Volatility in your Portfolio


Thinks s/he gets paid by the post
Mar 11, 2004
I know markets have been quiet lately, but I just did a few calculations and realized that my portfolio rises and falls very little from day to day, and it suits me great. Wonder how my stats compare to others:

Typical day's change in portfolio value: less than 0.1%

Quiet day: less than 0.05% up or down, often as low as 0.02%

Big day: around 0.2%- 0.3% change in portfolio value

Big day would have had the S&P or Nasdaq up or down over 1.5%

Maybe this is normal effect of blending about 50% fixed income and 50% stocks, (actually 40% FI, 40% stocks and 20% other -- things like REITS, Oil& Gas, Commodities but if you had to mash them down into two categories it would be about 50-50). But I'm clinging to the idea that all my slicing (14 asset classes) is the real factor levelling out the daily ups and downs.

Anybody else doing these types of calculations? How do your daily swings compare? Anybody ever calculate a Beta for your portfolio? (Mine is .28 )

One final thought: I have all my accounts funnelled into the Vanguard Cash-Edge portfolio utility which means I get automatic daily updates. I wonder if knowing the daily ups and downs has made me aggressively seek a low volatility portfolio, whereas when I used to hand-calculate these things once a month I didn't care as much about volatility and happily held riskier assets. Anybody been through the same evolution? Maybe it's just the switch from accumulating to disbursement mode that's making me want more stability...
I ER'd last May. Hate volatility, so I'm only at 28% in stocks right now; don't see it going higher than 30%.
Currently taking about 4.5% / month and will reduce it when soc. sec. kicks in at age 62 - about 3 years 8 months from now.
My stocks consist of some Vanguard funds in my 401k, my Dodge and Cox funds, and an Ameritrade account .
The Ameritrade account is about 50% in REITs and 50% in other stocks such as XOM, MO, SLE, GE, USB - all dividend paying stocks. The Ameritrade acct. gives me nice dividends every month that I use to supplement the pension and cd interest.
Interesting statistics and observations. I don't keep records regarding variations as detailed as you do even though I do update and track my holdings everyday to get an idea of trends etc.

My portfolio is 55% FI/45% Equity mix. The day to day variations just from my memory (though now I'm thinking that it would be interesting to add that to my tracking) are about +/- .10 most of the time less than .10, I think.
The one statistic that I don't have to rely on memory is that from the beginning of the year until 3/2 the portfolio moved from a range of -.86 to +.90. The direction has been upward so I'm happy for now.

Other observations: Most holdings fall within +/- 2% gain or loss ytd with the outliers at -5%, -3%, +25%, +12.5%.

I've always tend to allocate my porfolio to a buy and hold (sort of) conservative portion and an aggressive portion so tracking doesn't affect much in toning down the portfolio except for fine tuning the aggressive/active portion of it.
I am mostly in individual stocks. A typical day will see moves of 1% or less. I have had moves of greater than 3% in one day. Of course, I wouldn't be comfy with this in retirement.
Here's how I handle volatility in my portfolio.

Whether I sit like a lump all day or run around and stay busy, if the portfolio is up I proudly announce to my wife either:

"Look honey, I sat like a lump all day and still made $7000!" and she says "Woo hoo!!".


"Look honey, I cut down shrubs and changed the oil in both cars and made $7000! What a great hourly rate for such menial labor!" and she says "Woo hoo!!".

If the portfolio is down, I say nothing and she doesnt notice.

But seriously...my asset allocation appears to be pretty good...we float up and down with the tide but in recent years since I learned how to allocate funds better I havent seen any really big down days but the up days still look good. We have enough stuff like 'energy' and 'precious metals' that on crappy down days due to oil or the falling dollar we get a little 'make up' from those sorts of defensive funds. At a roughly 50/50 allocation, its also a rare day that both stocks and bonds take a beating.

I look at it every day and that keeps me aware of where we are and keeps me thinking about ways to improve our position.
>95% equities.

We're big fans of upward volatility.

Like TH we mostly ignore downward volatility. Anything over 5% has me itching to sell off a few percent of Tweedy, Browne (TBGVX, big cap gains since early 2003) to buy more Berkshire Hathaway or more small-cap value. And I keep a list of "loser" stocks to short when the market swoons.

But even "big" market days are less than 1%. 4Q04 was a pleasant surprise, and even this quarter's worst was inside minus 5%. So it'd take a repeat of 9/11 or the NASDAQ meltdown to get our attention.

As long as we stay above the post 9/11 numbers we won't be making any changes. Even then, any "changes" would just be an expense review.
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