Hornets Nest

That is what I have whipped up with my post about an all ETF portfolio put together by someone named Geoff Considine. My critique drew eight comments (half from Considine himself responding to various comments), which is a lot. This is all happening on ETFInvestor.

One comment I made was that no doubt Geoff could easily justify the issues I picked on and he does justify them. The work is very academic and number-crunch intensive. The portfolio has about 1/4 of the assets in energy. No matter how much jargon anyone uses, if oil drops a lot, the portfolio the Geoff put forth will drop a lot.

I believe the complexity employed is unnecessary for most people. He relies on blending together different volatilities and standard deviations to weave together the portfolio. I don't think the volatility of one sector can be used to capture results from another sector and as I read Geoff's work this is in part what he is relying on. In my opinion, and based on my experience, too many things need to go right.

I fully respect the fact the Geoff might find my approach laughably simple. I build sector weights based on the S+P weight and then I assign what I think are fundamental reasons to whether those sectors are likely to do well or do poorly. I also look at many foreign countries and try to integrate some of them in with my sector work. This ultimately leads to stock/ETF/CEF selection.

That a positive environment for oil probably means good things for Norway, as an example, is hardly rocket science. Since there is no ETF or CEF for Norway that leaves just a few stocks to pick from. Not all themes are that simple but I 'd be delighted if they were. If I tried Geoff's approach I would lose the forest for the trees.