Indexor

Tuesday Outlook: Commodities, Global Markets

Dave:

I always appreciate your work. In your chart of WIP you noted: "Are WIPs better than TIPs? Some must think so." There is a big tax difference between the two. Phantom income.

The drawback to holding TIPs in a taxable account is that they generate "phanton income." The principal value is adjusted annually to reflect inflation, and you're forced to pay taxes on the increase - even though you don't actually receive the money until you sell the bond or it matures. iShares will send you a 1099 that calculates your phantom income each year but TIP remains best for QUALIFIED ACCOUNTS only.

WIPs are somewhat different. The monthly distributions made by WIP include the coupon interest accrual and the CPI adjustment on the principal. The fund is able to pay this out by selling a very small
portion of the portfolio every month that there is a positive CPI
adjustment. Since the CPI adjustment is paid out every month, from a tax standpoint, there is no "phantom income" realized by the shareholder.

Hope this helps.

Just 5 ETFs and You're Set? Buy-n-Hold Silliness Still Carries On

Gary:

Consider your sources: John Bogle? Motley Fool?? Money Magazine???

It might be time to broaden your information horizons.

28 Key Asset Categories: How Do They Compare?

Hmmm..."Prudent Man CFA" is an options trader? That seems like a bit of a dichotomy in and of itself.

I agree that investing is more art and less science. And as Richard Shaw has provided for us once again, his version of art has painted a colorful canvas that many of us non-CFA's find extremely beneficial. While it may be void of continuously diminishing intrinsic values, I find it full of useful ideas, among a broad array of asset classes, that mere mortals might actually use to make money.

Thank you Mr. Shaw.

Quant Approach to TAA: Equity-Like Returns with Bond-Like Volatility

quaazy1,

Go up to the top of this page and under Mebane's picture is a section for "Bio and more articles." About 6-7 articles down you'll find the original article that this post is updating. It is titled: "A Quantitative Approach to Tactical Asset Allocation." It may just change the way you invest.

Although I've never had the pleasure of meeting Mebane, I've used a very similar system for well over 10 years. I found it uncanny that his article proved the results I've been able to achieve. As Mebane states: "The empirical results are equity-like returns with bond-like volatility and drawdown, and over thirty consecutive years of positive returns." Believe him and thank him for sharing his research.

Risk Management in Trending Markets

Exceptional article! Thank you for sharing your work. I look forward to reading your articles in the future.

El-Erian's Recommended Allocation vs. Harvard, Yale

Mebane: Excellent article, as always. I always look for your posts as we share very similar phiosophies on managing assets.

As Xyrus mentioned, that is my allocation strategy as well, including the specific ETFs, although I am weighted a bit diferently.

Thank you.

Thursday Outlook: Commodities, Emerging Markets

David:
As they say "A picture is worth a thoasand words" and your posts always prove this point in spades. In my opinion, you provide the most entertaining views on this site. Thank you.

The Good, the Not-So-Bad and the Ugly Commodites ETFs

Regardless of whether you are bullish or bearish on commodities, the reality is that this asset class has been trending to the upside for some time. In my humble opinion, common sense dictates 5-10% of a portfolio should be allocated here, if only to take advantage of the negative correlation. 5% could be placed into a broad-based ETF such as DBC, DJP or GSP and 5% in a more concentrated issue such as IAU, DBA, OIL etc. Of course, if you are more bullish, use techinal analysis or are comfortable closing out of reversing positions, those amounts could be tripled for as long as stocks and bonds continue deteriorating.

An Interview With Gary Gastineau

Excellent interview with interesting information. Thank you.