Are you tilted? (Frank Armstrong)

[mickeyd]

http://www.investorsolutions.com/lc...1&NLstats=true&newsletterid=29&memberid=13387

It’s really pretty easy to design a more “efficient” or optimal portfolio. It’s actually elementary stuff taught in almost every graduate finance class. It’s not a state secret, and it’s not rocket science.

First, we can jettison a boatload of risk by simply shifting from a domestic to a global portfolio. We will have an almost identical rate of return expectation at significantly lower risk. (A global portfolio would have a proportional weighting of all the global equities rather than just the United States. To greatly oversimplify, in round numbers this might be a 50/50 domestic/foreign portfolio.)

 

[haha]

These efficient frontier guys are too much- they all make their money by telling others that real money cannot be made, and billing them for this service.

I prefer to emulate people who have made money in the markets, not servicing  the markets.

Ha

 

[d]

we can jettison a boatload of risk by simply shifting from a domestic to a global portfolio

i suspect this is a gross oversimplification.  most all US individual investors live within country, and when investing domestically avoid a boatload of risk that foreign investors assume when investing in the US.  this reduced risk should result in a portfolio more heavily weighted toward domestic issues. 

stated a bit differently, take two identical investements which differ only in that one is domestic, the other foreign.  the foreign investment is subject to currency risk while the domestic issue is not.  add to this additional risks reflecting relative policitcal stablility, legal protection, accounting standards and transparency, market efficiency etc. etc. etc. and the result would/should be an overweighting of domestic investments.

 

[Papi]

Yeah, another advisor I had read advised somthing similar.  I think it was Meriman, but I'm not positive.  Their argument was that you need to split your domestic investments in half and go International because you do not want what happened to the Japanese market happen to you.  To a point I agree, but not going a full 50% international.    I feel like if the US markets were to implode, then just about everything would implode as well (except perhaps China )