Airport Blogging

So I landed from Hilo into Honolulu and have quite a while till my flight, scored an exit row seat to Phoenix though…woo hoo. A question came in that is similar to other questions that I wanted to address. The reader wants to know what eight ETFs I would use to make a complete portfolio and how would I weight the eight. Asking and answering this type of question is a bad idea for both parties on many levels. Why he wanted eight? No clue, which speaks to the problematic nature of this question. The willingness to take free input from a total stranger about what to invest in seems like a horrible idea to me. The person asking may not really know too much about what I try to do, I certainly know nothing about this person. This is a dangerous recipe. It is like taking a the only portfolio you will ever need published in Money Magazine and then implementing it. Is it for a 30 year old or a 70 year old. Gun slinger or widow? Do I, the advise giver, really know what I am doing ( my two hecklers will tell you no), is the person receiving the free advise capable of understanding the portfolio that they are about to implement on their own? Do not take free, generic advice about investing. I write this blog to share thought process. I cringe when someone comments about having followed my “advice” regardless of the outcome because I have no idea if they truly grasped the concept. Staying in touch with the currency market is important...

Airport Blogging

So I landed from Hilo into Honolulu and have quite a while till my flight, scored an exit row seat to Phoenix though…woo hoo. A question came in that is similar to other questions that I wanted to address. The reader wants to know what eight ETFs I would use to make a complete portfolio and how would I weight the eight. Asking and answering this type of question is a bad idea for both parties on many levels. Why he wanted eight? No clue, which speaks to the problematic nature of this question. The willingness to take free input from a total stranger about what to invest in seems like a horrible idea to me. The person asking may not really know too much about what I try to do, I certainly know nothing about this person. This is a dangerous recipe. It is like taking a the only portfolio you will ever need published in Money Magazine and then implementing it. Is it for a 30 year old or a 70 year old. Gun slinger or widow? Do I, the advise giver, really know what I am doing ( my two hecklers will tell you no), is the person receiving the free advise capable of understanding the portfolio that they are about to implement on their own? Do not take free, generic advice about investing. I write this blog to share thought process. I cringe when someone comments about having followed my “advice” regardless of the outcome because I have no idea if they truly grasped the concept. Staying in touch with the currency market is important...

Nick Knacks

This is a YTD chart of the US dollar index. It appears to be down quite a bit. I don’t think I would describe it as a crash but it certainly is noticeable. I am not in the panic-in-the-street crowd that says the dollar will crash. The decline this year, and further back really, has been somewhat orderly and does not appear to be the source of the biggest problems we face; sub-prime, liquidity and GDP growth. It could be argued that the weak currency has been enough of a lift for the multi-nationals to help GDP not be weaker. Obviously, if this is even correct, I am not describing a healthy situation but it is not calamitous either and for now I think whatever it devolves into, it won’t become calamitous. There are investment implications however. Weak growth, for example may not be a calamity but it may not get you to where you need to be either. I pick on EFA a lot but it is better than no foreign equity exposure. To be clear I don’t think is a great choice, especially with all the other options available but it should do well if foreign continues to beat domestic. Let me be clear because someone will add 1+1 and not get 2; better than nothing but worse than just about everything else. under ticker In case you missed it Wisdom Tree is launching a small cap emerging market dividend ETFDGS that, according to an email I received, should start trading on Tuesday. The fund is heaviest in Taiwan 23%, South Africa 14%, South Korea 12%, Thailand...

Nick Knacks

This is a YTD chart of the US dollar index. It appears to be down quite a bit. I don’t think I would describe it as a crash but it certainly is noticeable. I am not in the panic-in-the-street crowd that says the dollar will crash. The decline this year, and further back really, has been somewhat orderly and does not appear to be the source of the biggest problems we face; sub-prime, liquidity and GDP growth. It could be argued that the weak currency has been enough of a lift for the multi-nationals to help GDP not be weaker. Obviously, if this is even correct, I am not describing a healthy situation but it is not calamitous either and for now I think whatever it devolves into, it won’t become calamitous. There are investment implications however. Weak growth, for example may not be a calamity but it may not get you to where you need to be either. I pick on EFA a lot but it is better than no foreign equity exposure. To be clear I don’t think is a great choice, especially with all the other options available but it should do well if foreign continues to beat domestic. Let me be clear because someone will add 1+1 and not get 2; better than nothing but worse than just about everything else. under ticker In case you missed it Wisdom Tree is launching a small cap emerging market dividend ETFDGS that, according to an email I received, should start trading on Tuesday. The fund is heaviest in Taiwan 23%, South Africa 14%, South Korea 12%, Thailand...

The Right Lazy?

A reader left a comment professing a lack of comfort with country selection and wonders about the following lazy portfolio; 55% Vanguard FTSE All World Ex-US (VEU) 45% iShares Russell 3000 Index Fund (IWV) The chart compares both funds with the S&P 500 since VEU’s inception. In its short life VEU, the foreign fund, has had a 0.876 correlation to the S&P 500. In the same time period but less surprising IWV has had a 0.975 correlation to the S&P 500. Further, VEU and IWV have had 0.863 to each other. This is something I have written about many times in the past, all of the diversification benefits of the component countries gets blended away in a broad based product like VEU. I think it is clear that VEU quacks a lot like EFA. During the last slow decline, at the start of this decade, EFA offered no protection and during the next slow decline I doubt it or VEU will offer protection either. VEU will likely do better than the US market if the dollar stays weak or gets weaker but the diversification benefits seem non existent to me. IWV yields about the same as the S&P 500 and while the Vanguard website does not provide the yield for IWV it can’t be much different than EFA which ETFconnect lists at 1.8%. I am not opposed to the concept of a lazy portfolio but I don’t think all the bases can be covered with four funds, let alone two. I am not sure what the optimal number is but two ain’t it. Another reader asked if buying foreign...