The Portfolio Review: Why It Is Important and How to Do It


This week’s AAII Weekly Digest highlights these “must-read” AAII articles:


The Portfolio Review: Why It Is Important and How to Do ItThe Portfolio Review: Why It Is Important and How to Do It

Performing your own periodic portfolio review (quarterly or at least yearly) will help you understand whether you are on course to meeting your goals, or whether you need to change your strategy or tactics. The objective of such a review is to catch mistakes and to correct your course on a timely basis, with the ultimate goal of improving your results. While some of the data in this article are from 2010, the review tips and considerations outlined are timeless.

Minimizing Taxes With Asset Allocation

Stephen E. Wilcox

Asset location is a tax-minimization strategy of placing investments in accounts that ultimately will produce the highest aftertax return for the investor’s entire portfolio. Strategically taking into consideration both tax laws and the tax-efficiency of an investment will maximize aftertax returns.


Don’t Over-Rely on Historical Data to Forecast Future ReturnsDon’t Over-Rely on Historical Data to Forecast Future Returns

AAII Journal editor Charles Rotblut and Nobel Prize winner William Sharpe discuss the Sharpe ratio and advice Sharpe has for individual investors. Specifically, that historical risk may be a reasonably good predictor of future risk, but past returns are a rotten predictor of future returns.


Best Practices for Portfolio Rebalancing

The primary goal of a rebalancing strategy is to minimize risk relative to a target asset allocation, rather than to maximize returns. A strategy that combines regular monitoring with rebalancing at certain thresholds provides a harmony between allocation goals and cost minimization.

Our Member Question for this week is:

The New York Stock Exchange plans to impose a news embargo for listed companies in the minutes after the market’s 4 p.m. (Eastern) close. The move is a bid to protect NYSE’s closing auctions from sophisticated trading algorithms that scan English-language text in search of signals to buy or sell stocks. Do you think algorithmic trading is good or bad for the stock market? (Choose the one answer that best matches your opinion.)


Vote to answer this week’s Special Question: In what ways do you think algorithmic traders help or harm the stock market?

Last Week’s Results:

On September 20, the Federal Open Market Committee will meet to decide whether the Federal Reserve should raise short-term interest rates. According to CME Group as of August 25, there is only a 1.4% probability that the Fed will raise interest rates. If the Fed were to raise rates, do you think that move would benefit or harm the economy?

Poll results are as of 9 a.m. (Central) on Monday. 1,451 respondents.

Readers Split on Benefit of Fed, Interest Rate Hike

Common measures of inflation, including the Core PCE Price Index and Consumer Price Index (CPI), indicate that price inflation is relatively tame. The next meeting of the Federal Open Market Committee takes place on the 19th and 20th of this month. Currently, there is only a 1.4% chance that the Fed will raise interest rates at that meeting, according to the CME Group’s FedWatch Tool. We asked our readers whether an unexpected increase in interest rates would benefit or harm the economy. We also asked how they feel the Federal Reserve helps and hurts the U.S. economy and stock market. This blog post summarizes the results and responses.

Computerized Investing’s Top Sites for Portfolio Tracking, Analysis & Optimization

No matter what type of investor you are, keeping an eye on your portfolio is always a priority. Portfolio trackers allow you to garner useful insights into the productivity of your portfolio over time. Portfolio optimization goes a step further, using analytics to provide even deeper insights that you can use to make your portfolio more efficient. Here AAII’s Computerized Investing highlights several Best of Web candidates that we feel are above and beyond the rest based on their simplicity, offerings and cost.


The AAII Weekly Digest is one of the many benefits of AAII membership. To learn more, consider a 30-day Trial AAII Membership to start becoming an effective manager of your own assets.


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