by The Investor
on October 26, 2009
Update: We have a much newer and shinier and up-to-date version of this article on lazy portfolios for UK investors. Click the link to read it!
Most investors — even those who pick shares and should know better — would do well to get their stock market exposure via cheap index trackers.
Invest via an exchange-traded fund (ETF) – which are basically index trackers you can buy and sell on the stock market – and you’ll also benefit from lower annual charges and the freedom to sell in an instant.
Buy a few ETFs to cover several asset classes and you can create a diversified ETF portfolio in less than 15 minutes!
With dealing costs of under £100 and no stamp duty to pay on ETFs, creating your ETF portfolio will cost you a tiny fraction of what a private wealth manager or full service broker would charge, and the chances are you’ll do just as well over time — likely better, considering the ETF portfolio’s low costs.
If you rebalance your holdings annually – cheap and easy with ETF portfolios — then you’ll manage your state-of-the-art portfolio in less time than it takes to eat your Christmas turkey.
The big decision is what to hold in your ETF portfolio.
Understand there is no perfect portfolio. Complex asset allocation strategies aren’t proven to be more effective than rough-and-ready ones.
Instead, numerous writers have offered their own version of the lazy ETF portfolio. Each claims to deliver most of the diversification benefits that ETFs can offer for minimal time, effort, and/or cost.
In this post I’ll outline nine such ETF portfolios for UK investors.
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by The Investor
on October 24, 2009
My regular Saturday comment followed by this week’s blog and financial site links.
I admit there are worrying signs in the market. I don’t mean how the main indexes seem to have stalled — it’s always very hard to tell signals from noise, and anyway Australian academics just proved that technical analysis doesn’t work:
Technical analysis is not consistently profitable in the 49 countries that comprise the Morgan Stanley Capital Index once data snooping bias is accounted for.
There is some evidence that technical trading rules perform better in emerging markets than developed markets, which is consistent with the finding of previous studies that these markets are less efficient, but this result is not strong.
While we cannot rule out the possibility that technical analysis compliments other market timing techniques or that trading rules we do not test are profitable, we do show that over 5,000 trading rules do not add value beyond what may be expected by chance when used in isolation.
No, what’s slightly concerned me are reports that traders are making out like bandits on the City desks, oblivious to risk.
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by The Investor
on October 21, 2009
“Never in the field of financial endeavor has so much been owed by so few to so many.”
— Mervyn King, Governor of the bank of England
I have said before I’m too lazy busy to feel able to update you about every trade I make in the active portion of my share portfolio.
But I don’t mind saying that I’ve now sold all my Lloyds shares.
While I didn’t catch the highs — and have already explained how my heady trading profits were pretty illusory — the quick gains I did bank were too tempting in light of the ongoing risks of holding Lloyds.
Lloyds shares still look cheap – and sitting through the many risks is what investors will likely be rewarded for – but with even the Bank of England governor Mervyn King last night stating banks must be broken up, the uncertainty just keeps mounting.
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by The Investor
on October 20, 2009
A few people emailed to ask how I calculated the yield on the RBS Royal Bond.
Hey presto! This post will tell you everything you need to know about calculating bond yields, whether for government or corporate bonds.
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