Max Money Blog

Updated through June 27th, 2008

Higher the percentage of stocks you have in a lazy portfolio, higher is your portfolio’s standard deviation.

All of the lazy portfolios cited above beat S&P 500 index in every timeframe.

Not only that,  but they also get you there with a lower draw-down i.e. fall off the peak.  

Current Outlook

S&P 500, US Dollar Index, CRBI Reuters/Jeffries Index, US Treasury Yield charts.

Current Outlook

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Yeah right!! Well according to this news article on MarketWatch, if the congress passes the law to limit speculation on the energy futures market this may not too far fetched. The speculators will have to quickly unwind their positions and it may not even take that long.

According to Michael Masters of Masters Capital Management, the price of oil should come closer to $70 a barrel.

Congress is looking at closing the London loophole and putting restrictions on index speculators via higher margin requirements, setting position limits etc.

Watchout for commodity ETFs to take a hit if this indeed happens. Refer to my Sector ETFs ranking and signals page for Commodity ETFs.

FTSE has launched a new global alternative energy index. The FTSE Environmental Opportunities All-Share Index is made up close to 500 companies that are involved with alternative energy, water and waste management efforts.

The new index has hit the ground running and has already been licensed by Russell Investments.

How is it different from other alternative energy indices, you ask? To be able to qualify for the new index a company only has to have a minimum of 20% of its revenue from environmental friendly endeavors. The other indices require that atleast 50% of the revenue come from such efforts. This restriction implies that only smaller companies are able to qualify for the ‘traditional’ alternative energy indices while the new index favors established companies that are transforming into more environmental friendly.

Barclays has launched a new ETN that tracks the Global Emerging Markets Strategy Pegged Currency Index. The Barclays Asian and Gulf Currency Revaluation ETN (PGD) covers the currencies of Saudi Arabia, UAE, China, Hong Kong and Singapore.

It is widely expected that these five countries will have their currencies reevaluated and their dollar pegs adjusted upwards, resulting is a profit opportunity in the not so long term.

Barclays has another ETN that tracks 15 emerging market currencies in US Dollar terms (JEM).

Here are the performance numbers of the lazy portfolios profiled in my earlier post.

I was asked to add the Merriman portfolio to the mix, so I have provided numbers for that too. I will later update my earlier post to provide details on the Merrriman portfolio.

Performance numbers are as of yesterday, 24th June, 2008.

Clearly, higher the Stock equity %, higher is the standard deviation.

All of the above portfolios beat SP500 beyond 6 months timeframe, with lower draw-down.

All but one portfolios, beat SP500 beyond 3 months.

I have profiled some lazy portfolios below. I am hoping that this will help me become a better lazy investor. In addition, it will also help the readers of this blog with their investment decisions.

The performance numbers for these portfolios will be updated every weekend. If there are portfolios that are not covered here but you’d like to be in this list, do let me know.

Something about my investments portfolios, I usually have multiple accounts. A few of those are pure lazy ones, while the others are little active. I will be talking about the active techniques in some other posts. This article has the lazy portfolios that I have been influenced with. My own investments are in a combination of a few of these below.

My references have been, for the most part, the articles of Paul Farrell, a Marketwatch columnist, and the web-pages of the inventors of the individual portfolios. I will provide references below if you’d like to follow up and get some more information.

Paul Farrell is a huge proponent of lazy portfolios and every now and then he writes about them. He is also the author of the book "The Lazy Person’s Guide to Investing". I highly recommend it to anyone who has any interest in this subject matter.

Second Grader’s Starter Portfolio

Originally by Kevin Roth when he was in second grade. I came to know of this by Paul’s article  and here.

Total Equity allocation: 90%

Scott Burns Lazy Portfolio Suite

Columnist Scott Burns (Assetbuilder.com) has a bunch of lazy portfolios.

Couch Potato Portfolio:

Total Equity allocation: 50%

Margaritaville Portfolio:

Total Equity Allocation: 66.6%

Four Square Portfolio

Total Equity Allocation: 50%

Five Fold Portfolio

Total Equity Allocation: 60%

Six Ways From Sunday Portfolio

Total Equity Allocation: 66.67%

Dr. William Bernstein’s Portfolios

William Bernstein is a neurologist by training and is now also a financial advisor. He is the author of bestseller books, "The intelligent Asset Allocator" and "The Four Pillars of Investing".

No Brainer Portfolio (Link)

Total Equity Allocation: 75%

Smart Money Portfolio  (Link)

Total Equity Allocation: 60%

David Swensen’s Unconventional Portfolio

Mr Swensen manages the Yale University’s Endowment Fund and is the author of "Unconventional Success"(Link).

Total Equity Allocation: 70%

Bill Schultheis’s Coffeehouse Portfolio

Bill Schultheis is a former Smith Barney broker. The portfolio was launched in his 1999 book "The Coffeehouse Investor". It seems this is the No. 1 book that Jack Bogle recommends to people who are just starting out (Link).

Total Equity Allocation: 60%

Ted Aronson’s Family Portfolio

Ted is principal at AJO partners, an institutional fund manager. All his family’s taxable money is in Vanguard Index funds (Link).

Total Equity Allocation: 80%

I need to update my lazy portfolio suite with a few of these portfolios,  which I will do tomorrow evening. Hopefully I will have the numbers in a neat table uploaded tomorrow night. In the meantime, do let me know what else you’d like to see. Till then…

I have started publishing ETF performance rankings and signals. This will normally be a weekly feature unless there is interest to have this updated daily. There is a lot of information in these links below and I would appreciate some feedback as to how to best present it. I don’t have all ETF classes covered yet but it’s just a matter of time. If you happen to have any specific preferences, I may be able to accommodate them. Also, if you see any ETF missing from a list and you’d like it to be added, please drop me a line.

ETF rankings are for educational purposes only and should not interpreted as an investment advice.

Overall Top Performers

Last week, Northern Trust launched a new ETF that tracks the local Irish blue-chip ISEQ 20 Index. The ETF is listed under the symbol IQE on the NYSE Arca exchange and tracks the 20 securities that comprise the index. About 40% of it is weighted in financials. The expense ratio is at 0.48%.

It will soon have company with ETFs from PowerShares and SSGA joining the race. IQE, however is unique since it is the only one that will cover the Ireland’s local index.

Do you think this is a good time to invest in Ireland?