We're thinking about hiring the Paul the Octopus to manage our portfolio.

We talked about this Wired article that took a look at how random methods of stock picking can do about as well as actively managing a portfolio without all that nasty volatility. While the article isn't heavy on details and is more amusing than anything, it is interesting to talk about volatility, especially in light of the recent Nasdaq market glitch.

Also, there was this article from the folks at Planet Money that made an analogy between choosing what you think is best and what you think others will think is best in terms of baby animals. They likened this to how people behave with regard investing, where sometimes investments are chosen not on their merits as you see them, but upon what how you think your peers will value them. Perhaps we needs to see some sort of New Sincerity movement sweep the investment world.

In other news, our portfolio has changed around a bit. We started out buying chunks of five stocks, with each one worth 20% of our portfolio. However, with how things have changed in valued over time, our domestic stocks are now worth 60% of our portfolio. Interestingly, given how Brazil went to the toilet, EWZ is only about 6% of our portfolio value. By shares 60% of our portfolio is foreign, however by value only about 40% of our portfolio's worth lies outside the US.

The US economy has done well, which has served to skew the percentage of our portfolio value toward America. This is where having a diversified portfolio has, with the way things shook out, ended up limiting profits. Even our Beta is shifting downward. However, if we had chosen a more foreign portfolio, we would be in some dire straits indeed. While it is a little disappointing that we didn't predict the future, this is something we anticipated in our strategy. We were hoping when we started this experiment we would at least break even, and so far that appears to be the case. We are doing better than a savings account, and hopefully as we increase the size of our portfolio, the small rate of return will be more financially significant. Of course, we aren't even talking about how dividends may have contributed to this.

As far as a next investment, what about Egypt?

A random investment algorithm wouldn't see anything here, but humans say, "Hey, look what those colored lines are doing...I bet I can make some money..."

And then, we were talking about Africa as a place to put some money. After doing some discussion, we narrowed it down to:

EZA
GAF
AFK

And then there were some Asian investments. If only there was an Antarctica ETF.

For next week, we need to seriously consider what the long-awaited next buy. We should take a look at our friend's portfolio and analyze it the way we did with the Africa investments. Hopefully, a good pick will shake out.

Profit!

A Nigerian prince approaches you about a lucrative financial opportunity...or investing in Africa.

Members present: Brian, Bickford, and Danak

We started talking about EWZ, which has been the bane of our portfolio for some time now. Is it time to get out? If not now, when, and why?

Next, we decided it was high time to compare some potential investments in Africa. The table below outlines some of the pros, cons, and mysteries of a few prominent Africa ETFs. Most of the information from this was gathered from Morningstar as well as the holdings pages from the various funds themselves.

Fund	Pros	Cons	Good/Bad?
EZA	·      Mostly Africa ·      Heavy consumer discretionary ·      Good expense ratio	·      Heavy in financials ·      Low diversification of holdings
GAF	·      See above	·      Only slightly more diversified than EZA
AFK	·      Good expense ratio ·      Good diversification in both holdings and countries	·      47% financials ·      13% energy
NAFAX	·      17% Industrials ·      14% Consumer Cyclical (These are sectors we don’t have a lot of)	·      Heavy in financials (23%) ·      High expense ratio (2.5%)	10% of the fund is Nigerian Treasury Bonds.
WAFMX	·      Good diversification in holdings ·      50% Consumer Defensive (staples) ·      20% Consumer Cyclical	·      High expense ratio (2.25%)
CAFRX		·      Really strange, with lots of moving parts. See next column	·      Two different indexes in its top holdings. (EZA as 18%, AFK as 14%)
EGPT	·      Diversified well by company ·      Not super-heavy in Communications (17%) and Financials (15%)	·      Egypt may be a volatile state to invest in	·      58% of the fund is small companies
MES		·      46% Financials
GULF		·      High in Financials and Communications

Looking at this, there are reasons to not invest in all of these. However, we didn't do this sort of pro/con analysis for our previous investments. NORW was 50% Energy, but we ended up using to balance our portfolio. Right now, we want to avoid going too heavy in Telecom.

For next week:

• Do we try to balance our portfolio, or do we try to get into Africa? 
• It might be nice if our portfolio was eventually less than 20% in anything. 

Profit!

Shut yo mouth!

Members present (and agape!): Brian, Bickford, Danak

We looked at our SigFig account, and were trying to find out exactly where the dividends are going. We didn't have any luck.

Also, EWZ--should we dump this thing? It has been so bad to us.

We still have our eyes on some sort of African ETF, in particular NAFAX, but that doesn't look so good. Then there was another fund, WAFMX. However, we stopped taking a look at it, since the minimum investment is $2000--a little big for us.

The search continues.


For next week:

Look for potential investments in Africa &Asia

Profit!

T̶h̶e̶ ̶D̶a̶r̶k̶ ̶C̶o̶n̶t̶i̶n̶e̶n̶t̶ Like No Place Else!

Brian, Bickford, Danak

For this week

EZA (South Africa index)
NAFAX (Nile Pan-Africa Fund)
WAFMX (Wasatch Frontier Emerging Small Countries Fund)

We took a look at EZA, particularly at the components of the fund. In poking around, Brian came up with some articles that discussed how some funds will sometimes not necessarily reflect the country they are based in. While this is not a bad thing in itself, it may not be ideal if we are trying to focus on a specific economy, as opposed to the global economy.

One component of EZA, MTN Group , is a telecom company that does a lot of business with Iran. Even though this is a South Africa-based company, it would probably be affected by events in Iran and abroad. This is something to consider when choosing this as a possible investment.  

Next, we took a look at NPN (Nuveen Pennsylvania Municipal V?), the second largest holding, and we had a hard time figuring out what it has to do with a South Africa index. Some googling brings up NPNSJ, which is a South Africa media company. That makes more sense, and like when you're doing math and get some kind of garbage answer out of your calculator, you have to call it and look a litte deeper. Did Yahoo make a mistake? Definitely: A look at the ishares summary for the fund shows that they are not investing in Pennsylvania. Additionally, some more searching yielded further discrepancies.

NEW RULE: Be a little more skeptical when looking up data from sites like Yahoo! Finance, or anywhere really. If something doesn't make sense, it probably isn't right.  

Let's take a look at NAFAX:

Well the fund's Chief Investment officer sure thinks so. While he is a biased source, he does make some interesting points about Africa as an emerging market with growth potential. We took a look at the Style Box for the fund, and that confused us further. We are not sure how to judge if this is a good investment or not. It is very diversified, however how do we judge the components?

That's a good questions, and that's where we leave it. Next week, we are going to keep on digging. 

Profit!

  

Honeymarket Don't Even Care!

Members present: Brian, Bickford, Danak...set for global domination. 

Sequester? What sequester?

Last week the gang decided that it was important to make sure that our portfolio is staying diverse. We will become a little heavier in Telecom and Energy with the Norway buy. The next step is to seek out something different.

We looked at gold because we don't have any exposure to commodities, but it had a slight drop in 2009 and it was really cheap in 2005. However, it is up up up, and it doesn't seem like the right time to get in on this. Next, we decided to look into Africa in our quest to have a foothold on the entire Risk map.

In this article about some Africa ETFs there is a case made for investing in the continent while avoiding mining and oil. This might be a nice jumping-off point for some potential investments. We'd like to take a look at the makeup of some of the ETFs on the list.

EZA (South Africa index)
NAFAX (Nile Pan-Africa Fund)
WAFMX (Wasatch Frontier Emerging Small Countries Fund)

Next week we should do that

Profit!