Become A Wise Index Investor

By Lowell Herr: Below is a portfolio I extracted from Daniel Solin's recent book, "The Smartest Portfolio You'll Ever Own." Before I run a QPP analysis on one of the suggest portfolios, let me point out that the BWZ ETF did not have a three-year record. As a result, the following analysis runs for only 31 months.

By Lowell Herr: What are the alternatives one might use to those suggested by Solin in his recent book, The Smartest Portfolio You'll Ever Own? The reasons for seeking alternative investments are two fold.

By Lowell Herr: Daniel R. Solin's book, "The Smartest Portfolio You'll Ever Own" is fertile ground for portfolio analysis. I've been running analysis on five "supersmart" portfolios found in Chapter 21 of his book. These portfolios run from low risk to high risk.

By Lowell Herr: This is the second piece in our Positioning for 2012 series. Readers can find all of Seeking Alpha's 2012 outlook articles here.

Lowell Herr submits: Maintaining and monitoring a portfolio can be a daunting and time consuming task, depending on the depth of the analysis. Reviewing a portfolio requires discipline to go through the process outlined below. Setting up a calendar with periodic reminders is something I find useful. Some investors will find once a year is sufficient to review a portfolio, while others will want to check on the portfolio more frequently.

Lowell Herr submits: Establishing an appropriate benchmark for a portfolio is essential if one is serious about investing. Avoiding portfolio benchmarking is an act of self-deception, but all too common with the average investor. Exactly what is the purpose of a benchmark and what are the requirements for a fair and reasonable benchmark. Here is one definition of benchmarking.

Lowell Herr submits: Exactly how important is the portfolio policy on portfolio return, and how is it measured? Research papers from the late 1980s through the early 2000s tell us it is very important. That is, anywhere from 90% to 100% of the return of the portfolio is tied to portfolio policy. Let me quickly insert that several studies are frequently misinterpreted.

Lowell Herr submits: Portfolio construction takes nearly as many forms as there are investors. Building a portfolio around an array of individual stocks is quite popular, yet this method is prone to leaving diversification holes. Other investors prefer to mimic the S&P 500 through the use of sectors.