In order to keep some type of investment performance track record of the stocks analyzed on this blog I have created 2 Marketocracy portfolios that I describe below.
Those of you that are familiar with Marketocracy know that they have some basic holdings rules for portfolios to be in “compliance” and included in their rankings. I don’t plan to follow those rules and any compliance is accidental -- wow, in an environment where I have to get our firm’s compliance department to sign off before I go to the bathroom writing that actually felt liberating.
For those of you not familiar with the Marketocracy service I suggest you check them out at www.marketocracy.com. I think if used properly, people new to investing can learn some valuable lessons and save themselves some investment losses. Keep in mind that I am only referring to their free services, I have never used the premium service and have no idea if its worth the price or not.
I plan to post and discuss performance on a monthly basis. Below is a description of the two portfolios I created …….
“Watch List” portfolio -- this portfolio will hold a position in every stock that has been analyzed in detailed and written up on this blog. I don’t have any performance expectation for this portfolio. The main purpose of this portfolio is to simply remind me to check up on these stocks on a monthly basis. The secondary purpose is to provide me with some clues about how my personal idea generation process and the stocks that attract me compare with picking stock ideas at random -- on average, am I fishing in the more fertile parts of the lake?
“Best Ideas” portfolio -- this portfolio will hold full positions in a maximum of the 10 best ideas from this blog at any given time as well as much smaller positions in a maximum of 10 “watch list” stocks. I plan on using the 80/20 rule to assign position weights, with the best 10 names making up around 80% and the less attractive names making up around 20%. THIS IS NOT A RECOMMENDED INVESTMENT PORTFOLIO. THIS PORTFOLIO IS FOR PERFORMANCE TRACKING PURPOSES ONLY. THIS PORTFOLIO IS ONLY RELAVENT IN THE CONTEXT OF THIS BLOG. MY PERSONAL PORTFOLIO LOOKS SUBSTANTIALLY DIFFERENT. DO NOT REPLICATE THIS PORTFOLIO IN ANY INVESTMENT ACCOUNT. The main purpose of this portfolio is to see if I can identify the best stocks from all those that are analyzed on this blog.
I will use two benchmarks to grade myself:
1) Rate of inflation (as measured by Core CPI) + 10%
2) Russell 2000
I will use cumulative returns since inception until I reach a 3 year track record. After that I will use a 3 year moving average as well as cumulative performance. I would not pay much attention to the returns versus these benchmarks until there is at least an 18 month rack record and there has been at least one 12 month period with the major indexes down 10% or more.
OMF -- Watch List Portfolio
http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=FmOgDiEgEgFcOnMlMaKiAbDf
OTB -- Best Ideas Portfolio
http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=FmOaDeKbEgFgOoKjMaKiAbDe/maxDays=10000
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