is the added expense as they are managed investments. However, many tend to perform better than their benchmarks, thereby covering the added expense.

For reference I included

When investors populate their portfolios with stocks or equity ETFs, it is easy to forget just how exposed the portfolio is to risk. The following analysis is a reminder of the high risks we take when constructing portfolios. To know a little more about Risk Parity, check out this link.

Ivy-10 Analysis: The following portfolio is a modification of the Ivy-10 Portfolio. I substituted IWN for VB and GTU for GSG. Otherwise it is the Ivy-10. Without Risk Parity adjustments, this portfolio is projected to return 8.6% with a volatility of 9.5%. That projected return is likely high as the market return is set to 10.0%, an unrealistic figure. I will lower that rate in future analysis.

At the bottom of this screen show is the correlation matrix, pointing out why one includes bonds, treasuries, and commodities to build diversity.

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Risk Parity: The following

On page 76 of Mebane T. Faber and Eric W. Richardson's book, The Ivy Portfolio, the authors lay out a sample portfolio made up of 20 ETFs. Five percent of the portfolio is assigned to each ETF as shown in the following analysis using Geoff Considine's Quantext Portfolio Planner (QPP).

Ivy 20 Analysis: In the following analysis, fifty-seven months of data is used as that is the maximum time EWX has been operational. The second critical assumption is the 7% annualized projected growth for the S&P 500.

The projected return for the Ivy 20, with the above assumptions, is 8.3% with a rather high projected standard deviation of 16.1%. The Diversification Metric (DM) at 23% is well below our goal of 40%. One would think the portfolio would be well diversified since each ETF holds a percentage (5%) of the entire portfolio.

Looking at the historical data, we

Italian Elections

An extended U.S. stock market was handed some bad European news Monday. From MarketWatch:

Hopes for a clear-cut outcome in Italy's parliamentary elections on Monday gave way to fears that a strong showing by Silvio Berlusconi and his center-right allies could trigger a fresh round of political instability.

It is possible another round of elections will be required. Another round of elections means more uncertainty. Financial markets do not like uncertainty.

Last Week, Charts Said "Be Careful"

While today's weakness in stocks will be attributed to the elections in Italy, stocks have been shooting up warning flares for over three weeks. One example is the ratio of small-cap growth (IWO) to Treasuries (TLT) (chart below). When the ratio rises, small-cap growth stocks are in greater demand than Treasuries (a.k.a. risk-on). Conversely, when the ratio falls, Treasuries are in greater demand than small-cap growth stocks (a.k.a. risk-off). Last

The sample portfolio shown below consists of 16 ETFs that cover all major markets found in the eleven portfolios tracked here at ITA Wealth Management. VTI covers all of the "Big Nine" asset classes. We add VIG for added dividends and IWN for any possible push toward small-cap value, or where Fama and French find added alpha.

VEU is our developed international market and VWO is the ETF used for emerging markets. With these few ETFs we now have global coverage. The remaining five asset classes are commodities (DBC), domestic REITs (VNQ), international REITs (RWX), emerging markets sovereign debt (PCY), gold (GTU) and bonds. A number of bond and treasury ETFs cover corporate and different length bond options. The optimizer seeks out the best opportunities.

Three-Year Optimization: The first screenshot shows the optimization when we use three years of historical data and screen for maximum return. The data runs

The yield on a 10-year Treasury bond is very close to recovering 2%. That may sound ridiculously low when placed in a historical context. On the other hand, funds like iShares 10-20 Year Treasury (TLH) have logged -2.1% returns year-to-date, precisely because the 10-year’s yield has gained 0.25% in 4 short weeks.

On a day when domestic stocks pushed to another 5-year high (1/29/2013), popular yield producers labored to post slightly negative returns. Keep in mind, though, all of the assets in the table below have been year-to-date winners.

Certainly, the death of bond ETFs has been greatly exaggerated.

International assets are playing a greater role in a well diversified investment portfolio. With exchange traded funds, investors have found an efficient and easy-to-use tool to access overseas markets.

For instance, Windhaven Intvestment Management, a part of Charles Schwab Corp., is currently overweight international markets, allocating almost twice as much year-over-year, reports Murray Coleman for The Wall Street Journal. The Windhaven diversified growth ETF-managed portfolio has about a 25% weighting to international stocks and bonds, compared with 12% to 13% last year.

"At this time last year, we were at an all-time high in terms of the ratio of assets allocated to domestic versus international stocks in our diversified growth strategy. Now, we're taking a much more balanced approach," Stephen Cucchiaro, Windhaven's chief investment officer, said in the article.

Windhaven develops and creates prepackaged ETF portfolios for advisors and investors. The fund manager has $13.5 billion in assets under

What are the alternatives for an investor when a large majority of assets are fundamentally overvalued and technically overbought? One can wait to participate, of course. Even if there are no obvious reasons for sellers to enter the marketplace, they always do.

On the other hand, stock fund managers are being flooded with cash that they need to put to work immediately; most have very little wiggle room for keeping cash on hand. What's more, retail investors have been blitzed with stories of a "Great Rotation" into equities and away from bonds. Even with prices sitting at five-year highs and even with stocks soaring 10% in just 2 months, demand for risk assets is exceeding supply. Conceivably, this can push the S&P 500 to all-time records without much of a break.

It follows that an ETF enthusiast with excess cash may need to save some cash for a dip-buying opportunity

Perhaps it seems like I have gotten the order reversed, but after looking ahead to 2013 in last week's article, in this one we look at the market in the final full week of 2012. It was a good year in the market, all things considered. Let's take a tour of the final week:

Economy: The "fiscal cliff" drama in Washington took the lion's share of the attention, as it has for weeks now, but there was plenty of other news in the economic arena, much of it encouraging. On the housing front, we saw a nice upside surprise in the Case Shiller 20 city index for October, along with better than expected November pending home sales. Housing is showing slow but steady improvement, and while it won't solve all our economic ills by itself, it is a crucial component of a broad recovery.

Initial unemployment claims came

Well, that's what we're told anyway. Tomorrow is the Mayan doomsday prophecy, and/or perhaps a fiscal cliff deal. I believe Obama was slated to leave for a Hawaiian holiday, but that may be postponed.

The Executive branch and the Senate and House of Representatives each has a role to play in the budget process. The Congress is divided. Compromise is the only solution as in, "I'll give you X and you give me Y." This is the way it should go, but the House and WH are wide apart, with only some give around the edges. House Speaker John Boehner, through a bill, is publicly putting his side's agenda to a vote. So that's a marker from which to negotiate theoretically. And, yes, the Senate will not take up the bill if passed so as not to legitimize it.

Perhaps by the time you read this, the world will have