Why did Scott create AssetBuilder?
Scott created and started writing about the Couch Potato portfolio back in 1987.
The couch potato began to evolve into a simple building block approach by adding
equal-sized blocks to diversify your investments to provide milder ups and downs.
Couch Potato Building Block Portfolios are designed to be implemented very easily
by investors. They are all variations on a balanced portfolio, with different numbers
of asset classes (groups of securities that exhibit similar characteristics) ranging
from 2 to 10. These portfolios do well relative to most managed portfolios because
they minimize expenses and provide varying degrees of diversification.
At AssetBuilder we take this process a step further. It’s about constructing a portfolio
that gives you the highest return with a defined level of risk. It can be done with
a technique called mean variance optimization. Thus, while the Couch Potato 10 Speed
portfolio did significantly better than the average “world allocation” fund for
about the same level of risk, the AssetBuilder Portfolio 12 does still better, again
at about the same level of risk as the average world allocation managed fund. (Source:
Morningstar data for 12/31/08, AssetBuilder, Inc)
Scott believes AssetBuilder can add some real value with pre-constructed, risk-measured
portfolios. Lots of people can divide by two, three, four, or five to produce a
Couch Potato Building Block portfolio. But optimizing requires more work.
