Question: Andrew Tobias said to “Ask Less” the money questions. OK, here’s mine. Is the following a good diversification strategy for bond holdings: 50% total bond index, 50% intermediate bond index? Many bond funds mirror the Barclays U.S. Aggregate Bond index. However, supposedly around 75 percent of the index tracks government securities or other types Read more »
Are Commodity Futures a Good Hedge?
Question: I’ve been holding PCRDX since 2006 in a tax-sheltered account. How have I done? What are your current thoughts on commodities? Answer: PCRDX is the PIMCO Commodity Real Return Strategy Fund, which uses Treasury Inflation Protected Securities (TIPS) as collateral for a 100% long investment in a basket of commodity futures. Depending on when Read more »
How Much Better Is Alternative Weighting of Stock Indexes?
Question: Can you review the research on market weighting vs. equal weighting vs. fundamental weighting? What might be the long-term advantage in return for one method vs. another (or, to put it another way, how much can I expect to lose if I chose the wrong method)? Answer: My primary reason for preferring the use Read more »
Lesson 22 – Does the Doctor Take His Own Medicine?
I am sometimes asked if I invest my own money the same way I invest client money. I’m afraid such questions usually elicit a sarcastic response such as: “Do you think a surgeon should undergo the same operations she performs?” Or “Why would I even invest for one client the same way as another, let Read more »
Lesson 21 – A More Sensible Use of Hedges
As I mentioned in the last lesson, the Permanent Portfolio (PP) is NOT an example of a well-diversified portfolio. It does, however, have, in my opinion, three excellent hedges: Treasury bills, Treasury bonds, and gold. Hedges, as insurance, are to protect you against losses you can’t afford to take. If you’re a long-term investor, a Read more »