this post is a test, it is only a test. it was an actual post you would be told to read the post. This is an education issue that I have touched on before. And here is the rest of it. When an investor buys an actively managed mutual fund or goes through a broker who hires managers, in both instances the managers must assume that the asset allocation decisions have been made. It is right and reasonable for a small cap manager in the context above to be more than 97% invested at all times. A small cap fund needs to be a proxy for small cap stocks regardless of the direction and magnitude those stocks take. Fund managers and managers of separate accounts in brokerage house programs are not asset allocators that falls on you or your...

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this post is a test, it is only a test. it was an actual post you would be told to read the post. This is an education issue that I have touched on before. When an investor buys an actively managed mutual fund or goes through a broker who hires managers, in both instances the managers must assume that the asset allocation decisions have been made. It is right and reasonable for a small cap manager in the context above to be more than 97% invested at all times. A small cap fund needs to be a proxy for small cap stocks regardless of the direction and magnitude those stocks take. Fund managers and managers of separate accounts in brokerage house programs are not asset allocators that falls on you or your...

Reader Questions

“From a Mr. Richard Feder in Fort Lee, NJ.” Roger, I’m looking for a few ETF’s. I want one to be a ETF that invests in company’s that produce Copper, Platinum and other metals and may track a Commodities spot index and I want a ETF that will invest in India. Also what is your favorite ETF’s for 2006??? Deutsche Bank is supposed to be bringing an ETF that is linked to a commodity index that is expected to trade under symbol DBC. I’m not sure when it will price. For folks that do business at Merrill Lynch, they can access the Rogers International Commodity Index Fund. That one trades on the CME and for some reason does not seem to be available at other firms. PowerShares will have an ETF for India soon. That last I read about it, probably at ETFInvestor.com, it was only going to have 17 components. There are two closed end funds for India. I own one of the two for some clients. The 17 thing is a bit of a concern to me. Judging by the last question, I would guess the person might be a new reader of this site. I don’t really have a favorite anything, where portfolios are concerned. I write a lot about themes that make the most sense to me and I overweight the best way I can. The other thing is that I don’t use too many ETFs for clients. Where possible I use common stocks. Sometimes an ETF is the best possible tool. I was quoted in the year-end issue of Businessweek talking about the iShares...

Doing Some Financial Planning?

This is the time of year where a lot of folks review their portfolios to make sure they are on track for whatever it is they are saving for. This is probably a good idea. One word of warning would be if you use a retirement planning calculator to tell you how much you will have or how much you need to save or anything else. I plugged our numbers into two calculators yesterday and got results that made no sense. I assumed 7% average growth in assets and 4% inflation. So slower growth and higher inflation than we’ve had and both results were too encouraging. One calculator said I didn’t have to save anymore money and the other said that with my savings plans my assets will be worth a gajillion dollars. I’m not that old nor am I that wealthy. The idea that someone my age could stop squirreling away is ludicrous. I am a huge believer in giving yourself as many options as you can. Where saving and planning are concerned this means socking away as much as you possibly can, one way or another. For example, an investor that saved 50% more than needed with a plan of retiring in 2000 could have better handled a 25% hit to a properly diversified portfolio than if the amount saved was only exactly what was projected as the magic number 20 years earlier. My example is flawed, but its the best I could come up with early on a Saturday and it does make the...

Reviewing Some of 2005

The title says some because I’m sure there will be a couple of things that I will forget to mention. A major aspect of my approach is to try to be right more often than I am wrong. There is no getting around being wrong, success can still be had being wrong on many things. Theme-wise I really did not get too many thing wrong this year. Energy worked as the sector, measured by XLE, outperformed the SPX by about 35%. I overweighted dividends too. DVY actually lagged SPY by about 3%. Add back in the extra percent and half yield advantage and total return lagged by about 1.5%. That one might be a push? I was obviously wrong with the little bit of defensive action I took in October. That caused some drag in the fourth quarter. I overweighted foreign. Generally that worked very well. Of the roughly 29 foreign holdings that are in my ownership universe, 25 of them outperformed the S+P 500. I think what is most interesting is that many foreigns outperformed despite the dollar being up for the year. Also most of the countries I talked about all year beat the S+P as well. Most of the wrongs were individual stocks. I had rough go’s with BSX, BKF, ZBRA, IGT, SYMC, VZ, DELL and JNPR. My worst stock was FOXH which was owned by one client with an aggressive mandate. I sold it so he could take the tax write off. There may be others but that paints a good picture. Fortunately no one client owned all of them. At this point I’m not...