Stock Portfolios .biz is selling different stock portfolios and stock analysis of Nasdaq, Nyse and Amex traded stocks. Our goal is to provide the best possible stock investing opportunity for our customers. Selling online and keeping in touch via e-mail makes us cheaper than other stock investment research firms. What about our results?
Our Enterprising Portfolio (which contains only long positions, because of our long-term investment strategy) is Up 6,23% since 11/28/2008 as of 02/03/2009. During this period the major indexes (Dow Jones, Nasdaq and S&P500) has fallen 10%, so our portfolio has beaten the market with 16,23% in about two months.
29/01/2010: Enterprising stock portfolio is Up 42%, while the Dow is Up 20%, so Our Portfolio has beaten the market with more than 20% in one Year! (Without leverage!)
Why is it profitable and cost-effective for you to buy a Stock Portfolio?
Stock portfolios cost 39$ and they are updated once a year. For example you have 5000$ to invest and you buy stock funds. The entry fees of stock funds are different, but usually 5%-8%. You have to pay 5% of your 5000$ portfolio and it is 250$. You can leave your money there for several years, but when you close your position and you want to get in again, you have to pay again. Moreover, over the long term stocks made better results than funds. To sell a Fund takes several days, but selling a stock takes only several minutes (or even less). So, buying a stock portfolio and investing in stocks directly is cheaper and more profitable than to buy funds. It is not possible to sell a fund, but short selling is possible with stocks. In a financial crisis like nowadays it is very difficult to get profit with funds.
Stock Portfolio diversification and risk
What is diversification?
Diversification: A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. (Source: investopedia.com/terms/d/diversification.asp)
What is risk?
Risk: The chance that an investment’s actual return will be different than expected. This includes the possibility of losing some or all of the original investment. Risk is usually measured by calculating the standard deviation of the historical returns or average returns of a specific investment. (Source: investopedia.com/terms/r/risk.asp)
How much diversification is required in a stock portfolio?
One famous quote from the “Oracle of Omaha” (Warren Buffet) is that “wide diversification is only required when investors do not understand what they are doing”. We have the same view of diversification. Just think about the opposite side of using wide diversification. The stock investor does know several stocks which are going to develop very fast and gaining for him a lot of money, but he is using wide diversification. So he is losing return, because he is investing his money is those kind of stocks, which are not going to develop as fast as the best ones. Most of the stock specific risk can be reduced by purchasing 8-10 stocks of different sectors.
Using wide diversification can reduce the most risk, it’s true. But if the investor is thinking about the risk and not about the return, he is going to choose those kind of stocks, which are going to have the less risk, not the highest return. Moreover, when the stock investor is thinking about wide diversification, it is easier and cheaper to buy an index traded fund.
Where should you purchase your stock portfolio?
Purchase your stock portfolio online through a Market maker or an ECN?
Online stock portfolio investment can be made through two different types of brokers: market makers and ECNs (Electronic Communicating Network). Before starting to invest, the stock investor must determine which type of broker is the best for him. Both of these type of brokers have several advantages and disadvantages.
Stock Investment through an ECN
First of all, the stock portfolio investor must understand what an Electronic Communicating Network is. ECNs are the connection between market participants (for example: individual investors, banks or other market makers). The ECN displays the incoming offers and bids of the market participants for other market participants. Because of this the market is determined by them, so there is no fixed spread (spread is the difference between bid and ask price).
ECNs charge commission for each trade made through their trading platform. The commissions depend on the ECN. Mostly the charges are dipping when the traded amount is more at a fixed time period.
ECNs usually have better bid/ask prices, because the incoming offers come from more market participants. The prices are more volatile, because they are influenced by more traders. This can be an advantage for scalpers. ECNs pass all of the orders for someone else, so they are not motivated to trade against the market participant.
On the other hand, electronic communicating networks usually do not have a user-friendly trading platform (developing a user friendly trading platform has got huge costs). The price of the instruments is more volatile, so to determine a stop-loss is more difficult. An ECN charges for all of the exercised transaction.
Stock Portfolio through a market maker
Market makers have got own trading platforms, too. But they set their instruments prices, which are mostly following the prices of the instrument. The market maker company must make a deal with the market participant on his quoted price. These companies stay on both side of the market, so when the portfolio investor is buying an instrument, the market maker must sell it and when the investor is selling an instrument, the market maker must buy it. These companies offer a larger spread for the stock investors and they benefit from the spread.
Market makers have usually a very user-friendly trading platform. The quoted price of the instrument is less volatile, which is more confident for investors. A market maker company is more often used for long time investments, not for active day trading.
Market makers must exercise a trade on their quoted price of an instrument, so there is a clear conflict of interest in order execution between the stock trader and the market maker company. So they may trade against the market participant. Their quoted price can be different from other market makers or ECNs. When the stock portfolio investor is using stop-loss, the market maker company can move the price of the instrument to run out the investor’s position. So the market participant’s trade generates loss for himself and the market maker generates profit for himself. Another typical feature of a market maker company is the so called “freezing”. When news is released, the price of the instrument is going to be extremely volatile. During this time the investor can not trade.
Stock Portfolio through a full-service brokerage
Full-service brokerages offer a wide range of financial services, including instrument research, tax tips, retirement planning and much more. These services cost a lot of money for the company. So these brokerages charge more commissions at each trade to cover they costs. Trading with a full-service brokerage is more useful for that stock portfolio investor, who has got capital and work a lot, so they do not have time to research for information. The cost of a trade at a full-service brokerage can be 20 times more than at a discount brokerage, so the investor must think about the usefulness of the provided information. Is it so much worth?
Minimum capital
The required capital to use a full-service brokerage is not determinate, but usually it is more effective to use a full-service brokerage when the stock portfolio investor has got more than US$200.000 to invest. The costs of these brokerages are really high, so the invested capital should be a lot more than for example at a discount brokerage. Moreover, the time cost of the investor must be high, too. It should be more worth for the investor to pay for the extra services of the company than to do it by yourself.
Commissions and fees
Full-service brokerages usually do not charge for the extra services directly. The extra services are paid through the trading commission, so when for example a discount brokerage charges maximum US$20 for a trade, a full-service brokerage charges 150$ or more for a trade. The stock investor must know his type of person. He must decide whether to trade as an active trader or to be a buy and hold portfolio investor.
Personal financial management
Full-service brokerages offer a personal financial management, which include retirement planning, taxation analyses, financial analysis; life insurance needs analyses and much more. But these services are available only for those investors, who have a minimum account balance of a few million dollars. For example, the investor has got US$1 million and buys an investing fund. The entry fee they receive is 1% (not too much regarding to several investing funds), the full-service brokerage earns US$10.000. From this amount of money the company can lightly pay the fees of the workers, who do the extra services.
Stock Portfolio through a discount brokerage
Discount brokerage is a better decision for a stock investor, because full-service brokerages charge more commission for every trade. Moreover, when a stock investor starts to do the research and the actual work, he learns what to do. There are several important factors to consider when choosing a discount brokerage.
Minimum account balance
When a stock investor does not have a lot of money to invest, he must do some research about the discount brokerage companies, because the minimum account balances can be different. Moreover, for example margin accounts can have different minimum balances, too. So there can be a situation, when a portfolio investor does not have enough money to open an account at a chosen discount brokerage, but he can open an account at another discount brokerage.
Commissions and fees
The trading commissions can be very different. The investor must decide, what is the most important for him. When a stock portfolio investor does not trade daily, there is no importance for him that his trade is going to be exercised in a few seconds or in several minutes. Moreover it is not a difference when a trade commission is 9$ or 15$. Usually the service level depends on the charged commission. So the investor must decide what is more important for him, the service what the brokerage offers and gives or the charged commission. The other fees can be different, too. Some discount brokerage companies charge fees for special services, some do not.
Withdrawal
The money on the account is the investor’s money, but sometimes it is hard to get it. Several brokerage companies charge fees for withdrawal. Moreover, they do not let the investor to drop the account balance below a minimum. Before opening an account, the investor must ask about the withdrawal fees, the minimum balance and the cost of the closing an account.
Tradable instruments
It is important to determine what kind of instruments want the investor to purchase before opening an account at a brokerage. Most of the stocks can be traded at all of the discount brokerages. There can be instruments, which the investor can not trade at a brokerage, but he can trade with that instrument at another brokerage.
What are the main characteristics of our Stock Portfolios?
Stock portfolios are based on fundamental analyses and are usually updated once a year. All chosen stocks are traded on Nasdaq, Amex or Nyse. We do not prefer OTC stocks. A stock portfolio contains detailed analyses of valuation, growth, financial health for all chosen stocks. It includes target share price, charts, key statistics, insider holding, top fund owners, general information, price at recommendation, potential profitability, investment style, stock price performance, business summary, wall street analyst opinion, the distribution of the chosen stocks…
A stock portfolio is usually 20-25 pages long, with detailed analyses of all stocks. Typical holding period of a portfolio is several years, but it is not essential.
Do not forget that our stock portfolio services include only the stock portfolio selection, not the whole enterprising or defensive investment strategy!
If you have any questions with these stock portfolios, don’t hesitate to contact us. (Info)
View a sample stock report, MSFT stock report. A stock portfolio usually contains 10-12 stocks.
Stock Portfolio for the Enterprising InvestorUS 39$ |
Who is an Enterprising Investor?“The enterprising investor, by definition will devote a fair amount of his attention and efforts toward obtaining a better than run-of-the-mill investment result.” — Benjamin Graham, ‘The Intelligent Investor’ |
Stock Portfolio for the Defensive InvestorUS 39$ |
Who is a Defensive Investor?“Defensive investors place a high percentage of their investable assets in bonds, cash equivalents, and stocks that are less volatile than average.” – investopedia.com |
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