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StockCentral :: Community
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Join in on the discussion with other like-minded investors in our community forums. Learn about the fundamental investing methodology and participate in educational workshops in the Investing forums, stay up-to-date on StockCentral news and make suggestions to the StockCentral team in Central Square, and discuss your favorite stock or recent market news in our A-Z ticker-based forums.
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Doug Gerlach
Cambridge, MA
http://www.iclub.com/
President, ICLUBcentral
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| 02/20/2007 6:23 PM |
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Before we start analyzing our portfolios, let's make sure we're actually clear on the definition of "portfolio."
Simply put, a "portfolio" is a grouping of securities. How you group those securities is largely a matter of preference -- you could consider the entirety of your stock and fund holdings to be your "portfolio," or you might think of your IRA as a portfolio and your taxable "regular" brokerage account as another. Your investment club portfolio is by itself probably a single stand-alone portfolio.
But for the purposes of portfolio management, we need to be a bit more specific.
First, for our portfolio workshop, we're only considering stocks. (If push comes to shove, we might also consider equity mutual funds or ETFs as part of our stock portfolios, but the techniques we'll be discussing are really only suitable for stocks.)
Next, we need to consider a "portfolio" as a group of stocks that share a common investment objective. By "objective," I don't mean "hope and pray these stocks will make a lot of money for me," either! The stocks in a single portfolio should all have been chosen with the same approach and methodology.
If you are a Toolkit-style investor, then all of the securities in your portfolio should have been selected and analyzed using that approach. That tiny and unprofitable company into which you dumped a few bucks on a whim -- the one that looks awful in Toolkit -- isn't part of your portfolio. It's an outlier that won't likely be contributing to any of the fundamentals of sound portfolio management. There's nothing wrong with investing with a little of your "mad money" this way (as long as it's not habit-forming) but you must recognize what you're doing from the start so that you don't hurt yourself trying to use the wrong tool to whack that stock into place.
We don't need to consider cash as part of your portfolio. One of the rules that we follow is to remain fully invested at all times, so sitting on cash is rarely recommended.
So, first step in improving your portfolio is this:
1. Know your holdings.
Before you start improving your portfolio, you need to know what you've got in your portfolio right now. We need to collect a little information. Create a worksheet, either on paper or in a spreadsheet, with the following information for each stock in your portfolio:
Stock name
Ticker symbol
Sector
Industry group
Last year's total revenues
# of shares owned
Date of first purchase
Total cost basis (how much did you pay for all the shares you own)
Total value today
(You can lookup the Sector & Industry group, as well as the total of the company's last year's revenues, on the StockCentral data report.)
You may be able to print a report with this information right from your portfolio management software. If not, you might need to review your records and do a little bit of research.
Once you've collected this information, you'll be ready for Step #2.
Doug
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Posting from ICLUBcentral world headquarters in the Harvard Square's historic College House, Cambridge, MA
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Kathie Hagwell
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| 03/04/2007 10:43 PM |
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Which number from the StockCentral data report should be used for the "company's last year's revenues"?
THanks,
KH |
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Joe Craig
Ellicott City, MD
StockCentral Administrator
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| 03/04/2007 11:37 PM |
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If you look in the first section of the data report you'll see the "Fiscal Year Ended" date. This is the date that ended the company's last fiscal year. For Johnson and Johnson (JNJ) that number is 12/2006, which means that the last fiscal years ended at the end of December 2006.
Skipping down to the "Annual Data" section (it's the 4th major section) you'll see revenues listed for the last 10 fiscal years. Again, looking at JNJ, the last fiscal year is 2006 and the "Sales" number is $53,324.0. The header for that row says that the number is M -- millions of dollars. That means that JNJ's sales (or revenue) for FY 2006 was $53.234 Billion. |
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Joe |
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