by Paul Douglas Boyer
In a previous posting , I calculated the 12 month rolling returns for all IFA portfolios.
That posting is in error (that I do not believe was my fault). I have corrected it. It turns out that Feb 1, 2008 thru Jan 31, 2009 was not the worst 12-month rolling period, but it did come close.
I’ll be watching to see what happens at the end of this month.
Here is the corrected chart.
Sat, February 14 2009 » Analysis, Blog » Comments Off on Corrected 12 Month Rolling Returns
Sold my Kindle. We hid a Geocache. MM on iTunes. Cramer likes index funds. Take the IFA Challenge. Check out the backtest your portfolio spreadsheet. Gold. Icarra.com. Tom Woods. Avoid capital gains? Listener emails. Peter Schiff vs. Mish.
But, if you just cannot deal with that then go ahead and Play the new show right nowThe Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com 
Topics in this week’s show include:
7: Avoid capital gains and dividends and realize losses in taxable accounts.Music from music.podshow.com:
Runaway Train – Under Feather
Fri, February 13 2009 » Podcasts » Comments Off on MMM-146: Back in Time
Barrons continues their analysis of Jim Cramer’s Mad Money stock recommendations. Bottom line is that their analysis confirms what I learned by experience back in 2006: Cramer’s stock picks are worse than just buying and holding index funds. They actually suggest that buying short-term in-the-money puts on Jim’s recommendations can make you money. They say, "Those bets could earn over 25% in a month, Chen concludes, at the expense of Cramer’s fans." Hmmmm, maybe I’ll try that.
Wed, February 11 2009 » Analysis, Blog, Cramer » Comments Off on Bet Against Cramer, Make Money
[Update: Corrected the image. Note that the Bogle portfolio is corrected in the Google Spreadsheet – to some extent.]
I have copied Simba’s Backtest Portfolio spreadsheet from the Bogleheads forum into a Google Spreadsheet that you can use to back test a portfolio of Vanguard mutual funds and compare their performance from 1972 – 2008 to the IFA Index Portfolios. Combine the funds any way you like and compare them against IFA’s twenty portfolios. I included the "returns" for gold there for your convenience.
This graph from that spreadsheet shows the plots of a few others including the Coffeehouse portfolio, Harry Browne’s Permanent Portfolio, Scott Burns’ Four Square portfolio, and a couple of others along with IFA’s portfolios (they follow a nice line). Unfortunately, Google spreadsheets doesn’t do labeling very well on the data points. I would have liked each point to be colored and have a legend identifying those colors. Anyway, remember you want to be at a point at the top left on this graph. The line that is formed is called "The Efficient Frontier" beyond which it is difficult if not impossible to achieve. The strong correlation between returns and risk is evident. However, it is easy to be bottom right!
If you want to play with the spreadsheet yourself, feel free to bring it up. You’ll need a Google account. Leave the years to be 1972 – 2008 in order for the comparisons to be valid. Here’s the link:
https://spreadsheets.google.com/ccc?key=pOjc3ot10vgs0eml-DJZKcw&newcopy
But wait, there’s more!
IFA is now allowing you to submit your past financial statements to them so that they can compare you’re portfolio’s performance against their index portfolios. Go their web site at ifa.com to learn more. Here are some comparisons they have already performed.
Tue, February 10 2009 » Analysis, Blog » Comments Off on Backtest Portfolio Challenge
Amazon announced the upgrade to their Kindle ebook reading device today. Get in line to buy one if you want. I just sold my old one yesterday. I will probably not be buying the new one because I think for $359 I can buy a heck of a lot of books. Or I can buy a netbook and not only read books on it but also surf the internet and get my email.
I owned the Kindle 1 for about a year. I purchased a total of 3 books for it. Yet I had about 100 books on the gadget. How? I used software called mobipocket to convert pdf files to the format the Kindle likes. Many sites on the internet allow you to download free public-domain books. I also didn’t purchase many books because many times the books I wanted to read were not available at Amazon for the Kindle. And if I could get the book from the library, I actually think I prefer the hardback version to the electronic version, possibly because I get immediate feedback of where I am in the book just by feeling it.
I do like the idea that I can carry a stack of thousands of books around on one device. I like that my home is not as cluttered with books. But I’m thinking that if I can find a great pdf reader for the iphone, I’ll just use that instead.
Mon, February 9 2009 » Blog, Fun, Reviews » Comments Off on Kindle 2 Announced. Should you buy?
I just remembered a web site that was a Tool many many shows ago. This tool will help you benchmark your portfolio or to test out a new portfolio. It will allow you to compare it against another benchmark and it will calculate returns, standard deviations, and also Sharpe ratios.
The web site is http://www.icarra.com
Get over there and create an account and try it out. They have really made some nice improvements since I last used it.
Fri, February 6 2009 » Analysis, Blog, Tips » Comments Off on Benchmarking *YOUR* Portfolio
Great song. Conspiracy of the Rich. MMM.com DEACTIVATED. The Musical. Benchmarking your portfolio. Risk. TOOL is Google Tasks. Where Is The Interest?
But, if you just cannot deal with that then go ahead and Play the new show right nowThe Mad Money Machine is proud to advertise Index Funds Advisors at ifa.com
Topics in this week’s show include: 6. Risk exposure must be initially matched to the investor’s risk capacity , then monitored and maintained through rebalancing .Music from music.podshow.com:
Boys! Grab Your Guns – My American Heart
Runaway Train – Under Feather
Fri, February 6 2009 » Podcasts » Comments Off on MMM-145: This Is Not America
Here’s an easy to digest journey through the 12 Step Program for Active Investors. The 12 steps span four videos. Be sure to watch all four!
FOR BEST RESULTS, AFTER YOU CLICK PLAY, CLICK THE ARROW BUTTON IN THE BOTTOM RIGHT THEN SELECT "HQ" TO GET EVERY OUNCE OF INDEXING JOY FROM THESE VIDEOS!!!
This was a lot of fun to put together. I used Keynote and then exported the show to iMovie to render the video. Images and diagrams are from ifa.com. For backtested performance information go to ifabt.com.
Wed, February 4 2009 » Analysis, Blog, Fun, Tips, Video » Comments Off on Index Funds: The Musical!
At the end of October 2008 we experienced the worst 12-month rolling period for stocks in 50 years. Then at the end of November we outdid that. Now at the end of January 2009 we have a new low for a 12-month rolling period in many indexes and portfolios. We came close to the worst rolling 12 months again, but did not pass it.
The following table is taken from ifa.com, combining the returns for 11 months from 1 Feb 08 through 31 Dec 08 and the 1 month return for Jan 09.
Here is the corrected table.
Previous table, wrong:
Source: http://www.ifa.com/portfolios/PortReturnCalc/index.aspx and http://www.ifa.com/portfolios/
Tue, February 3 2009 » Analysis, Blog » Comments Off on Downdraft Keeps A Rollin’ (corrected)
We just finished watching our favorite movie. Again. Every year on February 2nd we try to set aside some time to watch Groundhog Day. Again and again. When I say favorite, I mean our number one pick of all movies. The only other movie we watch multiple times would be some version of Charles Dickens’ Christmas Carol. The two do have some similarities, mostly revolving around the theme of redemption. If you have not seen GD, please find a copy somewhere and watch it before the next Groundhog Day.
We have probably seen it 20 times. Every viewing is “spoiled.” So who cares if the plot is spoiled? Nevertheless, if you have not seen Groundhog Day and do not want to be spoiled, please stop reading now. This post includes SPOILERS.
A quick plot review: Phil Connors, played brilliantly by Bill Murray, is a bitter and sarcastic weatherman sent to cover the Groundhog Day festivities at Gobbler’s Knob near Pittsburgh. He gets stuck in time and wakes up on the same day over and over. Phil is the only one who realizes it. He can learn new things but everyone else is unaware. They are living the day for the first time every time.
At first Phil is bewildered. The next few loops of days later he gets angry. Several loops later he gets depressed. Then he repeats loops in which he tries to take advantage of his unique situation. He is learning while others stay frozen in their knowledge. This becomes boring to him eventually. He becomes depressed and resigns his fate. He comes to marvel at how his producer Rita (Andie MacDowell) is genuinely kind to everyone she meets and he comes to realize that he too can be kind. He sets out in the final loops of days to be kind in each and every situation in which he places himself. He learns to play the piano, to speak French, and to ice sculpt. He knows everyone in town and much about them. He truly changes his character. The last loop ends after Phil completes his transformation from bitterness to kindness. He, like the groundhog Phil, sees his shadow. His winter ends.
Groundhog Day works on many levels. It is funny, tender, philosophical, sad, clever, and though-provoking. I imagine this must have been a joy for writers Harold Ramis (of Ghostbusters) and Danny Rubin because of its roller-coaster cleverness. And it must have been fun to shoot because many of the sets were used in a variety of multiple takes to demonstrate the various stages of Phil’s time loops.
But the main reason the film appeals to me so much is because the movie unwittingly portrays the life of a computer programmer, like me. We are a unique breed of people; we who interact constantly with others, in our case computers, that are stuck in time. We are always trying things, failing, and ultimately succeeding. We code up something that never works the first time. We start over, make a change, and try again. We get angry, sad, frustrated, resigned, and ultimately overjoyed at our software loops. The computer doesn’t know what we’ve been through. We are the ones learning while the computer simply responds to our interaction. We come to realize that we must be kind to our computer, we must be careful what input we provide to it. It only knows us by our inputs.
After 10,000 hours at the keyboard, we master our environment. We learn the new languages. We sculpt out of the hardness that which time melts away. We use our skill for genuine good, not expecting reward. We’ve been through the cold and the gray but tomorrow does come and it is a better day.
Tue, February 3 2009 » Blog, Fun » Comments Off on It’s Groundhog Day, Again.
The Day the Market Fell. Good music for your Saturday…
From BLUE YORK by John thomas Oaks and Grand Central
Music and Lyrics by John thomas Oaks
Featuring Tim Caudill — Bass, Gary "Biscuit" Davis — Banjo, Kevin Moore — Fiddle, Jeff Zona — Acoustic Guitar, Lakieta Bagwell and Jimmy Bryant — BGVs
Sat, January 31 2009 » Blog, Fun, Video » Comments Off on The Day the Market Fell
1GoZzZBqG59VyDVeNRAjjscPwRL4guovWG
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