Looking at sectors

Bless this mess.

We are way overdue for a buy. Someone suggested looking at sectors to get an idea of where to narrow things down. What sort of sectors are doing particularly well (and might continue to do so)? Which sectors aren't doing well but might bump up soon? Google Finance also gives the top five gainers and losers (by volume, price, market cap, etc). These are limited to relatively large cap stocks (i.e .bigger companies), which should, in theory be more stable for most of the time. These might be good places to start.

Really what we're trying to do is make sense of the data we see. We'd like to be able to speculate as to why something is up or down. So, we look at a trend and try and figure out it

Take a look at energy over five years, one year, and year-to-date, respectively:

What could that mean? 

Also, current events might be a good source if information. Say, solar panels are in the news, what does the mean for the energy sector? What about secondary industries? The point we're trying to make is this might be a good line of reasoning to figure out investment prospects. But, of course that means we won't be buying anything today. 

Profit!

Next time, we should narrow our focus down to a few sectors (tech--the best and energy--the worst).

Da Dip

When I dip, you dip, we dip

The market took a big dive yesterday, likely as a result of the Fed raising interest rates. People get skittish and they freak out. Luckily our portfolio isn't just a mirror of the S&P 500, since we've tried to really stay diverse. We may have gone a little too heavy on international markets because that was a safer bet at the time for us. An interesting thing to look for is if the domestic market does experience a downturn, will that mean we'll see an uptick in international stuff or just see our diverse portfolio save us a bit.

Another relevant concern is we should try to think about whether or not we are diversified in a way that makes sense. A good chunk of our profit has come from dividends, but is that a problem? Many investors probably earned most of their profit from growth. Our theory at the outset was to be super safe and try and be able to make some gains despite what is going on in the market. So in a way, our plan worked. We could have made more money if we tried a different approach, but that's some crystal ball stuff. 

As part of our diversification strategy, we tried to not have too great a percentage of our portfolio in any one investment. Since we have purchased lost of ETFs, did we end up with higher exposure in any one thing?

As an aside, there's an interesting investment theory that you put 90% of your portfolio in super safe stuff and then 10% in some crazy-bananas stuff. It sounds like a safe way to be reckless. The caveat here is that you are likely going to lose out, and you really need to closely monitor that part. But it might be worth pursuing. So who wants to short some Bitcoin?


Next time we should talk about house stuff and leverage.

Profit

α & β

There hasn't been a Street Fighter Beta yet. 

Today we're brushing up on Alpha and Beta, which are metrics for evaluating a portfolio. You can read the description, but basically Alpha is a measure of return and Beta is a measure of risk.

We thought it would be a good idea to apply this to our portfolio spreadsheet to try and analyze how we're doing with all this stuff.

We'll keep you posted.

Profit!

Risk!

Today we're talking about [lower case] risk

We are going to try and learn about technical risk ratios. Some fun reading can be found here.

When trying to use alpha or beta or any of the other technical risk ratios, programs like SigFig that can analyze a portfolio assume that you you have a diversified portfolio to begin with. We've been working hard to try and keep things nice and diverse, so that means we can try and use these tools to help us out and avoid unsystematic risk.

The technical risk ratios are a part of Modern Portfolio Theory--and if it's like anything "modern" that probably means the sixties. But we'll have to save that for another time. 

Profit!

Math is hard

Were we mathing wrong?

Are we looking at our portfolio performance all wrong? We tend to compare our performance against the S&P 500, or more accurately the SPY ETF that tracks the S&P. Really all of our comparisons so far have been going into Google finance and look at the chart of how our portfolio is doing versus how the S&P has done over that period. Basically, are we doing the math correctly?

Here's what has been sticking for us: If every time we made a purchase it was SPY instead of whatever we bought, how would we have done? Better? Since everything is a moving target with investing, different investment products are valued differently depending on the time. Our idea is to try and look at past purchase dates and compare those with how SPY was doing.

But what does this information get us? What conclusions do we draw? If SPY turns out to consistently best our choices, do we just keep buying that and talk about video games every Saturday morning instead? Probably not. It's good to have some baseline to compare it to, to check in and see how we're doing. What we decided is that it is word trying to figure out how to track this. We won't bore you with the details, but we'll keep you posted on how it is going.

Profit

Hot Spreadsheet Action!

Our spreadsheet will never be this cool. 

Last week we mentioned that things were a little weird with how SigFig calculated things, so today is update the portfolio day. We pulled the information from Morningstar to update our portfolio spreadsheet just so we can keep track of things.

Here's our current portfolio sector weighting:

We started having a conversation about whether or not to buy a phone. One of our members was wavering--his phone wasn't working, which led him to think about it being new phone time. But then it started working again, and he started to waver. The decision paralysis set in. Which is a pretty relevant thing to consider. We've all spent more time than is necessary to think on a problem when we could have just acted. By the way, we still need to make a buy.

Profit!

Looking at VHT

We took a look at VHT, our health sector ETF.

Over the past week everyone pretty much figured out that the ACA was finally dead (boo), and there's been very little change in the last week.  The dips that we saw have been over the longer term, which at least means that things were not caused by people freaking out.

Some time in the future, we would like to talk about how worth it all those tax shenanigans are in saving you money.

Also, there is some weirdness happening with the way SigFig calculates our portfolio growth in comparison to the S&P.



On the right you see a large step jump. This may be messing up our performance calculations, and over inflating how well it says we're doing. We should look into it, and make sure everything is cool.


Profit!