WC Whiner

The Case for Bonds, and the Problem With Bond ETFs

I like some income if it's stuffed into a tax-deferred account, too.

That said, I am puzzled by your throwaway comment that, "foreign currency, precious metals, emerging markets, commodities, and short positions" were "safely out of the hands of retail investors" before ETFs came along. Even if you restrict yourself strictly to exchange-traded managed vehicles, the closed-end fund industry had delivered things like GIM (inception 1988, non-US sovereign debt, hence a currency and relative-rate play), ASA (inception 1958, not a typo, gold), EMF (inception 1987, emerging markets), PEO (inception 1929, again no typo, oil) and AMO (inception 1994, does a little short-selling).

What seems different to me is not availability, but marketing.

A Model All-ETF Portfolio That Works

You don't even have to look at the tickers to know what's going on here: Large Cap 36% and Foreign 28% say it all. Remember, almost everything has beaten the S&P 500 the last half-decade. If you are underweight it, of course you beat it. I was all set to regress their backtest against some indexes, but they have (gag) a Flash site. If anyone wants to post their monthlies for me, I'll pump them into R real quick.

FD: my little account "soundly beat" the S&P 500 for the five years ended 3/31/06 (alpha 0.8% per month vs that index, t-stat 2.5), but I do not think that speaks to anything than a couple lucky plays and my particular style having been in favor.