We have to admit that we thought the Latin phrase “primum non nocere” or “First, do no harm” was a part of the Hippocratic oath. Apparently we were wrong. This came to mind because we have thought for quite some time that personal financial journalists and bloggers should keep this dictum in mind when they write for a general audience. In a sense, investing is risky enough without having to deal with portfolio advice that is not ground in sound theory and common sense.

One mainstream media writer who seems to follow this approach with a high level of consistency is Jonathan Clements in the Wall Street Journal. Clements’ columns are usually well-written and focus on calm, consistent advice for individual investors. His most recent column addresses the question of what role the new “fundamental indices” should play in a balanced portfolios.

Where does that leave us? As a starting point, I often suggest indexers purchase three core holdings. Suppose you want a balanced portfolio. You might stash 42% in a U.S. total-market index fund, 18% in a foreign-stock index fund and 40% in a bond-market index fund.

This simple three-fund mix would, I believe, be a fine choice for most investors. But I am not militant about taking a market-weight approach. If you want to add a value index fund to this mix, tilt toward smaller companies, overweight emerging markets or throw in a fundamental index fund, I am not going to object too strenuously.

The point is not focus on this specific portfolio, but the approach is one that focuses on indexing, low costs, low turnover and periodic rebalancing. We find it hard to argue with this type of approach for the vast majority of individul investors.

Granted many (or most) people reading investment and trading blogs are not looking to simply match the market. They are looking to generate, dare we say it, abnormal returns. Which is fine so long as every one attempting to do so recognizes that this comes with the attendant risk of underperformance. For a broader audience, simply trying to match the market is a not immodest goal.

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