Roger Beep

Global Giants and Diversifiers To Supercharge a Portfolio

Hi Phil;

I might try it. I have a few concerns about undertaking this project. One concern I have is determine the actual monthly return on the Global Giants and Diversifiers Individual Stock portfolio. If I personally held that portfolio the brokerage firm would tell me what the monthly return was.

Let me step you thought how I might determine the monthly return and then you may wish to comment. Since this portfolio represents several years of investing experience and a few generations of portfolio development as per the Supercharge book I am going to assume $100K in total assets -- in reality it should be more but for the sake of modeling I will stipulate $100K.

Using Yahoo Finance I think I can determine the closing price of a stock for any particular trading day. I will assume I bought all of the holdings on 12/31/2006. I am unclear how I could from a retrospective point of view determine the monthly return on the portfolio, including the dividends.

Additionally, I would like to automate future monthly return data so I did not have to be scheduled in front of my computer to get that month's return data. From where I stand there are some practical considerations that I would need to figure out and for that reason I may not be able to undertake this project at least right away. For example, I anticipate having to write a macro for Excel to call the data that I would need. I am not that skilled at Excel but for a guy that self-taught himself computing in the old DOS days I feel like I could probably take it on. This could be a great learning experience for me after I clear the deck on a couple of other intense projects I have currently under taken.

Also, I appreciate your observations about the extremes, the tail values and what they portend for a porfolio's risk vs. return and the median expected return vs. 1st percentile loss.

Global Giants and Diversifiers To Supercharge a Portfolio

Hi Phi;

I appreciate you thoughts regarding taking a rather unsophisticated view of things, the 1st percentile risk, estimated median returns and endless attention to returns. What I really liked about the flow of the Supercharge book was the emphasis on risk and with examples showing us what to avoid up front and then moving on to core holding portfolios using indexes and ending up with an all stock portfolio that was developed with QPP.

I could live with the "unsophisticated view" that you mentioned if I or perhaps you had developed the Individual Stock Portfolio that appears in the Supercharge book for my personal use. And on a practical level I think you are correct. However, as a purchaser of the Supercharge book and QPP I would like to see more on the predictive validity of QPP using the example portfolios.

That is the reason for advancing a standardized graphical assessment. For example, the standard deviation (S.D.) levels from page 6 of QPP can be visually represented by the frequency envelope about the median using the Excel chart. I believe this can be varied by the user to reflect various S.D. levels. As I recall an X2 (read as “times 2”) frequency envelope is a ± 0.66 S.D. This all done graphically without having to resort to complicated statistical procedures. Most end users would much prefer a picture (chart) of these matters as opposed to confirmatory statistical data or summative comments about declines and gains. The upshot is one would be able to graphically see how QPP tracks to actual returns over time. In other words we would have a graphical picture of QPP’s predictive validity given the portfolio examples in the Supercharge book.

Global Giants and Diversifiers To Supercharge a Portfolio

Hi Phil;

I thought that this was another well written article. In addition to the "inputs" or holdings portion of the portfolio I would like to see a chart of the "outputs" to include the portfolio’s projected return using QPP's forward looking analysis using perhaps the 1st, 5th 10th, 20th and 50th (Median) values from p. 6 of QPP and the actual monthly return. I invite you to examine a standardized Excel chart template for this purpose which is resourced at harderchartingtemplate.../ and listed as SCCFB_mcpm_v7_1.xls. This chart covers a ten year period for each month. See the "LineFree" chart. It appears that BlueLine and LineFree have been switched. It should read "BlueLine." This would allow for comparisons using a standardized charting metric.