How to Optimize Your Portfolio Construction

4min Snip

00:00

Play full episode

Summary

Transcript

Episode notes

There is no clear total answer to that because it's going to depend on each different portfolio. We do know from a Michael Kitsus article that at least for ordinary portfolios about 20% relative deviation from where they started tends to be a decent place to do a rebalancing as long as you're not scheduling the rebalancing too often. The math isn't quite that heavy although if you did go into the particulars of the efficient frontier calculation it would get pretty hairy. Real wrath of God type stuff.

In this episode we answer emails from Pete, MyContactInfo and Jenzo. We discuss leveraged funds, a paper about holding them longer term and optimal leverage, analyzing leveraged portfolios, meta-concepts of retirement portfolio planning and how to separate the critical components of a withdrawal strategy (the dogs) from various management techniques, labeling methods and mental accounting (the tails), and last year's scare paper about hyper-low safe withdrawal rates of poorly constructed international portfolios.

Links:

Leveraged Portfolios Article/Paper: Double-Digit Numerics - Articles - The Big Myth about Leveraged ETFs (ddnum.com)

Sample Optimized Portfolios Article: What Is a Leveraged ETF and How Do They Work? (optimizedportfolio.com)

Analysis of UPRO vs S&P: https://tinyurl.com/me4c2xj9

Analysis of TNA vs. IWM: Backtest Portfolio Asset Allocation (portfoliovisualizer.com)

Analysis of TMF vs. TLT: Backtest Portfolio Asset Allocation (portfoliovisualizer.com)

Portfolio Charts Risk/Reward Calculator: RISK AND RETURN – Portfolio Charts

Portfolio Visualizer Efficient Frontier Tool: Efficient Frontier (portfoliovisualizer.com)

Bond Funds vs. Bond Ladders: Owning Individual Bonds vs. Owning a Bond Fund - A Wealth of Common Sense

Low Safe Withdrawal Rate Paper: delivery.php (ssrn.com)