Mad Money Machine

5 Responses

1. AIMster December 11 2006 @ 4:25 pm

   Hi, Paul,

   If you want an absolutely minimalist portfolio one that would lilely do reasonably well would be IYY – US total stock market, EFA – MSCI EAFE Index, AGG – Aggregate bond – say 30% each in those and then 5% each in ICF for Real Estate index fund and DBC – PowerShares Commodity tracking index fund. That would be about as minimalist as one could go, I’d think and get fairly broad exposure.

   You might want to expand on this by adding the Templeton EMF Emerging Market fund and RMT Royce Microcap stocks to broaden a bit the range of exposure to both emerging markets and the lower end of the US market, an area perhaps not as well represented by IYY. In such case I’d say go 20% EFA, 10% EMF and perhaps 25% IYY and 5% RMT. Another notch would be to go 20% AGG and 10% SGL – Strategic Global income fund which will broaden the income side by giving it some international exposure. In short, you can get pretty good diversification in under 10 funds.

   As far as a future competition goes, you might well want to move from Zack’s to the Marketwatch VSE. I noticed some time ago that the Zack’s stopped updating the portfolio values. Their tech support people informed me that the simulation provider used to update the portfolio values in near-real time, however the number of users was putting too much strain on their servers so they’ve reduced the updating to “infrequent.” Not as good. Plus VSE will let you run games for up to 740 days.

   As I mentioned in a comment a show or two back the best thing for you to do and the way you’ll keep doing shows is if all the work to make them happen remains fun for you. The day that stops is the day you fold your tent. And since your audience would like to see that day come later rather than sooner – ponder what are the fun things that make it work and focus on those.

   Best wishes for a safe and happy Holiday Season.

   Best,

   AIMster

2. ravjim December 11 2006 @ 11:25 pm

   Paul,

   A few musings, first I would use the portfolio smackdown to invite the person who does the best (and is willing) to place themselves against the ETF portfolio. Keeping a record of what is purchased and why, and to see if results are repeatable from year to year might be interesting and would be better competition. Perhaps we could keep up with all three; the etf portfolio, MMM winner and Jim Cramer.

   While I appreciate your dedication to doing the EFT portfolio every day, perahaps we only need it updated once a week or on the day prior to the next release of a MMM episode. This would save you time and needless to say, keeping up with numbers EVERY SINGLE DAY seems to be something that J Crammer might do. If it is set it and don’t sweat it, we don’t need the numbers so often and there is more Xbox time.

   Thank you for being the voice and the work on this most enjoyable podcast.

3. mallen99 December 12 2006 @ 11:15 am

   I vote for having a new investment challenge in 07 either with Zacks or Marketwatch. Iit would be more realistic and challenging for me if the game could be configured to limit positions to 10% of the portfolio along with the current volume restrictions and do away with Options, but allow short selling.

   Maybe you could setup an account that would represent the ETF portfolio in the contest, and one for Cramer and then we could all compete against each other.

4. mallen99 December 12 2006 @ 11:25 am

   Also forgot that I wanted to mention a new podcast that I have been enjoying lateley that I think you would also like….check out the archive on Nov 16 labeled Cramers comeback.

   http://www.wallstrip.com/theshow/

5. vancwa1 December 13 2006 @ 12:59 pm

   On the simple index portfolio – how about Vanguard Total Stock (Domestic) VTSMX, Vanguard Total International VGTSX, and Vanguard Total Bond VBMFX. If you wanted some REIT exposure – go with Vanguard’s own REIT ETF – VNQ.

   What would be interesting to me is to find out the maximum correlation to a given DFA risk mix with the absolute minimal number of holdings and cost.

   If one can get 95% correlation with 3 or 4 holdings – isn’t that good enough? If it takes 8 or 10 holdings to get 97% correlation, is that worth it?