Your core equity holding in a low cost ETF portfolio is like the first round draft pick. It should be a long term consistent performer that you can build the rest of your team around. Your core equity position should be low cost, but also encompass a large breadth of stocks. This article addresses which core fund is best for your portfolio.
Vanguard Total Stock Market ETF (NYSEARCA:VTI) - VTI covers the entire U.S. stock market for a very low 0.05% expense ratio. It covers essentially every U.S. stock (close to 3,500) with a market cap over $10 million dollars. Which means it covers a larger amount of small and micro cap companies than many total stock market funds. This has resulted in slightly higher returns and volatility than funds that only cover large cap funds and funds that cover less small and micro cap companies.
In a previous article I discussed by concerns with U.S. Stock Market Valuations. I don't believe I have the ability to call a market top, but I do believe current valuations indicate that return from U.S. stock markets over the next decade or two are likely to be less than the historical average. For this reason I decided it was important to diversify my portfolio and invest in foreign markets.
In a follow up article I discussed why I wanted to simplify my portfolio. My portfolio was performing well but had too many positions for me to follow properly. It also lacked diversification it was almost entirely in U.S. stocks and was not well diversified across sectors. My goal was to have less positions and more diversity.
Eugene Fama, Jack Bogle and Larry Swedroe and others make some persuasive arguments in the support of passive investing. These arguments
Summer may be coming to an end, but the heat in the stock market has not cooled down, as the stock market registered its hottest August performance in 14 years (S&P 500 index up +3.8%). With these stellar results, one would expect the corks to be popping, cash flowing into stocks, and the champagne flowing. However, for numerous reasons, we have not seen this phenomenon occur yet. Until the real party begins, I suppose the champagne will stay on ice.
At the end of last year, I wrote further about the inevitable cash tsunami topic in an article entitled "Here Comes the Dumb Money." At that point in time, stocks had remarkably logged an approximate +30% return, and all indications were pointing towards an upsurge of investor interest in the stock market. So far in 2014, the party has continued, as stocks have climbed another +8.4% for the