Aside from Trump-proofing our investment portfolio, my more overriding concern in re-arranging it, was to simplify it!  Although my Wife and I discuss our finances openly, and we talk about our investments frequently, I want her to be more involved, and have a deeper understanding of how we are doing, and what we are doing—on a regular basis.

In a recent post, I pointed-out that I had shifted the Asset Groups around, as follows: Individual Stocks from 42%, down to 16%; stock ETFs (exchange-traded funds) from 18%, increased to 33%; Mutual Funds remained even, from 37% to 34%, and Cash increased from 6% to 16% (plus, we have a little more outside).

The more realistic way to understand those changes, however, is as follows:  stocks—both individually, in ETFs and two mutual funds—have hardly been changed; because, two of the three mutual funds (8%), are stock mutual funds.  A global bond fund represents 25% of the total portfolio, for balance.  And, cash has increased by ten percent.  But, why’d I shift stocks around, rather than convert them to bonds, other securities or cash?

I believe that major indices, such as the Dow Jones Industrials and the S & P 500, are an easier concept for my Wife to feel comfortable with.  Investing in ETFs is basically just accepting the “law of averages”.  For instance, a particular ETF just tracks all of the securities in the particular index, and that includes both the good and the bad ones.  In effect, you can’t go wrong if you match the market, so to speak!

Most indices are weighted, so that each security’s proportion is based on the relative size of the various companies.  Apple, Inc., the largest component in the S & P 500, accounts for 3.25%, while the smallest represents just a tiny fraction of one percent of the index.–and the ETF.  We will still monitor the ETFs so that one or two stocks don’t grow out of proportion, as to make the index meaningless.  Similarly, the same can be said for the component companies of any one industrial sector, and such monitoring would be across all the investment groups.

Yale Professor Robert Shiller won the 2013 Nobel Prize in Economics, for his empirical research on Efficient Markets.  Shiller concluded that the markets are inefficient, and that various external factors often effect the outcome.  Accordingly, he recommends investing in stock indices, since very few investors have ever beaten the market. An article about Shiller’s Nobel win, and ETFs, is linked, as follows: https://www.thestreet.com/story/12069744/1/index-investing-wins-the-nobel-prize.html

Using ETFs reduces the need to analyze each stock; however, we will monitor the indices, as noted above.  Besides the sector weightings, I will probably modify the relative amounts in the various ETFs by company size, from time-to-time. And at some future date, we might decide to sell the remaining four individual stocks and/or the stock mutual funds.  Now, my toughest sales job awaits me—selling this idea to my Wife!

NOTE:  I have linked a post that I wrote some time ago, which hopefully, will be of value to readers who are unfamiliar with ETFs: https://thetruthoncommonsense.com/2012/05/12/which-is-better-etfs-or-mutual-funds/.


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  1. #1 by cheekos on December 24, 2016 - 6:02 AM

    Welcome to my Canadian readers, so we can get a good price on homes before Mr. Trudeau completes HIS Wall, eh!

  2. #2 by cheekos on December 27, 2016 - 3:57 PM

    Let me give you the symbol:


    Keep in mind that the major ETFs–SPY for the S & P 500, DIA for the Dow Jones, EFA for the EAFA (Europe, Australia and the Far East), which we don’t currently own, will have high volume, especially SPY, as compared to other ETFs in similar categories. Institutions use them to jump on a market move–whether In or Out. But, don’t sweat the small stuff–invest for the long-term!

    I sold our small XLY holding today; because, I’m aware that bricks & mortar retail stores are losing business, and also, there was an article about Macy’s (of all places) having to sub-let store space–and also, my wife said that the selection of “tops” was awful.

    You might wonder why I might seem to have re-created SPY with the Sector SPDRs (the symbols beginning in “X”). Notice, however, that the relative amounts will be different, some are missing (like Materials), and it provides a way for me to re-arrange my overall version of SPY.

    I also like the Sector SPDR ETFs, which include all of the S & P 500 components with a particular industrial sector. They are easy to track on Sector Tracker: http://www.sectorspdr.com/sectorspdr/tools/sector-tracker.

    Mutual Funds: SHSAX; PRMTX; TGTRX.

    I have invested with that global bond, initially with a version containing only global government bonds; but, I shifted to this one, when he added other bonds, providing more flexibility. I monitor that the same investment manager is leading it. Also, when he likes a bond, but not the underlying currency (say a German bond), he freely shorts the currency, in that case the Euro.

    NOTE: I bought the funds when I was an advisor; so, I didn’t pay the front-end load on the A-shares; however, if you invest in mutual funds, I certainly would recommend the A-shares. Don’t believe that their aren’t any fees to purchase loaded-funds. Generally, that means an incompetent broker, who cannot explain the value-added in his/her advice. Also, for larger amounts–say $50M across a fund family, owned and new purchase–the commission can be higher, in effect, on B-shares.

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