Arbor Asset Allocation Model Portfolio


Investment Diversification [0.04]

Posted on Aug. 6, 2017, 3:17 a.m. by Arbor Asset Allocation Model Portfolio @ [source]

Unsystematic risk can be nearly eliminated through investment diversification. Unsystematic risk is specific to an individual investment or industry and is not correlated with the market.

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Instead of taking a dividend in cash an investor can choose to reinvest dividends and receive additional shares of stock.

By reinvesting your dividends you are regularly dollar cost averaging back into your investment.

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Standard deviation and probability are concepts that make us better risk managers because they cause us to consider lower probability outcomes when making investment decisions.

What is Standard Deviation?

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Modern Portfolio Theory [0.17]

Posted on July 9, 2017, 1:40 a.m. by Arbor Asset Allocation Model Portfolio @ [source]

Modern Portfolio Theory was developed in the 1950’s with the belief that portfolio returns could be maximized for a given amount of investment risk by combining assets in a particular manner.

Much of Modern Portfolio Theory is now questioned.

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There are now hundreds of ETFs trading on U.S. stock exchanges.

There are also many ETFs in the income area.

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Longer lifespans, the most expensive bonds in history, near record equity prices, and increased asset correlations are changes affecting how you should allocate your assets. Bonds carry significantly more risk than at any time in the last 50 years.

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What is Saving?

Saving is the act of preserving income for a future use; or an amount of income that is not currently consumed.

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We can take this valuable information and produce a ratio that is one of the most useful metrics in stock analysis: Free Cash Flow Yield. The ratio is exceedingly valuable to an investor because it relates to the value you are receiving for your investment dollar.

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When adding individual investments to a portfolio, each additional investment lowers risk but also lowers the expected return. It’s easy to understand the benefit of adding; going from one stock to two, or from five stocks to twenty stocks.

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Many investors find themselves buying when everyone else is buying and selling when everyone else is selling.

This result is these investors far underperform the market averages because they buy at above average prices and sell at below average prices.

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If you are the type of person who has little interest in learning how to invest, buy and hold may be the right strategy for you.

A buy and hold strategy requires equal attention to the “hold” part.

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Gross Profit is derived from the top of the income statement and therefore is considered a “cleaner” number than Net Income or EBIT as the numerator.

Gross Profit is the basics of what a company does.

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The Book of Value by Anurag Sharma was published in 2016.

While chance does influence investment performance, emotional and broadly analytical skills exert a much greater influence on the experiences that investors have when investing.

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Dividend Coverage Ratios allow analysts to evaluate the safety of a company’s dividend. Many investors concentrate on the dividend yield but don’t give sufficient attention to the safety of that dividend.

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The dividend yield has historically provided approximately one-half of long term total stock market returns to investors. It’s a little less than one-half for those who take their dividend and little over one-half for those who reinvest their dividends.

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The Cash Dividend Payout Ratio provides a much better analysis of the safety and ability of a company to carry on its business AND pay its dividend.

First of all, starting with Cash Flow from Operations means that you have a number that can’t be manipulated as often net income is.

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Is Operating Income (Earnings) the Same as EBIT?

You might find that some analysts use operating income (earnings) and Earnings Before Interest & Taxes (EBIT) interchangeably; this is incorrect.

EBIT includes interest losses metrics non operating profit profitability taxes


Treasury Inflation Protected Securities (TIPS) provide benefits that are unavailable with any other investment. We’re going to explore how TIPS work, their benefits, and when it makes sense to buy and hold them in a portfolio.

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Financial Debt is a measure of a company’s non-operational debt. This is why we isolate Financial Debt.

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Arbor Investment Planner is pleased to announce the performance record of the Dividend Value Builder Portfolios for the period of 12/11/2015 to 12/10/2016.