portfolio123.com

[dipaolom]

As this is the "Stock Picking (Individual Security Analysis)" forum, I'm assuming that this sort of think is appropriate here.

I have had really (and I mean REALLY) good results doing my analysis at www.portfolio123.com

I don't work for them in any way--I'm just a satisfied customer.

Basically, you can backtest any investment concept that appeals to you and see how that concept would have fared at some period in history. It has really changed my way of thinking about what works, what risk really is or is not, and what diversification means.

The site is on the up and up, and you can communicate directly with the people that run it. There is also a great community of users (and the website is set up so that ideas and rule-sets can be easily shared). You can get free access to the site for amonth--you do have to submit a credit card to set that up, but there have been no shenanigans with peoples' cards...

I want to emphasize that I'm not an employee or a shill for the company or anything like that. I feel almost duty bound to let people know since P123 will definitely have an impact on when (and how) I retire.

I do have a profile (dipaolom) and have made several posts to the forums there if you are wary about my motivations.

Feel free to ask questions about it.

Marc in VA

 

[dipaolom]

Hmmm....

Not a single response or question. I suppose my original post looks a little too much like a scam or manipulation of some sort.

It's not, of course, but I could understand that inference.

Marc in VA

 

[clifp]

I looked at it but I can't imagine spending $29/month for it, and the hassles of inputing a portfolio for a 14 trail just don't make it worth while.

 

[Rich_by_the_Bay]

Not a single response or question. I suppose my original post looks a little too much like a scam or manipulation of some sort.

Very much so, Marc. Please be sensitive to the strong anti-spam orientation of this board.

I think we owe you the benefit of the doubt, though, and welcome any specific useful information you wish to share, while refraining from promotion of any particular site without specific, plausible reasons, which is what spammers do.

You state, "I feel almost duty bound to let people know since P123 will definitely have an impact on when (and how) I retire." If you have real information to share, please do so. If not, this board will not be receptive.

 

[dipaolom]

Long Post Warning...

OK...fair enough. Here's the thing:

Like most folks in this forum, I am very fact-oriented. In all things, not just investing. So when I finally began to manage my own money (motivated in part by Peter Lynch's excellent book "One Up on Wall Street") my Mom introduced me to National Association of Investors Corp (NAIC)--a non-profit that exists to teach people the basics of methodical, fundamental investing (how to read a balance sheet, how to calculate and chart growth trends by hand, how to develop your own earnings estimates, etc) and encourages establishment of investment clubs.

My gains with NAIC averaged about 14% per year for about 6 years--nice enough, but nothing extraordinary. The big lessons I took from NAIC were: (1) analyst estimates and rankings are meaningless unless you know what assumptions they're making, and (2) it is of the utmost importance to use a standardized, repeatable method for analysis of each company. That helped me steer clear of tempting, but oh-so-dangerous, stock recommendations that begin with "I just talked to my Uncle Joe. He's a really good investor, and HE says..."

NAIC was a necessary part of my education, but HAND CHARTING stock performance data? Flipping through tomes and tomes of Value Line? I've got two kids...that's just not sustainable over the long term (unless you like that sort of thing as a hobby). So my search radar was still looking for more efficient/effective, but fact-based, ways to get my investment recommendations.

That's how I happened onto Portfolio123.com. In a nutshell, here's what it does and why I like it:

1) P123 doesn't have a particular style of investing that it promotes--it simply provides the infrastructure for users to do their analysis using whatever approach they like best (fundamental, technical, momentum, growth, value...anything).

2) Here's how the site works:

First-DATA: Users have access to the last 6 years of Reuters data for the universe of securities traded in the US. That data is a snapshot of each company taken once each week (over the 6 years) that slices and dices each company hundreds of different ways, from the mundane (what is/was the PE, growth rate, analyst rating, etc) to the esoteric (the Average True Range, Working Capital Per Share To Price Ratio, Short Interest, Average Daily Volume, etc.).

Second-RANKING SYSTEM: Users select some of those factors that they think will be efective in identifying better-performing companies and use them to create a ranking system. There are tool on the site to backtest the perfomance of the ranking system so that you can know that, over time, the companies ranked the highest by your ranking system actaully show the best performance over time (at whatever interval you define...weekly, monthly, semi-annually, etc.)

Third-ACTUAL STOCK RECOMMENDATIONS: SO now you have every company ranked according to criteria that you specfied. When specific buy/sell criteria are applied to that list of 70000+ companies, you get stock recommendations. For example, some buy rules you might see are "Price < $30 but greater than $3" or "Market Cap < $1 billion" or "Correlation with the S&P < 0.3" etc. This is also where you set the size of the portfolio that you want (25 stocks, 5 stocks, etc.)

Fourth-BACKTESTING: You don't have to guess about how your assumptions may tend to perform--you can backtest them against the stored price data at the site. The question it answers is "if I got into a time machine and went back 6 months/1 year/5 years/etc., and blindly applied the rules if the trading system I've jsut developed, what would have happened? I have learned, over time, is that much of what I read about stockpicking is not worth too much. For example, if I read in interesting article in WSJ or IBD, I can put those riles into P123 and see how they perform. Ususally, it ain't too good.

This description makes it all sound waaay more complicated than it really is.

There are two other things that I like about it:

1) They don't have any of your money. You do your analysis at P123 and then go to your discount broker's website to make your trades. Their business model is to provide such a useful tool that you will pay for that access (about $40/month or so). I like that there is no conflict of interest there.

2) Becasue it is an internet based system, the work of the other site members is viewable. Whatthat means is that I don't have to develop my owns systems--I can find systems created by others that match my own approach. There are no "black boxes" or proprietary systems in P123.

These are returns on the 4 systems I'm running now (I have swapped some out along the way)
No Inception Tot Ret Annual Sharpe Ratio DDown
1 01/05/07 27.7% 74.1% N/A -12.6%
2 11/17/06 56.6% 118.1% 2.66 -7.1%
3 05/18/07 -0.1% -1.1% N/A -5.0%
4 06/03/05 207.1% 73.7% 2.00 -19.0%

Sorry for the long post. Just wanted to put some flesh on the bones of my first post.
Marc in VA

 

[dipaolom]

"7000+" companies, not "70000+"

Noticed the typo right after I posted it...

 

[lswswein]

Hi dipaolom
This looks a lot like what you get at backtest.org. That website was the effort of a lot of people at the motley fool. The thing is the backtested strategies are used by a lot of quant hedge funds and tend to need a lot of trading.

-h