[{"data":1,"prerenderedAt":6826},["ShallowReactive",2],{"blog-ep2-cathie-wook-ark-portfolio":3,"blog-popular":556},{"id":4,"title":5,"body":6,"description":544,"extension":545,"meta":546,"navigation":548,"path":549,"publishedAt":550,"seo":551,"seo_description":544,"seo_title":552,"social_image":553,"stem":554,"updatedAt":550,"__hash__":555},"blog/blog/ep2-cathie-wook-ark-portfolio.md","Cathie Wood ARK Portfolio Analysis 2025",{"type":7,"value":8,"toc":527},"minimark",[9,14,18,21,31,36,39,42,49,52,74,79,82,96,99,102,110,113,117,120,123,137,157,160,163,177,180,184,187,193,207,213,227,230,283,290,294,311,343,347,354,359,373,377,380,400,407,410,414,419,422,426,429,491,494,498,504,508,511,513,524],[10,11,13],"h1",{"id":12},"cathie-wood-and-ark-invest-the-visionary-behind-the-disruption","Cathie Wood and ARK Invest: The Visionary Behind the Disruption",[15,16,17],"p",{},"Cathie Wood is more than an investor; she's a futurist. Since founding ARK Investment Management in 2014, she has built a reputation for spotting tomorrow's winners before the market catches on. Her flagship fund, the ARK Innovation, became a household name during the pandemic boom with enormous returns. But like all active managers, Wood has faced challenges during the downturn that comes afterwards. Her strategy offers crucial lessons for investors to learn from.",[15,19,20],{},"This episode will mirror the structure of our Warren Buffett deep dive, but focused on ARK’s flagship strategies, using Portseido to analyze performance, holdings, and risk. Just a small spoiler that her portfolio is a stark contrast to the steady, value-oriented approach of the previous episode.",[22,23,24],"blockquote",{},[15,25,26,30],{},[27,28,29],"strong",{},"Disclaimer:"," This analysis is based on publicly available 13F data from 2017-2025. Trade dates and prices are estimated at quarter-end. Some tickers may be missing. The actual dollar value must be multiplied by 1 million for real scale.",[32,33,35],"h2",{"id":34},"_1-the-overview-a-tale-of-two-returns-twr-vs-mwr","1. The Overview: A Tale of Two Returns (TWR vs. MWR)",[15,37,38],{},"When we log into Portseido and view the Home dashboard for the ARK Investment Portfolio, we immediately encounter a fascinating discrepancy that perfectly illustrates the danger of \"chasing performance.\"",[15,40,41],{},"As of the current snapshot, the portfolio value sits at $15,522. However, the real story lies in the massive gap between the Time-Weighted Return (TWR) and Money-Weighted Return (MWR).",[43,44,45],"ul",{},[46,47,48],"li",{},"Time-Weighted Return (TWR): +233.28%",[15,50,51],{},"What this tells us: If an investor had put a lump sum in at the very beginning and never touched it, the strategy itself actually performed incredibly well over the long term. The stock picks, in isolation, generated massive growth.",[53,54,55,56,55,61,55,65],"picture",{},"\n    ",[57,58],"source",{"srcSet":59,"type":60},"/blog_images/ep2-cathie-wook-ark-portfolio/return-twr.avif","image/avif",[57,62],{"srcSet":63,"type":64},"/blog_images/ep2-cathie-wook-ark-portfolio/return-twr.webp","image/webp",[66,67],"img",{"alt":68,"src":69,"style":70,"width":71,"height":72,"decoding":73},"ARK TWR Return","/blog_images/ep2-cathie-wook-ark-portfolio/return-twr.png","max-width:100%; height:auto;aspect-ratio:'attr(width) / attr(height)';max-height: 500px",1475,838,"async",[43,75,76],{},[46,77,78],{},"Money-Weighted Return (MWR): -34.97%",[15,80,81],{},"What this tells us: This metric accounts for cash inflows and outflows. The stark drop to -35% suggests that the bulk of the capital flowed into this portfolio after the massive gains had already happened. This is what people may call \"buying the top.\"",[53,83,55,84,55,87,55,90],{},[57,85],{"srcSet":86,"type":60},"/blog_images/ep2-cathie-wook-ark-portfolio/return-mwr.avif",[57,88],{"srcSet":89,"type":64},"/blog_images/ep2-cathie-wook-ark-portfolio/return-mwr.webp",[66,91],{"alt":92,"src":93,"style":70,"width":94,"height":95,"decoding":73},"ARK MWR Return","/blog_images/ep2-cathie-wook-ark-portfolio/return-mwr.png",1462,846,[15,97,98],{},"The \"What If\" Reality Check: Portseido's benchmarking tool further highlights the opportunity cost of this volatility.",[15,100,101],{},"💡💡 If this same capital had been deployed into the S&P 500 during the exact same timeframe, the outcome would have been drastically different:",[43,103,104,107],{},[46,105,106],{},"Projected S&P 500 Value: $50,423.29",[46,108,109],{},"S&P 500 Return: Approx. +207.15% (MWR basis)",[15,111,112],{},"This divergence between TWR and MWR is a classic lesson of hype-driven investing: the strategy worked early on (high TWR), but most investors arrived too late to benefit (negative MWR), ultimately trailing the steady S&P 500 benchmark by a wide margin.",[32,114,116],{"id":115},"_2-performance-boom-or-bust","2. Performance: Boom or Bust",[15,118,119],{},"The journey of Cathie Wood's portfolio tells a compelling story of boom, bust, and resurgence. The data tracked through Portseido reveals a striking pattern of performance across market cycles. The \"Historical Return\" table in Portseido highlights a journey of extreme highs and significant drawdowns, characterized by sharp divergence from the S&P 500.",[15,121,122],{},"The Annual Performance Breakdown (MWR) allows us to track the yearly momentum of the portfolio against the market benchmark:",[53,124,55,125,55,128,55,131],{},[57,126],{"srcSet":127,"type":60},"/blog_images/ep2-cathie-wook-ark-portfolio/historical.avif",[57,129],{"srcSet":130,"type":64},"/blog_images/ep2-cathie-wook-ark-portfolio/historical.webp",[66,132],{"alt":133,"src":134,"style":70,"width":135,"height":136,"decoding":73},"ARK Historical returns","/blog_images/ep2-cathie-wook-ark-portfolio/historical.png",1207,881,[43,138,139,142,145,148,151,154],{},[46,140,141],{},"2020: The Breakout. A massive year for disruptive innovation, fueled by liquidity during the pandemic. The portfolio returned +171.90%, outperforming the S&P 500 by a staggering 140.04%.",[46,143,144],{},"2021: The Initial Slide. The momentum shifted as the portfolio dropped -21.73%, while the S&P 500 climbed +26.46%.",[46,146,147],{},"2022: The Crash. A crushing year for growth stocks resulted in a -61.35% return, underperforming the benchmark by -41.87%.",[46,149,150],{},"2023: The Recovery. A strong rebound saw the portfolio gain +58.43%, significantly outpacing the S&P 500’s +24.27%.",[46,152,153],{},"2024: Stability. The portfolio continued to grow with an +11.31% return, though it trailed the S&P 500’s +23.89% during this period.",[46,155,156],{},"2025 (YTD): Current Momentum. As of the latest data in 2025, the portfolio is up +29.75%, currently beating the S&P 500’s +15.55%.",[15,158,159],{},"This historical view visualizes the high-beta nature of the ARK strategy. While the portfolio is capable of massive outperformance in favorable environments when tech and innovation regained investor attention (like 2020 and 2023), it also faces deep corrections that can take years to recover from. For index investors, smaller drawdowns mean faster recoveries like a 20% decline recovers in months during bull markets, but a 60% decline requires years of exceptional outperformance just to catch up.",[15,161,162],{},"The Portseido benchmark analysis provides crucial context on how Wood's portfolio performs relative to major market indices:",[53,164,55,165,55,168,55,171],{},[57,166],{"srcSet":167,"type":60},"/blog_images/ep2-cathie-wook-ark-portfolio/benchmarks.avif",[57,169],{"srcSet":170,"type":64},"/blog_images/ep2-cathie-wook-ark-portfolio/benchmarks.webp",[66,172],{"alt":173,"src":174,"style":70,"width":175,"height":176,"decoding":73},"ARK's portfolio vs. the benchmark.","/blog_images/ep2-cathie-wook-ark-portfolio/benchmarks.png",1472,722,[15,178,179],{},"The data shows that ARK underperformed NASDAQ (more growth-focused) but outperformed the broader S&P 500. This reflects the positioning: ARK is more concentrated in select growth themes than the diversified NASDAQ but avoids the value and defensive stocks in the S&P 500.",[32,181,183],{"id":182},"_3-portfolio-allocation-betting-on-the-future","3. Portfolio Allocation: Betting on the Future",[15,185,186],{},"What does a portfolio focused on \"disruptive innovation\" look like? The Allocation tab breaks it down by sector and weight.",[15,188,189,192],{},[27,190,191],{},"Sector Breakdown:"," Unsurprisingly, the portfolio is heavily weighted toward technology and sectors that intersect with it:",[43,194,195,198,201,204],{},[46,196,197],{},"Technology: 35.8% (The dominant force)",[46,199,200],{},"Healthcare: 21.9% (Likely genomics and biotech)",[46,202,203],{},"Consumer Cyclical: 13.6%",[46,205,206],{},"Communication Services: 10.1%",[15,208,209,212],{},[27,210,211],{},"Top Holdings:"," Looking at the specific assets, we see high conviction bets. Portseido shows that the top holdings make up a significant chunk of the portfolio, indicating a concentrated strategy:",[53,214,55,215,55,218,55,221],{},[57,216],{"srcSet":217,"type":60},"/blog_images/ep2-cathie-wook-ark-portfolio/allocation.avif",[57,219],{"srcSet":220,"type":64},"/blog_images/ep2-cathie-wook-ark-portfolio/allocation.webp",[66,222],{"alt":223,"src":224,"style":70,"width":225,"height":226,"decoding":73},"ARK's portfolio allocation by stock and by sector or theme","/blog_images/ep2-cathie-wook-ark-portfolio/allocation.png",1471,1138,[15,228,229],{},"The portfolio holds a focused set of high-conviction names.",[231,232,233,238,243,248,253,258,263,268,273,278],"ol",{},[46,234,235],{},[27,236,237],{},"Tesla (TSLA) — 9.71%",[46,239,240],{},[27,241,242],{},"Roku (ROKU) — 6.05%",[46,244,245],{},[27,246,247],{},"Robinhood Markets (HOOD) — 5.99%",[46,249,250],{},[27,251,252],{},"Shopify (SHOP) — 5.31%",[46,254,255],{},[27,256,257],{},"Palantir Technologies (PLTR) — 4.93%",[46,259,260],{},[27,261,262],{},"Coinbase (COIN) — 4.27%",[46,264,265],{},[27,266,267],{},"Roblox (RBLX) — 3.81%",[46,269,270],{},[27,271,272],{},"CRISPR Therapeutics (CRSP) — 3.67%",[46,274,275],{},[27,276,277],{},"Advanced Micro Devices (AMD) — 3.65%",[46,279,280],{},[27,281,282],{},"Tempus AI (TEM) — 3.26%",[15,284,285,286,289],{},"The ",[27,287,288],{},"top 10 holdings represent approximately half of the portfolio",", indicating significant concentration in core conviction themes while maintaining broader diversification across more than 200 holdings.",[32,291,293],{"id":292},"_4-uncovering-true-alpha-stock-selection-in-action","4. Uncovering True Alpha: Stock Selection in Action",[15,295,296,297],{},"Analysis of individual holdings shows which bets generated exceptional returns:\n",[53,298,299,302,305],{},[57,300],{"srcSet":301,"type":60},"/blog_images/ep2-cathie-wook-ark-portfolio/holding.avif",[57,303],{"srcSet":304,"type":64},"/blog_images/ep2-cathie-wook-ark-portfolio/holding.webp",[66,306],{"alt":307,"src":308,"style":70,"width":309,"height":310,"decoding":73},"ARK holdings","/blog_images/ep2-cathie-wook-ark-portfolio/holding.png",1468,1083,[43,312,313,319,325,331,337],{},[46,314,315,318],{},[27,316,317],{},"Robinhood (HOOD):"," Unrealized Gain of +1,076% (from avg cost $10.15 to current $119.40)\nThis position exemplifies Wood's conviction. Despite skepticism, Robinhood proved its business model and has become a flagship fintech holding.",[46,320,321,324],{},[27,322,323],{},"Palantir (PLTR):"," Unrealized Gain of +829.52% (from avg cost $20.20 to current $187.75)\nEarly bet on AI-powered data analytics before mainstream adoption.",[46,326,327,330],{},[27,328,329],{},"Shopify (SHOP):"," Unrealized Gain of +271.53% (from avg cost $43.91 to current $163.14)\nE-commerce platform benefiting from digital retail acceleration especially from the pandemic years.",[46,332,333,336],{},[27,334,335],{},"Coinbase (COIN):"," Unrealized Gain of +257.93% (from avg cost $70.57 to current $252.61)\nDigital asset infrastructure positioning during crypto adoption waves.",[46,338,339,342],{},[27,340,341],{},"Tesla (TSLA):"," Unrealized Gain of +171.39% (from avg cost $180.51 to current $489.88)\nDespite recent volatility and media skepticism, Tesla remains solidly profitable at current levels.",[32,344,346],{"id":345},"_5-dividends-growth-over-income","5. Dividends: Growth Over Income",[15,348,349,350,353],{},"One area where ARK sharply diverges from traditional dividend-focused strategies is income generation. This reflects Wood's philosophy: growth stocks that reinvest profits into innovation generate returns through capital appreciation, not income distribution. It's very clear that ",[27,351,352],{},"ARK is not a vehicle for passive income investors",".",[43,355,356],{},[46,357,358],{},"Portfolio Yield (TTM): 0.09%",[53,360,55,361,55,364,55,367],{},[57,362],{"srcSet":363,"type":60},"/blog_images/ep2-cathie-wook-ark-portfolio/div.avif",[57,365],{"srcSet":366,"type":64},"/blog_images/ep2-cathie-wook-ark-portfolio/div.webp",[66,368],{"alt":369,"src":370,"style":70,"width":371,"height":372,"decoding":73},"ARK's dividend and cash flow metrics dashboard","/blog_images/ep2-cathie-wook-ark-portfolio/div.png",1466,888,[32,374,376],{"id":375},"conclusion-lessons-from-arks-innovation-playbook","Conclusion: Lessons from ARK's Innovation Playbook",[15,378,379],{},"Analyzing Cathie Wood's portfolio through Portseido's data-driven lens reveals three critical lessons for all investors. The strategy is high-risk, high-reward, and highly volatile. Definitely it is not for everyone.",[231,381,382,388,394],{},[46,383,384,387],{},[27,385,386],{},"Conviction and Discipline:"," The portfolio's -34.97% Money-Weighted Return requires conviction to maintain positions despite multi-year drawdowns.",[46,389,390,393],{},[27,391,392],{},"Top holdings drive returns:"," The 1,076% gain in Robinhood, 829% in Palantir, and 271% in Shopify drive portfolio performance more than the rest.",[46,395,396,399],{},[27,397,398],{},"The mathematical reality is unforgiving:"," ARK's 61% drawdown in 2022 required a 158% gain just to break even, while the S&P 500's 19% decline only needed 24% to recover.",[15,401,402,403,406],{},"Ultimately, the 2020-2025 data shows that this strategy ",[27,404,405],{},"underperformed"," diversified approaches, especially the S&P 500 index, on a multi-year basis, suggesting that mixing growth concentration with broader diversification may offer better risk-adjusted returns.",[408,409],"hr",{},[32,411,413],{"id":412},"frequently-asked-questions-faq","Frequently Asked Questions (FAQ)",[415,416,418],"h3",{"id":417},"what-is-cathie-woods-portfolio-performance-in-2025","What is Cathie Wood's portfolio performance in 2025?",[15,420,421],{},"As of 2025 year-to-date, Cathie Wood's ARK portfolio is up +29.75%, currently beating the S&P 500's +15.55%. However, while the Time-Weighted Return shows +233.28% since the start of logging, the Money-Weighted Return sits at -34.97%. Over the 2020-2025 period, the strategy underperformed the S&P 500 on a multi-year basis.",[415,423,425],{"id":424},"what-are-the-top-holdings-in-cathie-woods-portfolio","What are the top holdings in Cathie Wood's portfolio?",[15,427,428],{},"As of 2025, the top ten holdings are:",[231,430,431,437,443,449,455,461,467,473,479,485],{},[46,432,433,436],{},[27,434,435],{},"Tesla (TSLA)"," — 9.71%",[46,438,439,442],{},[27,440,441],{},"Roku (ROKU)"," — 6.05%",[46,444,445,448],{},[27,446,447],{},"Robinhood Markets (HOOD)"," — 5.99%",[46,450,451,454],{},[27,452,453],{},"Shopify (SHOP)"," — 5.31%",[46,456,457,460],{},[27,458,459],{},"Palantir Technologies (PLTR)"," — 4.93%",[46,462,463,466],{},[27,464,465],{},"Coinbase (COIN)"," — 4.27%",[46,468,469,472],{},[27,470,471],{},"Roblox (RBLX)"," — 3.81%",[46,474,475,478],{},[27,476,477],{},"CRISPR Therapeutics (CRSP)"," — 3.67%",[46,480,481,484],{},[27,482,483],{},"Advanced Micro Devices (AMD)"," — 3.65%",[46,486,487,490],{},[27,488,489],{},"Tempus AI (TEM)"," — 3.26%",[15,492,493],{},"The top 10 holdings represent approximately half of the portfolio, indicating significant concentration in core conviction themes while maintaining broader diversification across more than 200 holdings.",[415,495,497],{"id":496},"does-cathie-wood-beat-the-sp-500","Does Cathie Wood beat the S&P 500?",[15,499,500,501,503],{},"Cathie Wood's ARK strategy has ",[27,502,405],{}," the S&P 500 on a multi-year basis (2020-2025). While the portfolio showed exceptional returns in certain years (like +171.90% in 2020 and +58.43% in 2023), the Money-Weighted Return of -34.97% significantly trails the S&P 500's approximate +207.15% return over the same period, illustrating the danger of chasing performance after gains have already occurred.",[415,505,507],{"id":506},"what-can-investors-learn-from-cathie-woods-strategy","What can investors learn from Cathie Wood's strategy?",[15,509,510],{},"Cathie Wood's portfolio reveals that the strategy is high-risk, high-reward, and highly volatile—definitely not for everyone. The portfolio's -34.97% Money-Weighted Return requires conviction to maintain positions despite multi-year drawdowns, while top holdings like Robinhood (+1,076%), Palantir (+829%), and Shopify (+271%) drive most of the performance. The mathematical reality is unforgiving: ARK's 61% drawdown in 2022 required a 158% gain just to break even, compared to the S&P 500's 19% decline that only needed 24% to recover.",[408,512],{},[15,514,515],{},[27,516,517,518,523],{},"Ready to analyze your own innovation-focused portfolio? ",[519,520,522],"a",{"href":521},"/","Portseido"," helps you track performance, risk, and trades—just like in this ARK deep dive. Try it for free!",[15,525,526],{},"Happy Investing!",{"title":528,"searchDepth":529,"depth":529,"links":530},"",3,[531,533,534,535,536,537,538],{"id":34,"depth":532,"text":35},2,{"id":115,"depth":532,"text":116},{"id":182,"depth":532,"text":183},{"id":292,"depth":532,"text":293},{"id":345,"depth":532,"text":346},{"id":375,"depth":532,"text":376},{"id":412,"depth":532,"text":413,"children":539},[540,541,542,543],{"id":417,"depth":529,"text":418},{"id":424,"depth":529,"text":425},{"id":496,"depth":529,"text":497},{"id":506,"depth":529,"text":507},"A high-level look at Cathie Wood's ARK Invest portfolios, focusing on performance, holdings, and investing philosophy.","md",{"slug":547},"ep2-cathie-wook-ark-portfolio",true,"/blog/ep2-cathie-wook-ark-portfolio","2025-12-23",{"title":5,"description":544},"Cathie Wood ARK Portfolio 2025 - Performance, Holdings, and Strategy","/blog_images/ep2-cathie-wook-ark-portfolio/banner.png","blog/ep2-cathie-wook-ark-portfolio","QdVfvpQTDChJwRt_JTl5iBiS4JRqPdwAVGHQfMacpSI",[557,824,1030,1191,1291,1408,1563,1829,2359,2706,2835,3064,3234,3427,3583,3941,4097,4256,4485,4846,5013,5140,5256,5324,5481,5837,5994,6120,6255,6430,6541,6632,6720],{"id":558,"title":559,"body":560,"description":815,"extension":545,"meta":816,"navigation":548,"path":817,"publishedAt":818,"seo":819,"seo_description":820,"seo_title":820,"social_image":610,"stem":821,"updatedAt":822,"__hash__":823},"blog/blog/alternative-data-for-investing.md","Alternative data for researching a company",{"type":7,"value":561,"toc":806},[562,565,568,577,581,599,614,618,621,638,652,661,665,680,693,697,711,715,732,747,751,764,767,771,774,787,794,797,803],[15,563,564],{},"Philip A. Fisher’s Common Stocks and Uncommon Profits book is among one of the best investing books I have ever read. In the book, he coined the term “Scuttlebutt” which I was really intrigued by since first seeing it. Although the methodology in the book works fine, nowadays there are many resources that we as investors can access with ease. In this article, I share with you tools that I find most helpful during researching a company and its businesses.",[15,566,567],{},"Going through annual reports and earnings calls is not going to tell us how good the company’s products and services are. In the company’s own documents, we will always find they are the best at blah blah blah, and they are also the leader in their subsegment market. Therefore, the first few tools in the list here are going to focus on the customer’s point of view.",[15,569,570,571,573,574,576],{},"This article is sponsored by ",[519,572,522],{"href":521},". There are many hard parts in investing but don’t let tracking your portfolio be one of them. Visualize your portfolio with ",[519,575,522],{"href":521},", so you can focus on beating the market.",[32,578,580],{"id":579},"how-to-use-product-review-contents","How to use / product review contents",[15,582,583,584,587,588,591,592,598],{},"I am always a fan of trying out products myself. It gives a first hand feel of how good they really are. However, in some cases it might not be possible- the product is too expensive to try, the product is not available in some regions, etc. Nowadays, there are tons of product review videos out there to help us out in all the cases. These reviews can be long and biased, but they can give us a sense of the products more than what a paragraph in an annual report does. Moreover, these reviews do in-depth analysis (in the user’s perspective) comparing the product to its competitors as well. ",[27,585,586],{},"Google"," and ",[27,589,590],{},"Youtube"," are your best friends in this case. Here are some ",[519,593,597],{"href":594,"rel":595},"https://www.youtube.com/results?search_query=amazon+fire+stick+vs+roku+vs+apple+tv+vs+chromecast",[596],"nofollow","examples of browsing Youtube"," to find out more on how $ROKU, $AMZN, $AAPL and $GOOGL compares with regards to their streaming hardware:",[53,600,55,601,55,604,55,607],{},[57,602],{"srcSet":603,"type":60},"/blog_images/alternative-data-for-investing/youtube-product-reviews.avif",[57,605],{"srcSet":606,"type":64},"/blog_images/alternative-data-for-investing/youtube-product-reviews.webp",[66,608],{"alt":609,"src":610,"style":611,"width":612,"height":613,"decoding":73},"How $ROKU, $AMZN, $AAPL and $GOOGL compares with regards to their streaming hardware","/blog_images/alternative-data-for-investing/youtube-product-reviews.png","max-width:100%; width:923px; height:auto;aspect-ratio:'attr(width) / attr(height)'",923,664,[32,615,617],{"id":616},"various-product-reviewing-rating-sites","Various product reviewing / rating sites",[15,619,620],{},"While the aforementioned tools help us get a sense of how the product looks and feels, it is not enough. As a consumer, at least to me, after learning more about the products, I definitely read reviews from real consumers. There are many tools in the market right now, depending on which markets you are targeting. Here are some examples:",[43,622,623,628,633],{},[46,624,625],{},[27,626,627],{},"Software: Google Play store, Apple App store, softwareadvice.com",[46,629,630],{},[27,631,632],{},"Restaurants: Google map, Yelp, Trip Advisor",[46,634,635],{},[27,636,637],{},"Other products: Amazon",[53,639,55,640,55,643,55,646],{},[57,641],{"srcSet":642,"type":60},"/blog_images/alternative-data-for-investing/pins-app-review-on-google-play.avif",[57,644],{"srcSet":645,"type":64},"/blog_images/alternative-data-for-investing/pins-app-review-on-google-play.webp",[66,647],{"alt":648,"src":649,"style":611,"width":612,"height":650,"loading":651,"decoding":73},"$PINS app review on Google Play Store","/blog_images/alternative-data-for-investing/pins-app-review-on-google-play.png",855,"lazy",[15,653,654,655,660],{},"Reading through these ",[519,656,659],{"href":657,"rel":658},"https://play.google.com/store/apps/details?id=com.pinterest&hl=en&gl=US&showAllReviews=true",[596],"reviews",", we can spot a common theme here including why consumers love it, why they hate it as well as key factors that they consider when using the product, etc.",[32,662,664],{"id":663},"communities-for-specific-industry","Communities for specific industry",[15,666,667,668,587,671,674,675,353],{},"Just like investing communities, there are communities for other industries as well. These communities can give us information just like the reviewing / rating sites, but they can be more authentic. Furthermore, by getting ourselves into those communities, we can get ourselves up to date on any crucial events or news in such industry. Example tools here are ",[27,669,670],{},"Reddit",[27,672,673],{},"Facebook Group",". Here is another example of a ",[519,676,679],{"href":677,"rel":678},"https://www.reddit.com/r/cordcutters/",[596],"streaming service on Reddit",[53,681,55,682,55,685,55,688],{},[57,683],{"srcSet":684,"type":60},"/blog_images/alternative-data-for-investing/reddit-community.avif",[57,686],{"srcSet":687,"type":64},"/blog_images/alternative-data-for-investing/reddit-community.webp",[66,689],{"alt":690,"src":691,"style":611,"width":612,"height":692,"loading":651,"decoding":73},"CordCutters subreddit","/blog_images/alternative-data-for-investing/reddit-community.png",458,[32,694,696],{"id":695},"glassdoor","Glassdoor",[15,698,699,700,705,706,710],{},"Glassdoor is a website for reviewing companies from both former and current employees. With Glassdoor, we are able to assess the company’s working environment and sometimes how the company is doing recently. After reading through enough of those reviews, you will be able to spot the common pros and cons. Furthermore, there are also CEO approval ratings where you can see how employees think about their own CEO. You can read more about it ",[519,701,704],{"href":702,"rel":703},"https://www.glassdoor.com/employers/blog/how-investors-use-glassdoor/",[596],"here"," (on how to use it) and ",[519,707,704],{"href":708,"rel":709},"https://help.glassdoor.com/s/article/Ratings-on-Glassdoor?language=en_US",[596]," (on how each rating is calculated).",[32,712,714],{"id":713},"job-openings","Job openings",[15,716,717,718,721,722,725,726,731],{},"By looking at job openings, sometimes we can get a sense of the company’s directions and what they aim to do. You can find those data from the ",[27,719,720],{},"company’s own site"," as well as various job listing platforms e.g. ",[27,723,724],{},"Linkedin, Glassdoor",", etc. The following is an example I got from ",[519,727,730],{"href":728,"rel":729},"https://twitter.com/AznWeng",[596],"@AznWeng"," on Twitter",[53,733,55,734,55,737,55,740],{},[57,735],{"srcSet":736,"type":60},"/blog_images/alternative-data-for-investing/job-openings-data.avif",[57,738],{"srcSet":739,"type":64},"/blog_images/alternative-data-for-investing/job-openings-data.webp",[66,741],{"alt":742,"src":743,"style":744,"width":745,"height":746,"loading":651,"decoding":73},"Jobs opening data","/blog_images/alternative-data-for-investing/job-openings-data.png","max-width:100%; width:462px; height:auto;aspect-ratio:'attr(width) / attr(height)'",462,803,[32,748,750],{"id":749},"google-trend","Google trend",[53,752,55,753,55,756,55,759],{},[57,754],{"srcSet":755,"type":60},"/blog_images/alternative-data-for-investing/google-trend-on-crox.avif",[57,757],{"srcSet":758,"type":64},"/blog_images/alternative-data-for-investing/google-trend-on-crox.webp",[66,760],{"alt":761,"src":762,"style":611,"width":612,"height":763,"loading":651,"decoding":73},"$CROX keyword trends","/blog_images/alternative-data-for-investing/google-trend-on-crox.png",704,[15,765,766],{},"Google trend gives us historical data on the search volume trends. We are able to compare multiple keywords together in the chart here. Moreover, in some cases, it might give us some color on a short term company’s performance. For example, from the image above, despite Covid lockdown during 2020, Crocs ($CROX) search volume surged which correlates with their performance for the year.",[32,768,770],{"id":769},"similarweb-web-app-analyzer","Similarweb (Web / App analyzer)",[15,772,773],{},"Similarweb offers us a free service to analyze websites or apps. The data can be very useful for us as an investor. Moreover, we can also compare sites / apps as well. The data includes the platform rank, number of visits, bounce rate, average visit duration, ranking trends, visitor demographics (countries they come from, genders and age ranges), competitors, user acquisition channels, many more.",[53,775,55,776,55,779,55,782],{},[57,777],{"srcSet":778,"type":60},"/blog_images/alternative-data-for-investing/fb-website-analysis-from-similarweb.avif",[57,780],{"srcSet":781,"type":64},"/blog_images/alternative-data-for-investing/fb-website-analysis-from-similarweb.webp",[66,783],{"alt":784,"src":785,"style":611,"width":612,"height":786,"loading":651,"decoding":73},"$FB website analysis","/blog_images/alternative-data-for-investing/fb-website-analysis-from-similarweb.png",661,[15,788,789,790,353],{},"Try that yourself ",[519,791,704],{"href":792,"rel":793},"https://www.similarweb.com/website/facebook.com/#overview",[596],[15,795,796],{},"If you find the list helpful, don’t forget to share it with other fellow investors, and if there are any other tools that you think might be useful, please let me know down below in the comment.",[15,798,799,800,802],{},"At ",[519,801,522],{"href":521},", we help investors track their portfolio effortlessly and answer some of the most important questions in investing. How does your portfolio fare against a benchmark in the bull/bear market? Which decisions helped beat the benchmark? Where did the gains come from? And many more…",[15,804,805],{},"Happy investing!",{"title":528,"searchDepth":529,"depth":529,"links":807},[808,809,810,811,812,813,814],{"id":579,"depth":532,"text":580},{"id":616,"depth":532,"text":617},{"id":663,"depth":532,"text":664},{"id":695,"depth":532,"text":696},{"id":713,"depth":532,"text":714},{"id":749,"depth":532,"text":750},{"id":769,"depth":532,"text":770},"Alternative data is the data that comes from non-traditional sources which can give the investors edge over the market.",{},"/blog/alternative-data-for-investing","2022-07-04",{"title":559,"description":815},null,"blog/alternative-data-for-investing","2022-07-12","G0VHauvZin6sOKL5uOn7QLfsfigr2FUJU4bk2L_Kt_E",{"id":825,"title":826,"body":827,"description":1023,"extension":545,"meta":1024,"navigation":548,"path":1025,"publishedAt":1026,"seo":1027,"seo_description":820,"seo_title":820,"social_image":881,"stem":1028,"updatedAt":822,"__hash__":1029},"blog/blog/another-hard-part-of-investing.md","Another hard part of investing",{"type":7,"value":828,"toc":1017},[829,850,856,863,866,870,883,886,890,903,906,909,912,915,918,931,935,938,941,944,947,960,964,977,980,983,986,999,1002,1005,1014],[15,830,831,832,837,838,843,844,849],{},"As an investor, I always find ",[519,833,836],{"href":834,"rel":835},"https://www.oaktreecapital.com/insights",[596],"Howard Marks’ memo"," a great source of learning. For those who don’t know who Howard Marks is, he is a great value investor and cofounder of Oaktree Capital Management. Periodically he writes a short memo (also available in ",[519,839,842],{"href":840,"rel":841},"https://podcasts.apple.com/us/podcast/the-memo-by-howard-marks/id1521551570",[596],"podcast",") reflecting his views on the investment landscape. Recently I’m intrigued by one of his memos titled ",[519,845,848],{"href":846,"rel":847},"https://www.oaktreecapital.com/docs/default-source/memos/selling-out.pdf?sfvrsn=5a4f7166_11",[596],"“Selling out”",". The article discusses when to sell an investment. The part that I’m intrigued is when he quoted his son Andrew",[15,851,852],{},[853,854,855],"em",{},"“​​When you look at the chart for something that’s gone up and to the right for 20 years, think about all the times a holder would have had to convince himself not to sell.”",[15,857,858,859,862],{},"Then he raised an example of ",[27,860,861],{},"$AMZN"," whose return to date was more than 1,600x. Buying such stock over thousands of other alternatives is not easy, and, even if you have bought it, keeping such stock over the long term is still not easy too.",[15,864,865],{},"In this article, we dive a bit deeper, looking back into the past, and mimic what it would feel like to buy and hold such multi baggers.",[32,867,869],{"id":868},"amzn-historical-performance","AMZN historical performance",[53,871,55,872,55,875,55,878],{},[57,873],{"srcSet":874,"type":60},"/blog_images/another-hard-part-of-investing/AMZN-returns-1600x.avif",[57,876],{"srcSet":877,"type":64},"/blog_images/another-hard-part-of-investing/AMZN-returns-1600x.webp",[66,879],{"alt":880,"src":881,"style":611,"width":612,"height":882,"decoding":73},"1600-bagger AMZN performance","/blog_images/another-hard-part-of-investing/AMZN-returns-1600x.png",628,[15,884,885],{},"A $10,000 investment on AMZN at the close of its first trading day would be worth $16 million as of March 24th, 2022. This figure is equivalent to 166,642.85% (1,666 baggers) or 34.94% annualized return over 25 years, beating the S&P 500 (6.97% annualized return over the same period) by a light year. The chart above might look pretty (going from bottom left to the top right). However, we rarely see things. In the next part, we will zoom in a bit at each important milestone. The goal is to see and learn more from them what really happened to our simulated portfolio. To be able to truly understand what it feels like, putting all other things aside and asking yourself: would you still be able to hold such an asset under the same circumstance?",[32,887,889],{"id":888},"first-year","First year",[53,891,55,892,55,895,55,898],{},[57,893],{"srcSet":894,"type":60},"/blog_images/another-hard-part-of-investing/amzn-7-days-performance.avif",[57,896],{"srcSet":897,"type":64},"/blog_images/another-hard-part-of-investing/amzn-7-days-performance.webp",[66,899],{"alt":900,"src":901,"style":611,"width":612,"height":902,"loading":651,"decoding":73},"AMZN 7-day performance","/blog_images/another-hard-part-of-investing/amzn-7-days-performance.png",467,[15,904,905],{},"1 week — Just after 7 days of buying, our investment was down -28.78% to $7,122. Great start!",[15,907,908],{},"2 months — After that one and a half month, our investment breaks even for the first time.",[15,910,911],{},"4 months — Our investment doubles",[15,913,914],{},"10 months — Our investment triples",[15,916,917],{},"1 year — Our investment turns into a 10-bagger",[53,919,55,920,55,923,55,926],{},[57,921],{"srcSet":922,"type":60},"/blog_images/another-hard-part-of-investing/amzn-1-year-performance.avif",[57,924],{"srcSet":925,"type":64},"/blog_images/another-hard-part-of-investing/amzn-1-year-performance.webp",[66,927],{"alt":928,"src":929,"style":611,"width":612,"height":930,"loading":651,"decoding":73},"AMZN 1-year performance","/blog_images/another-hard-part-of-investing/amzn-1-year-performance.png",460,[32,932,934],{"id":933},"into-the-bubble","Into the bubble",[15,936,937],{},"1 year 4 months — Our investment was down -47.67% from its high a quarter earlier.",[15,939,940],{},"1 year 8 months — Our investment skyrocketed and grew 7.59 times from that huge drawdown (+4,609.82% since inception).",[15,942,943],{},"2 years 3 months — Our investment was down -59.31% from its peak.",[15,945,946],{},"2 years 8 months — Our investment reached all-time high again to $544,324 (+5,343.24% since inception). By now, we should be familiar with 40% drawdown already since it had reached that point 4 times already with each time larger than before. Largest drawdown to date was -59.31%",[53,948,55,949,55,952,55,955],{},[57,950],{"srcSet":951,"type":60},"/blog_images/another-hard-part-of-investing/amzn-1999-crash-drawdown.avif",[57,953],{"srcSet":954,"type":64},"/blog_images/another-hard-part-of-investing/amzn-1999-crash-drawdown.webp",[66,956],{"alt":957,"src":958,"style":611,"width":612,"height":959,"loading":651,"decoding":73},"AMZN 1999 crash's drawdown","/blog_images/another-hard-part-of-investing/amzn-1999-crash-drawdown.png",471,[32,961,963],{"id":962},"dot-com-bubble-burst","Dot-com bubble burst",[53,965,55,966,55,969,55,972],{},[57,967],{"srcSet":968,"type":60},"/blog_images/another-hard-part-of-investing/amzn-drawdown-during-dotcom-crash.avif",[57,970],{"srcSet":971,"type":64},"/blog_images/another-hard-part-of-investing/amzn-drawdown-during-dotcom-crash.webp",[66,973],{"alt":974,"src":975,"style":611,"width":612,"height":976,"loading":651,"decoding":73},"AMZN's drawdown during Dotcom bubble burst","/blog_images/another-hard-part-of-investing/amzn-drawdown-during-dotcom-crash.png",463,[15,978,979],{},"From there, your worst nightmare happened- in less than 2 years, the investment was down 94.40% from its high. It went from $544,324 to $30,459.",[15,981,982],{},"8 years since its high in 1999 — our portfolio gained momentum and was back to $475,541",[15,984,985],{},"It took 10 full years to recover such loss (3,619 days to be precise).",[53,987,55,988,55,991,55,994],{},[57,989],{"srcSet":990,"type":60},"/blog_images/another-hard-part-of-investing/amzn-performance-to-date.avif",[57,992],{"srcSet":993,"type":64},"/blog_images/another-hard-part-of-investing/amzn-performance-to-date.webp",[66,995],{"alt":996,"src":997,"style":611,"width":612,"height":998,"loading":651,"decoding":73},"AMZN performance to date","/blog_images/another-hard-part-of-investing/amzn-performance-to-date.png",264,[15,1000,1001],{},"From there, 12 years passed, there were only two down years for the portfolio. During such a period, it repeated itself although it was not as extreme as in 2001. Portfolio went up, made several -30% drawdowns, recovered and repeated.",[15,1003,1004],{},"Throughout the journey, there are many points in time that make me wonder how many of all people would still be able to hold their nerve and keep holding such an investment. Buying such assets early on has been difficult, considering the fact that many $AMZN competitors had been long gone. Holding the investment after watching it double, triple and morphed into a 10-bagger or even 100-bagger might be as difficult if not more. This might be one of the overlooked aspects of investing.",[15,1006,1007,1008,1013],{},"Investing can be complex, but it's one where many learn and grow from experience. ",[519,1009,1012],{"href":1010,"rel":1011},"https://lifemathmoney.com/two-big-investing-lessons-i-learned-cheaply/",[596],"While mistakes are part of the journey",", managing your portfolio shouldn't be one of them. That's where Portseido comes in. We've developed this tool to help you monitor your investments efficiently, empowering you to make informed decisions and work towards achieving your financial objectives.",[15,1015,1016],{},"The purpose of this article is to learn from the past investment cases. Nothing contained in this article should be construed as investment advice.",{"title":528,"searchDepth":529,"depth":529,"links":1018},[1019,1020,1021,1022],{"id":868,"depth":532,"text":869},{"id":888,"depth":532,"text":889},{"id":933,"depth":532,"text":934},{"id":962,"depth":532,"text":963},"In this article, we simulated how historically invested in AMZN over the long term can be so hard even its return's more than 1000x",{},"/blog/another-hard-part-of-investing","2022-07-05",{"title":826,"description":1023},"blog/another-hard-part-of-investing","K3oMT0ZhVUOgtXp_l8JKcF_DkLmZlaSaUeNLqpX2fBo",{"id":1031,"title":1032,"body":1033,"description":1184,"extension":545,"meta":1185,"navigation":548,"path":1186,"publishedAt":1187,"seo":1188,"seo_description":820,"seo_title":820,"social_image":1046,"stem":1189,"updatedAt":1187,"__hash__":1190},"blog/blog/asset-allocation.md","What is Asset Allocation? Why is it important to portfolio?",{"type":7,"value":1034,"toc":1165},[1035,1053,1057,1071,1075,1078,1082,1085,1089,1092,1096,1099,1103,1106,1110,1113,1117,1121,1124,1128,1131,1135,1138,1142,1146,1154,1158],[53,1036,55,1037,55,1040,55,1043],{},[57,1038],{"srcSet":1039,"type":60},"/blog_images/asset-allocation/asset-allocation.avif",[57,1041],{"srcSet":1042,"type":64},"/blog_images/asset-allocation/asset-allocation.webp",[66,1044],{"alt":1045,"src":1046,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":1051},"Portfolio and Asset Allocation","/blog_images/asset-allocation/asset-allocation.png","max-width:100%;width:600px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",700,298,"high",[1052],"cover-image",[32,1054,1056],{"id":1055},"what-is-asset-allocation","What is Asset Allocation?",[15,1058,1059,1060,1064,1065,1070],{},"Asset Allocation refers to the distribution of funds across diverse investment assets to fit your ",[519,1061,1063],{"href":1062},"/blog/good-financial-goals/","financial goal"," and within your risk tolerance. While there are many ",[519,1066,1069],{"href":1067,"rel":1068},"https://lifemathmoney.com/long-term-investing-building-an-equity-portfolio/",[596],"asset allocation strategies",", the key is to allocate the portfolio that suits your individual needs and helps you achieve your long-term objectives while keeping the risk under the acceptable level. Whether you're aiming for stability or growth, asset allocation can be your compass in the world of investing.",[32,1072,1074],{"id":1073},"asset-classes","Asset Classes",[15,1076,1077],{},"Asset allocation involves dividing your investments among different asset classes, each with its own risk and return characteristics. Here are the primary asset classes:",[415,1079,1081],{"id":1080},"_1-stocks","1. Stocks",[15,1083,1084],{},"Stocks (Equity) are ownership in a company. They are often classified into subclasses by their market capitalization, market listed, industries and sectors for example large-cap stocks, mid-cap stocks, small-cap, emerging market stocks, and more.",[415,1086,1088],{"id":1087},"_2-bonds","2. Bonds",[15,1090,1091],{},"Bonds are debt securities issued by governments or corporations. They are often further categorized by entity issued, maturity periods and credit ratings for example corporate bonds, government bonds, municipal bonds, and more.",[415,1093,1095],{"id":1094},"_3-real-estate","3. Real Estate",[15,1097,1098],{},"Real estate investments involve purchasing physical properties or Real Estate Investment Trusts (REITs), which offer exposure to the real estate market.",[415,1100,1102],{"id":1101},"_4-cash","4. Cash",[15,1104,1105],{},"Cash and cash equivalents, like money market funds or short-term certificates of deposit (CDs), provide liquidity and safety.",[415,1107,1109],{"id":1108},"_5-alternative-investments","5. Alternative Investments",[15,1111,1112],{},"Alternative investments include hedge funds, private equity, and commodities. They offer diversification beyond traditional asset classes but can be higher risk.",[32,1114,1116],{"id":1115},"why-is-asset-allocation-important-to-investors","Why is Asset Allocation important to investors?",[415,1118,1120],{"id":1119},"fits-individual-needs","Fits Individual Needs",[15,1122,1123],{},"Individual investors have different financial goals and varying levels of risk tolerance. There's no one-size-fits-all portfolio. Asset allocation allows you to customize your investment strategy to meet your specific needs.",[415,1125,1127],{"id":1126},"balancing-risk-and-reward","Balancing Risk and Reward",[15,1129,1130],{},"Asset allocation is the key to finding the right balance between risk and reward. For instance, retirees may prioritize capital preservation over high returns due to limited earning years. In contrast, young investors might focus on growth while having a higher risk tolerance.",[415,1132,1134],{"id":1133},"managing-economic-surprises","Managing Economic Surprises",[15,1136,1137],{},"Asset allocation takes into account the varying reactions of asset classes to economic conditions. By balancing assets based on their structural characteristics, the impact of economic surprises can be minimized. This means your portfolio can weather changes in the economic environment more effectively.",[32,1139,1141],{"id":1140},"examples-of-asset-allocations","Examples of Asset Allocations",[415,1143,1145],{"id":1144},"ray-dalios-all-weather-portfolio","Ray Dalio's All Weather Portfolio",[15,1147,1148,1149],{},"\"Launched in 1996, All Weather was originally created for Ray’s trust assets. It is predicated on the notion that asset classes react in understandable ways based on the relationship of their cash flows to the economic environment. By balancing assets based on these structural characteristics the impact of economic surprises can be minimized. Market participants might be surprised by inflation shifts or a growth bust and All Weather would chug along, providing attractive, relatively stable returns.\" - ",[519,1150,1153],{"href":1151,"target":1152},"https://www.bridgewater.com/research-and-insights/the-all-weather-story","_blank","Bridgewater Research & Insights",[415,1155,1157],{"id":1156},"warren-buffetts-9010-investing-strategy","Warren Buffett's 90/10 Investing Strategy",[15,1159,1160,1161],{},"\"My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.\" - ",[519,1162,1164],{"href":1163,"target":1152},"https://www.berkshirehathaway.com/2013ar/2013ar.pdf","Berkshire Hathaway 2013 Annual Report",{"title":528,"searchDepth":529,"depth":529,"links":1166},[1167,1168,1175,1180],{"id":1055,"depth":532,"text":1056},{"id":1073,"depth":532,"text":1074,"children":1169},[1170,1171,1172,1173,1174],{"id":1080,"depth":529,"text":1081},{"id":1087,"depth":529,"text":1088},{"id":1094,"depth":529,"text":1095},{"id":1101,"depth":529,"text":1102},{"id":1108,"depth":529,"text":1109},{"id":1115,"depth":532,"text":1116,"children":1176},[1177,1178,1179],{"id":1119,"depth":529,"text":1120},{"id":1126,"depth":529,"text":1127},{"id":1133,"depth":529,"text":1134},{"id":1140,"depth":532,"text":1141,"children":1181},[1182,1183],{"id":1144,"depth":529,"text":1145},{"id":1156,"depth":529,"text":1157},"Asset Allocation refers to the distribution of funds across diverse investment assets to fit your financial goal and within your risk tolerance.",{},"/blog/asset-allocation","2023-09-29",{"title":1032,"description":1184},"blog/asset-allocation","-eHdhXZMqJzY7CvBv9Vq7GQzMMOzD4T_nGK4rWpcXRw",{"id":1192,"title":1193,"body":1194,"description":1284,"extension":545,"meta":1285,"navigation":548,"path":1286,"publishedAt":1287,"seo":1288,"seo_description":820,"seo_title":820,"social_image":1207,"stem":1289,"updatedAt":1287,"__hash__":1290},"blog/blog/dividend-aristocrats.md","Dividend Aristocrats - A Guide to Consistent Income",{"type":7,"value":1195,"toc":1278},[1196,1209,1212,1216,1219,1223,1226,1229,1233,1236,1239,1254,1257,1265,1269,1272,1275],[53,1197,55,1198,55,1201,55,1204],{},[57,1199],{"srcSet":1200,"type":60},"/blog_images/dividend-aristocrats/dividend-aristocrats-cover.avif",[57,1202],{"srcSet":1203,"type":64},"/blog_images/dividend-aristocrats/dividend-aristocrats-cover.webp",[66,1205],{"alt":1206,"src":1207,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":1208},"Dividend Aristocrats","/blog_images/dividend-aristocrats/dividend-aristocrats-cover.png",[1052],[15,1210,1211],{},"Dividend Aristocrats, a term coined for a select group of companies, holds a distinguished position in the investment world. In this article, we'll delve into the concept of Dividend Aristocrats, explore their historical performance, discuss investment opportunities, and highlight some potential new members in 2023.",[32,1213,1215],{"id":1214},"what-are-dividend-aristocrats","What are Dividend Aristocrats?",[15,1217,1218],{},"Dividend Aristocrats represent a unique set of companies that have demonstrated not only financial stability but also a long-term commitment to returning value to their shareholders. To be part of this elite group, a company must have a track record of raising dividends annually for at least 25 years. This criterion aims to identify businesses that have withstood the test of time and continue to perform consistently well.",[32,1220,1222],{"id":1221},"how-can-i-invest-in-dividend-aristocrats","How can I invest in Dividend Aristocrats?",[15,1224,1225],{},"Investing in Dividend Aristocrats can be done through various avenues, with one popular option being Exchange-Traded Funds (ETFs). The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) is specifically designed to track the performance of companies in the S&P 500 that have a history of consistently increasing dividends. By investing in NOBL, investors gain exposure to a diversified portfolio of Dividend Aristocrats, reducing individual company risk.",[15,1227,1228],{},"Additionally, investors can choose to build their portfolios by directly selecting individual Dividend Aristocrat stocks. Conducting thorough research on the financial health, industry trends, and growth prospects of each company can help in making informed investment decisions.",[32,1230,1232],{"id":1231},"is-dividend-aristocrats-a-good-investment","Is Dividend Aristocrats a good investment?",[15,1234,1235],{},"Investors often consider Dividend Aristocrats as a reliable source of income. These companies have demonstrated resilience and financial strength by consistently increasing their dividends, even during economic downturns. By focusing on long-term stability and sustainable growth, Dividend Aristocrats can offer investors a unique combination of income and potential for capital appreciation.",[15,1237,1238],{},"To gauge the attractiveness of Dividend Aristocrats as an investment, one can examine historical performance.",[53,1240,55,1241,55,1244,55,1247],{},[57,1242],{"srcSet":1243,"type":60},"/blog_images/dividend-aristocrats/dividend-aristocrats-return.avif",[57,1245],{"srcSet":1246,"type":64},"/blog_images/dividend-aristocrats/dividend-aristocrats-return.webp",[66,1248],{"alt":1249,"src":1250,"style":1047,"width":1251,"height":1252,"decoding":73,"fetchPriority":1050,"className":1253},"Dividend Aristocrats Performance","/blog_images/dividend-aristocrats/dividend-aristocrats-return.png",736,651,[1052],[15,1255,1256],{},"Source: Data from Yahoo Finance",[15,1258,1259,1260,1264],{},"As depicted in the graph and table above, the annual return of the Dividend Aristocrats index since inception is 9.8%, compared to the 9.65% of the S&P500. Simultaneously, it exhibits lower volatility at 14.58% in contrast to the S&P500's 15.19%, making it a better-performing investment with a higher ",[519,1261,1263],{"href":1262},"/blog/what-is-sharpe-ratio/","Sharpe Ratio",", although the difference is not significant.",[32,1266,1268],{"id":1267},"which-stocks-are-the-new-dividend-aristocrats-in-2023","Which stocks are the new Dividend Aristocrats in 2023?",[15,1270,1271],{},"The list of Dividend Aristocrats is subject to frequent updates, involving both additions and removals. In the current year, the February 2023 adjustments welcomed Nordson Corp. (NDSN), CH Robinson Worldwide Inc. (CHRW), and JM Smucker Co. (SJM). Moreover, the list expanded further in August 2023 with the addition of Kenvue.",[15,1273,1274],{},"Conversely, this year witnessed the removal of VF Corp (VFC) and AT&T (T) from the esteemed list. Both companies experienced a reduction in dividends, leading to their exclusion from the Dividend Aristocrats category.",[15,1276,1277],{},"In conclusion, Dividend Aristocrats represent a compelling investment option for those seeking a combination of income and stability. Through careful consideration of historical performance and utilizing investment vehicles like ETFs, investors can access a diversified portfolio of companies with a proven track record of consistent dividend growth. As we look ahead to 2023, keeping an eye on emerging candidates for the Dividend Aristocrats list can provide valuable insights for investors seeking to build a resilient and income-generating portfolio.",{"title":528,"searchDepth":529,"depth":529,"links":1279},[1280,1281,1282,1283],{"id":1214,"depth":532,"text":1215},{"id":1221,"depth":532,"text":1222},{"id":1231,"depth":532,"text":1232},{"id":1267,"depth":532,"text":1268},"Dividend Aristocrats represent a unique set of companies that have demonstrated a long-term commitment to returning value to their shareholders by having a track record of raising dividends for at least 25 years.",{},"/blog/dividend-aristocrats","2024-01-04",{"title":1193,"description":1284},"blog/dividend-aristocrats","AZMPFs2oEPiHqv2ZmyPxi2CBgoPQzgB46mCUWhnfXNk",{"id":1292,"title":1293,"body":1294,"description":1401,"extension":545,"meta":1402,"navigation":548,"path":1403,"publishedAt":1404,"seo":1405,"seo_description":820,"seo_title":820,"social_image":1307,"stem":1406,"updatedAt":1404,"__hash__":1407},"blog/blog/dividend-payout-ratio.md","What is Dividend Payout Ratio?",{"type":7,"value":1295,"toc":1394},[1296,1309,1312,1316,1319,1322,1326,1329,1344,1348,1351,1358,1361,1364,1367,1370,1374,1377,1381,1388,1391],[53,1297,55,1298,55,1301,55,1304],{},[57,1299],{"srcSet":1300,"type":60},"/blog_images/dividend-payout-ratio/dividend-payout-ratio-cover.avif",[57,1302],{"srcSet":1303,"type":64},"/blog_images/dividend-payout-ratio/dividend-payout-ratio-cover.webp",[66,1305],{"alt":1306,"src":1307,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":1308},"Dividend Payout Ratio","/blog_images/dividend-payout-ratio/dividend-payout-ratio-cover.png",[1052],[15,1310,1311],{},"One essential metric for dividend investors to consider is the dividend payout ratio. This ratio provides valuable insights into a company's dividend sustainability and its approach to returning profits to shareholders. In this article, we'll discuss the concept of the dividend payout ratio, how to calculate it, what constitutes a healthy ratio, and more.",[32,1313,1315],{"id":1314},"what-is-a-dividend-payout-ratio","What is a Dividend Payout Ratio?",[15,1317,1318],{},"The dividend payout ratio is a proportion of a company's earnings distributed as dividends to its shareholders. It quantifies the percentage of profits that a company chooses to return to its investors in the form of dividends, reflecting its commitment to rewarding shareholders. A low payout ratio suggests that a company retains a significant portion of its earnings for reinvestment or future growth, while a high ratio indicates a more substantial portion of earnings is being distributed to shareholders.",[15,1320,1321],{},"For example, a company with 60% dividend payout ratio means that of all net profit the business earned it will pay 60% of the amount to the shareholders as dividends while retaining the rest (40%) for reinvestment in the business.",[32,1323,1325],{"id":1324},"how-to-calculate-a-dividend-payout-ratio","How to Calculate a Dividend Payout Ratio?",[15,1327,1328],{},"Calculating the dividend payout ratio is straightforward. Simply divide the total annual dividend payments made by the company by its annual net earnings or profits. The resulting ratio is expressed as a percentage. The formula is as follows:",[53,1330,55,1331,55,1334,55,1337],{},[57,1332],{"srcSet":1333,"type":60},"/blog_images/dividend-payout-ratio/dividend-payout-ratio-formula.avif",[57,1335],{"srcSet":1336,"type":64},"/blog_images/dividend-payout-ratio/dividend-payout-ratio-formula.webp",[66,1338],{"alt":1339,"src":1340,"style":1341,"width":1342,"height":1343,"loading":651,"decoding":73},"Dividend Payout Ratio Formula","/blog_images/dividend-payout-ratio/dividend-payout-ratio-formula.png","max-width:100%; width:960px; height:auto;aspect-ratio:'attr(width) / attr(height)'",960,119,[32,1345,1347],{"id":1346},"what-is-the-best-dividend-payout-ratio","What is the Best Dividend Payout Ratio?",[15,1349,1350],{},"The ideal dividend payout ratio can vary depending on the industry, the company's growth stage, and its capital allocation strategy. However, some general guidelines can be applied:",[15,1352,1353,1354,353],{},"A ratio in the range of 0-30% is considered low but can be acceptable for certain companies, especially those in growth phases. In such cases, it's essential to assess how the company utilizes the retained earnings for capital allocation, which should ultimately lead to future dividend growth. Many well-known investors even went against paying a dividend if the amount could be reinvested at a high ",[519,1355,1357],{"href":1356},"/blog/roce/","return on capital employed",[15,1359,1360],{},"A payout ratio around 30-50% is often considered healthy for dividend-paying companies. It strikes a good balance between returning dividends to shareholders and allocating capital to maintain competitiveness and support future growth.",[15,1362,1363],{},"A payout ratio exceeding 50% is quite high, and in such cases, investors should scrutinize whether it is sustainable over the long term. A high payout ratio may indicate that a company is prioritizing dividend payments at the expense of growth and reinvestment to maintain competitiveness.",[15,1365,1366],{},"And in the most extreme cases, the ratio above 100% is unsustainable as it means the dividend amount being paid out is higher than the earning from the company. Sooner or later, the company will have to reduce the dividend payment.",[15,1368,1369],{},"At the end of the day, it's crucial to consider the dividend payout ratio in the context of a company's overall financial health, capital allocation strategy, and growth prospect.",[32,1371,1373],{"id":1372},"is-it-better-to-have-a-higher-dividend-payout-ratio","Is it Better to Have a Higher Dividend Payout Ratio?",[15,1375,1376],{},"While a higher dividend payout ratio may seem attractive to dividend investors, it's not necessarily better. As mentioned earlier, a too-high payout ratio can be a red flag, indicating a lack of growth opportunities or unsustainable dividend payments in the future. Companies need to strike a balance between rewarding shareholders and reinvesting in their businesses to ensure long-term success.",[32,1378,1380],{"id":1379},"what-is-the-difference-between-dividend-yield-and-payout-ratio","What is the Difference Between Dividend Yield and Payout Ratio?",[15,1382,1383,1387],{},[519,1384,1386],{"href":1385},"/blog/dividend-yield/","Dividend yield"," and payout ratio are two distinct metrics used to evaluate dividend-paying companies. Dividend yield measures the annual dividend payment as a percentage of the stock's current market price, providing insight into the income generated from your investment.",[15,1389,1390],{},"On the other hand, the payout ratio quantifies the percentage of earnings paid out as dividends, reflecting the company's dividend policy and financial strategy.",[15,1392,1393],{},"Both metrics, when considered together, can help investors identify high-return, sustainable dividend-paying companies that align with their investment goals. While dividend yield focuses on income, the payout ratio sheds light on the company's commitment to dividend payments and financial health.",{"title":528,"searchDepth":529,"depth":529,"links":1395},[1396,1397,1398,1399,1400],{"id":1314,"depth":532,"text":1315},{"id":1324,"depth":532,"text":1325},{"id":1346,"depth":532,"text":1347},{"id":1372,"depth":532,"text":1373},{"id":1379,"depth":532,"text":1380},"The dividend payout ratio is a proportion of a company's earnings distributed as dividends to its shareholders. It quantifies the percentage of profits that a company chooses to return to its investors in the form of dividends.",{},"/blog/dividend-payout-ratio","2023-11-06",{"title":1293,"description":1401},"blog/dividend-payout-ratio","-_3sHHYM6cVZZyfnaVrFxMFzR8DAaJU0josXRFn5Doo",{"id":1409,"title":1410,"body":1411,"description":1556,"extension":545,"meta":1557,"navigation":548,"path":1558,"publishedAt":1559,"seo":1560,"seo_description":820,"seo_title":820,"social_image":1424,"stem":1561,"updatedAt":1559,"__hash__":1562},"blog/blog/dividend-yield.md","Dividend Yield - What is it? How to calculate?",{"type":7,"value":1412,"toc":1548},[1413,1426,1429,1433,1436,1439,1443,1446,1458,1461,1464,1467,1471,1474,1480,1486,1489,1493,1496,1501,1510,1513,1517,1520,1524,1535],[53,1414,55,1415,55,1418,55,1421],{},[57,1416],{"srcSet":1417,"type":60},"/blog_images/dividend-yield/dividend-yield-cover.avif",[57,1419],{"srcSet":1420,"type":64},"/blog_images/dividend-yield/dividend-yield-cover.webp",[66,1422],{"alt":1423,"src":1424,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":1425},"Dividend Yield","/blog_images/dividend-yield/dividend-yield-cover.png",[1052],[15,1427,1428],{},"For dividend investors, selecting good dividend-paying companies is crucial, and one of the most important metrics to evaluate these companies is the dividend yield. Dividend yield provides valuable insights into the potential return on investment through dividends. In this article, we will delve into what dividend yield is, how to calculate it, and what you should look out for when using dividend yield.",[32,1430,1432],{"id":1431},"what-is-dividend-yield","What is Dividend Yield?",[15,1434,1435],{},"Dividend yield is a financial ratio measuring dividend paid in percentage of current asset price. It is one of the fundamental metrics used by investors to quickly evaluate dividend-paying stocks. It quantifies the return an investor can expect to receive from a particular investment, assuming the dividend remains the same. In essence, it measures the annual dividend paid by a company relative to its current stock price. ​",[15,1437,1438],{},"This ratio helps investors gauge the rate of return they would earn if they were to purchase the company's stock at its current market price and hold it for a year, while also receiving dividends. The key assumption and important thing to note here is that this number is backward looking since it uses the past year dividend in the calculation. If you were to buy that stock now, your return would actually be the next year's annual dividend.",[32,1440,1442],{"id":1441},"how-to-calculate-dividend-yield","How to Calculate Dividend Yield?",[15,1444,1445],{},"The calculation of dividend yield is relatively straightforward. To determine the dividend yield of a stock, you need two pieces of information: the annual dividend per share and the current market price of the stock.",[53,1447,55,1448,55,1451,55,1454],{},[57,1449],{"srcSet":1450,"type":60},"/blog_images/dividend-yield/dividend-yield-formula.avif",[57,1452],{"srcSet":1453,"type":64},"/blog_images/dividend-yield/dividend-yield-formula.webp",[66,1455],{"alt":1456,"src":1457,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050},"Dividend Yield Formula","/blog_images/dividend-yield/dividend-yield-formula.png",[15,1459,1460],{},"For example, if a company pays an annual dividend of $2 per share, and its stock is currently trading at $40, the dividend yield would be:",[15,1462,1463],{},"Dividend Yield = $2 / $40 = 5%",[15,1465,1466],{},"This means that if you were to buy this stock at the current price, you could expect a 5% return on your investment in the form of dividends.",[32,1468,1470],{"id":1469},"is-a-high-dividend-yield-good","Is a High Dividend Yield Good?",[15,1472,1473],{},"At first glance, a high dividend yield may seem attractive because it implies a potentially higher rate of return. However, it's essential to consider a few factors when using this metric.",[15,1475,1476,1479],{},[27,1477,1478],{},"Sustainability",": High dividend yields are only beneficial if the company can sustain those dividend payments. You should assess the financial health of the company by looking at its profit margins, cash flow, and dividend payout ratio. A company with an unsustainable dividend may not be an ideal long-term investment and you will end up not receiving that level of yield going forward.",[15,1481,1482,1485],{},[27,1483,1484],{},"Investment in Growth",": Companies that distribute a large portion of their profits as dividends might be underinvesting in future growth opportunities. This can impact their long-term profitability and, consequently, the sustainability of their dividends. It's important to look at the balance between dividend payments and reinvesting in the business.",[15,1487,1488],{},"Essentially, as mentioned above, dividend yield as usually shown in various dividend trackers or financial websites are backward-looking in nature as it’s calculated using the past year dividend. You need to assess the company's sustainability in terms of business, financial health to evaluate if those dividend payments will grow or at least remain the same going forward.",[32,1490,1492],{"id":1491},"whats-the-difference-between-dividend-yield-and-yield-on-cost","What's the Difference Between Dividend Yield and Yield on Cost?",[15,1494,1495],{},"Another metric that dividend investors often look at is “yield on cost”. Dividend yield and yield on cost are related but different concepts. The key difference lies in what each metric measures and the perspective it offers.",[15,1497,1498,1500],{},[27,1499,1423],{},": As discussed earlier, dividend yield measures the annual dividend received over the current market price. It provides an estimate of the current rate of return on your investment if you were to buy the stock at its current price.",[15,1502,1503,1509],{},[27,1504,1505],{},[519,1506,1508],{"href":1507},"/blog/yield-on-cost/","Yield on Cost",": Yield on cost, on the other hand, measures the annual dividend received over the average cost of your investment. This metric provides a long-term perspective, accounting for the gains in yield that result from dividend growth over time. It is particularly useful for long-term investors who have held a stock for a while.",[15,1511,1512],{},"Let’s look at an example. Imagine you purchased shares of a company several years ago at a price of $50 per share, and at that time, it had an annual dividend yield of 3%. Over the years, the company consistently increased its dividend payments, and now, the annual dividend per share has grown to $3.50. However, the current market price of the stock has also risen to $100 per share. In this case, the current dividend yield, calculated as $3.50 / $100, is 3.5%. This represents the return you would receive based on the current stock price. However, your yield on cost is calculated as $3.50 / $50, which is 7%. This reflects the return on your original investment of $50 per share. So, while the current dividend yield is 3.5%, the yield on cost is significantly higher at 7%, demonstrating how it measures the long-term yield growth resulting from your initial investment.",[32,1514,1516],{"id":1515},"bottom-line","Bottom Line",[15,1518,1519],{},"Dividend yield is one of the crucial criteria for dividend investors seeking income from their investments. It offers a snapshot of the potential return on investment through dividends, assuming the dividend remains unchanged. However, it's essential to note that it’s backward looking and you should consider factors like sustainability and growth when evaluating high dividend yields. In the world of dividend investing, understanding these concepts is important to make informed investment decisions and achieve your financial goals. So, when tracking your dividends, remember that the dividend yield is just one piece of the puzzle in evaluating dividend-paying stocks and building a successful dividend portfolio.",[32,1521,1523],{"id":1522},"track-your-dividends-automatically-with-portseido","Track Your Dividends Automatically with Portseido",[15,1525,1526,1527,1529,1530,1534],{},"We know tracking dividends can be painful and high-effort, so we make it easy for you. ",[519,1528,522],{"href":521}," helps you ",[519,1531,1533],{"href":1532},"/dividend-tracker/","track your dividends"," easily and effortlessly. We automatically keep track of your dividends and integrate them into your performance calculations. We offer a range of user-friendly dividend tracking features, including projected income, a dividend calendar, dividend yield, and yield on cost calculation, all with easy-to-understand visualizations to help you assess your true financial performance.",[15,1536,1537,1538,1542,1543,1547],{},"But that's not all – Portseido isn't limited to just dividends. We provide a comprehensive ",[519,1539,1541],{"href":1540},"/portfolio-tracker/","portfolio tracker"," that covers global stocks, ETFs, mutual funds, and cryptocurrencies. Supporting multiple currencies and the management of multiple portfolios, our platform generates ",[519,1544,1546],{"href":1545},"/track-portfolio-performance/","powerful performance reports",", in-depth analytics, and beautiful portfolio visualization, giving you a complete overview of your investments. With Portseido, tracking dividends and managing your portfolio has never been simpler.",{"title":528,"searchDepth":529,"depth":529,"links":1549},[1550,1551,1552,1553,1554,1555],{"id":1431,"depth":532,"text":1432},{"id":1441,"depth":532,"text":1442},{"id":1469,"depth":532,"text":1470},{"id":1491,"depth":532,"text":1492},{"id":1515,"depth":532,"text":1516},{"id":1522,"depth":532,"text":1523},"Dividend yield is a financial ratio measuring dividend paid in percentage of current asset price. It is one of the fundamental metrics used by investors to quickly evaluate dividend-paying stocks.",{},"/blog/dividend-yield","2023-10-16",{"title":1410,"description":1556},"blog/dividend-yield","1nqbdmT8ucbjWqfrks1BAmda-KiK9RFttJE-k3sqTU0",{"id":1564,"title":1565,"body":1566,"description":1821,"extension":545,"meta":1822,"navigation":548,"path":1823,"publishedAt":1824,"seo":1825,"seo_description":820,"seo_title":820,"social_image":1737,"stem":1826,"updatedAt":1827,"__hash__":1828},"blog/blog/drawdown-why-investors-should-track-it.md","Drawdown definition and what it means to investors",{"type":7,"value":1567,"toc":1809},[1568,1573,1577,1580,1584,1592,1596,1600,1614,1618,1633,1636,1652,1656,1671,1674,1679,1688,1693,1702,1707,1711,1714,1719,1722,1726,1741,1755,1768,1771,1784,1787,1790,1794,1797,1803,1805],[15,1569,1570,1571,353],{},"Drawdown is one of the most important metrics in measuring risk of your investment strategy. While it is useful to track such metrics, it is not a good practice to react to it in an emotional way which might ruin your portfolio returns. In this article, we discuss what drawdown is, how intelligent investors can learn from it and what investors should expect during the crash. If you find this article helpful, don’t forget to share it with your fellow investors. If you also think that tracking this is useful and you want to track it regularly and effortlessly, visit us at ",[519,1572,522],{"href":521},[32,1574,1576],{"id":1575},"what-is-drawdown","What is Drawdown?",[15,1578,1579],{},"Drawdown is a decline of investment value from the peak which is typically measured in percentage value. It is used to infer the downside risks of an investment. Many investors consider risk as the permanent loss of capital, and drawdown is one metric that has the nearest definition to that.",[32,1581,1583],{"id":1582},"what-is-maximum-drawdown","What is Maximum Drawdown?",[15,1585,1586,1587,353],{},"Maximum Drawdown (MDD) represents the largest percentage decline in an investment's value over a specific time frame. It measures the biggest drop from a peak to a subsequent trough. MDD is a crucial indicator as it shows the worst-case scenario for an investor who bought at the highest point and sold at the lowest point. This metric is particularly relevant during economic downturns, as significant drawdowns often coincide with ",[519,1588,1591],{"href":1589,"rel":1590},"https://lifemathmoney.com/recession/",[596],"recessions",[32,1593,1595],{"id":1594},"maximum-drawdown-calculation","Maximum Drawdown Calculation",[415,1597,1599],{"id":1598},"drawdown-formula","Drawdown Formula",[53,1601,55,1602,55,1605,55,1608],{},[57,1603],{"srcSet":1604,"type":60},"/blog_images/drawdown-why-investors-should-track-it/drawdown-formula.avif",[57,1606],{"srcSet":1607,"type":64},"/blog_images/drawdown-why-investors-should-track-it/drawdown-formula.webp",[66,1609],{"alt":1599,"src":1610,"style":1611,"width":1612,"height":1613,"decoding":73,"fetchPriority":1050},"/blog_images/drawdown-why-investors-should-track-it/drawdown-formula.png","max-width:100%;width:699px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",699,76,[415,1615,1617],{"id":1616},"max-drawdown-calculation-example","Max Drawdown Calculation Example",[53,1619,55,1620,55,1623,55,1626],{},[57,1621],{"srcSet":1622,"type":60},"/blog_images/drawdown-why-investors-should-track-it/drawdown-calculation-example.avif",[57,1624],{"srcSet":1625,"type":64},"/blog_images/drawdown-why-investors-should-track-it/drawdown-calculation-example.webp",[66,1627],{"alt":1628,"src":1629,"style":1630,"width":1631,"height":1632,"decoding":73,"fetchPriority":1050},"Drawdown Calculation Example","/blog_images/drawdown-why-investors-should-track-it/drawdown-calculation-example.png","max-width:100%;width:234px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto; margin-top: 20px;",234,237,[15,1634,1635],{},"From the table above, we can calculate the maximum drawdown value by finding the peak values and their following trough values. Then calculate the drawdown of each pair and find the largest drop in value. In this case,",[1637,1638,1642],"pre",{"className":1639,"code":1640,"language":1641,"meta":528,"style":528},"language-sh shiki shiki-themes github-light","MaxDrawdown = 1060 - 1230 / 1230 = -13.82%\n","sh",[1643,1644,1645],"code",{"__ignoreMap":528},[1646,1647,1650],"span",{"class":1648,"line":1649},"line",1,[1646,1651,1640],{},[415,1653,1655],{"id":1654},"maximum-drawdown-calculation-in-spreadsheet","Maximum Drawdown Calculation in Spreadsheet",[53,1657,55,1658,55,1661,55,1664],{},[57,1659],{"srcSet":1660,"type":60},"/blog_images/drawdown-why-investors-should-track-it/drawdown-calculation-spreadsheet.avif",[57,1662],{"srcSet":1663,"type":64},"/blog_images/drawdown-why-investors-should-track-it/drawdown-calculation-spreadsheet.webp",[66,1665],{"alt":1666,"src":1667,"style":1668,"width":1669,"height":1670,"decoding":73,"fetchPriority":1050},"Drawdown Calculation in Spreadsheet","/blog_images/drawdown-why-investors-should-track-it/drawdown-calculation-spreadsheet.png","max-width:100%;width:895px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto; margin-top: 20px;",895,274,[15,1672,1673],{},"Using the same example above, we can calculate drawdown by using historical portfolio value.",[231,1675,1676],{},[46,1677,1678],{},"Calculate Peak Value of each period using \"MAX\" function",[1637,1680,1682],{"className":1639,"code":1681,"language":1641,"meta":528,"style":528},"MAX(Current Value, Previous Peak Value)\n",[1643,1683,1684],{"__ignoreMap":528},[1646,1685,1686],{"class":1648,"line":1649},[1646,1687,1681],{},[231,1689,1690],{"start":532},[46,1691,1692],{},"Compute Drawdown (%) at each period",[1637,1694,1696],{"className":1639,"code":1695,"language":1641,"meta":528,"style":528},"(Current Value - Peak Value) / Peak Value\n",[1643,1697,1698],{"__ignoreMap":528},[1646,1699,1700],{"class":1648,"line":1649},[1646,1701,1695],{},[231,1703,1704],{"start":529},[46,1705,1706],{},"Get Max Drawdown by applying \"MIN\" function to all Drawdown (%) column (Using MIN because the value is in negative number)",[32,1708,1710],{"id":1709},"tracking-drawdown","Tracking Drawdown",[15,1712,1713],{},"While tracking drawdown can be beneficial to improve one’s investment skill, it can be disastrous if investors are emotionally attached to it. Watching an investment drop down 50% from $100k to $50k can be very painful, and we can guess what emotional investors might do next.",[15,1715,1716],{},[27,1717,1718],{},"“Panic Selling”",[15,1720,1721],{},"Avoiding panic is easier said than done. In this case, we will approach this by expectation management. Thus, the question is what the investors should expect during the downturn, and why it is normal to face such a drawdown. By setting an appropriate expectation, we believe that investors can relieve such pain easily although avoiding all the pains might be difficult.",[32,1723,1725],{"id":1724},"example-of-a-drawdown","Example of a Drawdown",[53,1727,55,1728,55,1731,55,1734],{},[57,1729],{"srcSet":1730,"type":60},"/blog_images/drawdown-why-investors-should-track-it/portseido-portfolio-dashboard.avif",[57,1732],{"srcSet":1733,"type":64},"/blog_images/drawdown-why-investors-should-track-it/portseido-portfolio-dashboard.webp",[66,1735],{"alt":1736,"src":1737,"style":1738,"width":1739,"height":1740,"decoding":73},"Portseido Portfolio dashboard","/blog_images/drawdown-why-investors-should-track-it/portseido-portfolio-dashboard.png","max-width:100%; width:692px; height:auto;aspect-ratio:'attr(width) / attr(height)'",692,696,[15,1742,1743,1744,1747,1748,1751,1752,353],{},"It’s the fact that we cannot avoid drawdowns, so it is the matter of how much. Historically, over the past 29 years, ",[27,1745,1746],{},"SPY"," (SPDR S&P 500 ETF Trust) has had an ",[27,1749,1750],{},"annualized return of 8.87%",". This means an investment of $10,000 on SPY during such a period will result in $117,100 today (2022–02–15) or ",[27,1753,1754],{},"1071% total return",[53,1756,55,1757,55,1760,55,1763],{},[57,1758],{"srcSet":1759,"type":60},"/blog_images/drawdown-why-investors-should-track-it/sp500-drawdown-chart.avif",[57,1761],{"srcSet":1762,"type":64},"/blog_images/drawdown-why-investors-should-track-it/sp500-drawdown-chart.webp",[66,1764],{"alt":1765,"src":1766,"style":611,"width":612,"height":1767,"loading":651,"decoding":73},"S&P500 drawdown chart","/blog_images/drawdown-why-investors-should-track-it/sp500-drawdown-chart.png",468,[15,1769,1770],{},"You might see this kind of stats many times before, but what it does not tell us is during such time you also faced your investment being halved once, being down more than 30% for 3 times and also being down more than 10% for 12 times. This means while investors investing in S&P 500 might expect an annualized return of 8.87% over the long term, the investors should also expect that it is typical to see an investment at any given time being down more than 40% once over 15 years, more than 30% once every decade and more than 10% every 2.5 year.",[53,1772,55,1773,55,1776,55,1779],{},[57,1774],{"srcSet":1775,"type":60},"/blog_images/drawdown-why-investors-should-track-it/nasdaq-100-drawdown-chart.avif",[57,1777],{"srcSet":1778,"type":64},"/blog_images/drawdown-why-investors-should-track-it/nasdaq-100-drawdown-chart.webp",[66,1780],{"alt":1781,"src":1782,"style":611,"width":612,"height":1783,"loading":651,"decoding":73},"Nasdaq-100 (QQQ) drawdown chart","/blog_images/drawdown-why-investors-should-track-it/nasdaq-100-drawdown-chart.png",469,[15,1785,1786],{},"QQQ (Invesco QQQ Trust which tracks the Nasdaq-100 Index) did even worse on the drawdown. Over the past 22 years, although it has had an annualized return of 12.42% (a total of 1356%), it dropped 82.96% in just 2.5 years, and it took almost 13 years to get back the value that has been wiped out.",[15,1788,1789],{},"Although the future might not repeat what we saw in the past, it is still a good proxy for setting our own expectations on the downside. By using this expectation and gauging investors’ own risk appetite, investors can choose a suitable investment style to fit with such needs too. If the investor’s strategy is more aggressive (e.g. growth investing), the expected drawdown might be higher during the downturn as well as the expected return during the bullish market. On the other hand, if it is more conservative (e.g. value investing), while the expected return might not be as high as the more aggressive strategy during the bull run, the drawdown should be expected to be lower.",[32,1791,1793],{"id":1792},"what-to-do-instead","What to do instead?",[15,1795,1796],{},"Think and act intelligently. Although we should track drawdown as a proxy of how much risk we took in our strategy, we should not panic on the figure. Every decision should be justified with reasonable and thorough thinking. This applies to all situations whether you are in the bullish market or bearish market.",[15,1798,1799,1800,1802],{},"Learn from it. At ",[519,1801,522],{"href":521},", we always believe that, in any given situation, there is an opportunity to learn. Every investor makes mistakes, for example investing in overleveraged businesses, investing in low moat and unsustainable growth businesses, overly optimistic expectations during the bubble, etc. However, the thing that differentiates great investors from the others is how such mistakes are dealt with. Learning from such mistakes and being a better investor little by little every day is just like compounding interest. You might not feel the difference today, but it makes a huge difference in the long run.",[15,1804,805],{},[1806,1807,1808],"style",{},"html .default .shiki span {color: var(--shiki-default);background: var(--shiki-default-bg);font-style: var(--shiki-default-font-style);font-weight: var(--shiki-default-font-weight);text-decoration: var(--shiki-default-text-decoration);}html .shiki span {color: var(--shiki-default);background: var(--shiki-default-bg);font-style: var(--shiki-default-font-style);font-weight: var(--shiki-default-font-weight);text-decoration: var(--shiki-default-text-decoration);}",{"title":528,"searchDepth":529,"depth":529,"links":1810},[1811,1812,1813,1818,1819,1820],{"id":1575,"depth":532,"text":1576},{"id":1582,"depth":532,"text":1583},{"id":1594,"depth":532,"text":1595,"children":1814},[1815,1816,1817],{"id":1598,"depth":529,"text":1599},{"id":1616,"depth":529,"text":1617},{"id":1654,"depth":529,"text":1655},{"id":1709,"depth":532,"text":1710},{"id":1724,"depth":532,"text":1725},{"id":1792,"depth":532,"text":1793},"Drawdown is a decline of investment value from the peak which is typically measured in percentage value. It is used to infer the an investment risk.",{},"/blog/drawdown-why-investors-should-track-it","2022-07-06",{"title":1565,"description":1821},"blog/drawdown-why-investors-should-track-it","2023-11-01","UEl_6UDu6V1CwsffOFZbpeWzkRxYNaOfOh1xUN9nbR0",{"id":1830,"title":1831,"body":1832,"description":2348,"extension":545,"meta":2349,"navigation":548,"path":2351,"publishedAt":2352,"seo":2353,"seo_description":2354,"seo_title":2355,"social_image":2356,"stem":2357,"updatedAt":2352,"__hash__":2358},"blog/blog/ep1-warren-buffett-portfolio.md","Warren Buffett Portfolio Analysis 2025",{"type":7,"value":1833,"toc":2331},[1834,1838,1841,1850,1854,1857,1869,1872,1879,1883,1886,1898,1901,1904,1916,1931,1935,1938,1950,1953,2015,2024,2033,2037,2040,2052,2063,2066,2078,2081,2085,2088,2100,2111,2114,2126,2130,2133,2145,2152,2164,2171,2175,2178,2190,2205,2209,2212,2232,2235,2237,2239,2243,2246,2250,2253,2296,2300,2303,2307,2310,2314,2317,2319,2321,2329],[10,1835,1837],{"id":1836},"warren-buffett-the-oracle-of-omaha","Warren Buffett: The Oracle of Omaha",[15,1839,1840],{},"Warren Buffett is more than an investor; he's an icon. For decades, his name has been synonymous with \"buy-and-hold\" wisdom and market-beating returns. But in an era of unprecedented market volatility and technological disruption, does the Oracle of Omaha's strategy still hold up?",[15,1842,1843,1844,1849],{},"We decided to look past the headlines and annual letters. By loading over a decade of ",[519,1845,1848],{"href":1846,"rel":1847},"https://www.sec.gov/edgar/browse/?CIK=0001067983",[596],"Berkshire Hathaway's publicly available 13F data"," into the Portseido portfolio tracker, we can see what the raw numbers reveal about his performance, his biggest bets, and his trading habits. The results are fascinatng.",[32,1851,1853],{"id":1852},"here-is-portseidos-legend-under-the-lens-ep1-warren-buffett-video","Here is Portseido's Legend Under the Lens Ep1: Warren Buffett (Video)",[15,1855,1856],{},"For a visual breakdown and additional insights, check out our YouTube video on Warren Buffett's portfolio analysis:",[1858,1859,1861,1862],"div",{"style":1860},"position:relative;padding-bottom:56.25%;height:0;overflow:hidden;max-width:100%;","\n  ",[1863,1864],"iframe",{"src":1865,"title":1866,"frameBorder":1867,"allowFullScreen":548,"style":1868},"https://www.youtube.com/embed/yZMbWhaL1Qc","Warren Buffett Portfolio Analysis","0","position:absolute;top:0;left:0;width:100%;height:100%;",[1870,1871],"br",{},[22,1873,1874],{},[15,1875,1876,1878],{},[27,1877,29],{}," This analysis is based on publicly available 13F data from 2013-2025. Trade dates and prices are estimated at quarter-end. The analysis excludes Berkshire Hathaway's large cash holdings to focus specifically on the performance of its equity portfolio. TWR return calculation method is used in this analysis.",[32,1880,1882],{"id":1881},"the-big-picture-performance-and-resilience","The Big Picture: Performance and Resilience",[15,1884,1885],{},"At first glance, the growth is undeniable. The portfolio has demonstrated a steady, powerful climb over the last decade, transforming into a behemoth valued at over $266 billion.",[53,1887,55,1888,55,1891,55,1894],{},[57,1889],{"srcSet":1890,"type":60},"/blog_images/ep1-warren-buffett/2.avif",[57,1892],{"srcSet":1893,"type":64},"/blog_images/ep1-warren-buffett/2.webp",[66,1895],{"alt":1896,"src":1897,"style":611,"width":612,"height":613,"decoding":73},"Chart showing the overall portfolio growth of Warren Buffett's portfolio from 2013 to 2025.","/blog_images/ep1-warren-buffett/2.png",[15,1899,1900],{},"But this chart also tells a story of resilience. No investor, not even Buffett, is immune to market shocks. The sharp dip in early 2020 shows how the portfolio weathered the COVID-19 crash.",[15,1902,1903],{},"Then we can look further at the key stats.",[53,1905,55,1906,55,1909,55,1912],{},[57,1907],{"srcSet":1908,"type":60},"/blog_images/ep1-warren-buffett/3.avif",[57,1910],{"srcSet":1911,"type":64},"/blog_images/ep1-warren-buffett/3.webp",[66,1913],{"alt":1914,"src":1915,"style":611,"width":612,"height":613,"decoding":73},"Key stats of Warren Buffett's portfolio including Beta, Max Drawdown, and Drawdown Duration.","/blog_images/ep1-warren-buffett/3.png",[15,1917,1918,1919,1922,1923,1926,1927,1930],{},"With a ",[27,1920,1921],{},"Beta of 1.01",", the portfolio's volatility almost perfectly mirrors the broader market. The most telling metric here is the ",[27,1924,1925],{},"Max Drawdown of -39.14%",". While a significant drop, the crucial lesson is in the ",[27,1928,1929],{},"Drawdown Duration: 451 days",". It took over a year of discipline and conviction to recover from that market bottom—a powerful reminder that long-term investing requires extraordinary patience.",[32,1932,1934],{"id":1933},"portfolio-allocation-a-masterclass-in-high-conviction-betting","Portfolio Allocation: A Masterclass in High-Conviction Betting",[15,1936,1937],{},"So, what fuels this engine? The answer is concentration.",[53,1939,55,1940,55,1943,55,1946],{},[57,1941],{"srcSet":1942,"type":60},"/blog_images/ep1-warren-buffett/4.avif",[57,1944],{"srcSet":1945,"type":64},"/blog_images/ep1-warren-buffett/4.webp",[66,1947],{"alt":1948,"src":1949,"style":611,"width":612,"height":613,"decoding":73},"Pie charts showing Warren Buffett's portfolio allocation by stock and by sector.","/blog_images/ep1-warren-buffett/4.png",[15,1951,1952],{},"The portfolio holds 39 different assets. The followings are his top 10 holdings:",[43,1954,1955,1961,1967,1973,1979,1985,1991,1997,2003,2009],{},[46,1956,1957,1960],{},[27,1958,1959],{},"Apple (AAPL):"," 24.1%",[46,1962,1963,1966],{},[27,1964,1965],{},"American Express (AXP):"," 17.5%",[46,1968,1969,1972],{},[27,1970,1971],{},"Bank of America (BAC):"," 11.5%",[46,1974,1975,1978],{},[27,1976,1977],{},"Coca-Cola Co (KO):"," 10.4%",[46,1980,1981,1984],{},[27,1982,1983],{},"Chevron Corp (CVX):"," 6.8%",[46,1986,1987,1990],{},[27,1988,1989],{},"Moody's Corp (MCO):"," 4.7%",[46,1992,1993,1996],{},[27,1994,1995],{},"Occidental Petroleum Corp (OXY):"," 4.4%",[46,1998,1999,2002],{},[27,2000,2001],{},"Kraft Heinz Co (KHC):"," 3.5%",[46,2004,2005,2008],{},[27,2006,2007],{},"Chubb Ltd (CB):"," 2.7%",[46,2010,2011,2014],{},[27,2012,2013],{},"Davita Inc (DVA):"," 2.0%",[15,2016,2017,2018,2023],{},"The top three positions alone account for more than half of the entire equity portfolio. While the top 10 positions acount for 87.6% of his portfolio. This isn't diversification in the traditional sense; it's a powerful display of conviction in a select few businesses. ",[519,2019,2022],{"href":2020,"rel":2021},"https://www.youtube.com/watch?v=z85iiX2QWqU",[596],"On diversification, Buffett and Munger"," even stated \"Three wonderful businesses will be better than a hundred average businesses.\"",[15,2025,2026,2027,587,2030,353],{},"From a sector perspective, this translates to a massive bet on two areas of the economy: ",[27,2028,2029],{},"Financial Services (39.9%)",[27,2031,2032],{},"Technology (25.6%)",[32,2034,2036],{"id":2035},"the-ultimate-showdown-buffett-vs-the-sp-500","The Ultimate Showdown: Buffett vs. The S&P 500",[15,2038,2039],{},"This is the question every investor wants answered: does Buffett still beat the market? The data gives us a nuanced answer.",[53,2041,55,2042,55,2045,55,2048],{},[57,2043],{"srcSet":2044,"type":60},"/blog_images/ep1-warren-buffett/5.avif",[57,2046],{"srcSet":2047,"type":64},"/blog_images/ep1-warren-buffett/5.webp",[66,2049],{"alt":2050,"src":2051,"style":611,"width":612,"height":613,"decoding":73},"Table comparing the annualized returns of Buffett's portfolio against benchmarks like the S&P 500.","/blog_images/ep1-warren-buffett/5.png",[15,2053,2054,2055,2058,2059,2062],{},"Over the entire tracking period since 2013, Buffett's annualized return is an impressive ",[27,2056,2057],{},"10.87%",". However, the S&P 500 actually edged it out with a ",[27,2060,2061],{},"12.03%"," return. This shows that over certain long-term periods, a simple index fund can outperform even the world's greatest stock picker.",[15,2064,2065],{},"However, the story changes when we zoom in. A year-by-year breakdown reveals the ebb and flow of active management.",[53,2067,55,2068,55,2071,55,2074],{},[57,2069],{"srcSet":2070,"type":60},"/blog_images/ep1-warren-buffett/6.avif",[57,2072],{"srcSet":2073,"type":64},"/blog_images/ep1-warren-buffett/6.webp",[66,2075],{"alt":2076,"src":2077,"style":611,"width":612,"height":613,"decoding":73},"Year-by-year performance breakdown of Buffett's portfolio vs. the S&P 500.","/blog_images/ep1-warren-buffett/6.png",[15,2079,2080],{},"In some years, like 2019, Buffett's portfolio crushed the market by over 10 percentage points. In other years, it has lagged. This granular view demonstrates that outperformance isn't a constant, but a cyclical battle won over different market regimes.",[32,2082,2084],{"id":2083},"the-dividend-machine-buffetts-secret-weapon","The Dividend Machine: Buffett's Secret Weapon",[15,2086,2087],{},"A significant part of Buffett's strategy is his focus on companies that generate and return cash to shareholders. His portfolio is a true dividend powerhouse as 29 out of 39 are dividend-paying stocks.",[53,2089,55,2090,55,2093,55,2096],{},[57,2091],{"srcSet":2092,"type":60},"/blog_images/ep1-warren-buffett/10.avif",[57,2094],{"srcSet":2095,"type":64},"/blog_images/ep1-warren-buffett/10.webp",[66,2097],{"alt":2098,"src":2099,"style":611,"width":612,"height":613,"decoding":73},"Dashboard showing the projected annual dividend income and Yield on Cost for Buffett's portfolio.","/blog_images/ep1-warren-buffett/10.png",[15,2101,2102,2103,2106,2107,2110],{},"The portfolio is projected to generate nearly ",[27,2104,2105],{},"$4.8 billion in annual dividend income",". But the most powerful metric for long-term investors is the ",[27,2108,2109],{},"Yield on Cost (YOC) of 3.25%",". This is significantly higher than the portfolio's current dividend yield of 1.81%. It means that based on his original purchase price, Buffett is earning a much higher cash return than new investors buying the same stocks today—a perfect illustration of the rewards of buying and holding quality dividend-paying companies.",[15,2112,2113],{},"Drilling down into a specific holding like Chevron (CVX) shows a consistent payment of around $200 million every quarter.",[53,2115,55,2116,55,2119,55,2122],{},[57,2117],{"srcSet":2118,"type":60},"/blog_images/ep1-warren-buffett/11.avif",[57,2120],{"srcSet":2121,"type":64},"/blog_images/ep1-warren-buffett/11.webp",[66,2123],{"alt":2124,"src":2125,"style":611,"width":612,"height":613,"decoding":73},"Dividend forecast for Chevron (CVX) within the portfolio, showing quarterly payments.","/blog_images/ep1-warren-buffett/11.png",[32,2127,2129],{"id":2128},"trade-analysis-debunking-the-buy-and-forget-myth","Trade Analysis: Debunking the \"Buy and Forget\" Myth",[15,2131,2132],{},"Is Buffett a \"set it and forget it\" investor? The data suggests he's far more active than his reputation suggests.",[53,2134,55,2135,55,2138,55,2141],{},[57,2136],{"srcSet":2137,"type":60},"/blog_images/ep1-warren-buffett/7.avif",[57,2139],{"srcSet":2140,"type":64},"/blog_images/ep1-warren-buffett/7.webp",[66,2142],{"alt":2143,"src":2144,"style":611,"width":612,"height":613,"decoding":73},"Bar chart showing the number of buy and sell trades per year in Buffett's portfolio.","/blog_images/ep1-warren-buffett/7.png",[15,2146,2147,2148,2151],{},"The chart above shows his trading activity over the years. During the market chaos of 2020, he made 101 total trades, his most active year in this period. In 2024, his firm sold a staggering ",[27,2149,2150],{},"$176 billion worth of stock",", showing a clear pattern of trimming positions and reducing equity exposure.",[53,2153,55,2154,55,2157,55,2160],{},[57,2155],{"srcSet":2156,"type":60},"/blog_images/ep1-warren-buffett/8.avif",[57,2158],{"srcSet":2159,"type":64},"/blog_images/ep1-warren-buffett/8.webp",[66,2161],{"alt":2162,"src":2163,"style":611,"width":612,"height":613,"decoding":73},"Table view of trading activity, showing buy value, sell value, and portfolio turnover per year.","/blog_images/ep1-warren-buffett/8.png",[15,2165,2166,2167,2170],{},"Despite this activity, his ",[27,2168,2169],{},"Portfolio Turnover"," remains low, hovering around 14% even in its most active year. This confirms he isn't a trader, but he is constantly optimizing and fine-tuning his positions—a crucial distinction.",[32,2172,2174],{"id":2173},"uncovering-true-alpha-where-the-magic-happens","Uncovering True Alpha: Where the Magic Happens",[15,2176,2177],{},"The ultimate test of an active manager is their ability to generate returns above and beyond the market. By analyzing every closed trade, we can see exactly where Buffett's decisions created true alpha.",[53,2179,55,2180,55,2183,55,2186],{},[57,2181],{"srcSet":2182,"type":60},"/blog_images/ep1-warren-buffett/9.avif",[57,2184],{"srcSet":2185,"type":64},"/blog_images/ep1-warren-buffett/9.webp",[66,2187],{"alt":2188,"src":2189,"style":611,"width":612,"height":613,"decoding":73},"Individual trade log for Apple (AAPL), showing the massive excess return vs. the S&P 500.","/blog_images/ep1-warren-buffett/9.png",[15,2191,2192,2193,2196,2197,2200,2201,2204],{},"The legendary investment in ",[27,2194,2195],{},"Apple (AAPL)"," is the perfect case study. For one of his earliest purchases in 2016, the position returned ",[27,2198,2199],{},"+684%",". During that same holding period, the S&P 500 returned +208%. That ",[27,2202,2203],{},"+475% of excess return"," is pure alpha—the result of a brilliant decision at the right time. This analysis proves that while he may not beat the market every single year, his big wins are monumental.",[32,2206,2208],{"id":2207},"conclusion-lessons-from-the-oracles-dashboard","Conclusion: Lessons from the Oracle's Dashboard",[15,2210,2211],{},"Analyzing Warren Buffett's portfolio through a data-driven lens reveals three key lessons for all investors:",[231,2213,2214,2220,2226],{},[46,2215,2216,2219],{},[27,2217,2218],{},"Conviction is Key:"," Meaningful returns come from concentrated bets in businesses you understand deeply, not from owning a little bit of everything.",[46,2221,2222,2225],{},[27,2223,2224],{},"Patience is a Superpower:"," The ability to withstand significant drawdowns and multi-year periods of underperformance is essential for long-term success.",[46,2227,2228,2231],{},[27,2229,2230],{},"Great Investing is Active:"," \"Buy and hold\" doesn't mean \"buy and forget.\" The best investors are constantly learning, evaluating, and optimizing their positions based on price and value.",[15,2233,2234],{},"While we may not have the billions that Buffett does, the principles that drive his success—discipline, conviction, and a relentless focus on business quality—are lessons we can all apply to our own financial journeys.",[408,2236],{},[32,2238,413],{"id":412},[415,2240,2242],{"id":2241},"what-is-warren-buffetts-portfolio-performance-in-2025","What is Warren Buffett's portfolio performance in 2025?",[15,2244,2245],{},"As of August 2025, Warren Buffett's Berkshire Hathaway equity portfolio achieved an annualized return of 10.87% from 2013 to 2025, according to Portseido's analysis. However, the S&P 500 slightly outperformed with a 12.03% return over the same period.",[415,2247,2249],{"id":2248},"what-are-the-top-holdings-in-warren-buffetts-portfolio","What are the top holdings in Warren Buffett's portfolio?",[15,2251,2252],{},"As of August 2025, the top ten holdings are:",[43,2254,2255,2259,2263,2267,2271,2275,2279,2283,2287,2291],{},[46,2256,2257,1960],{},[27,2258,1959],{},[46,2260,2261,1966],{},[27,2262,1965],{},[46,2264,2265,1972],{},[27,2266,1971],{},[46,2268,2269,1978],{},[27,2270,1977],{},[46,2272,2273,1984],{},[27,2274,1983],{},[46,2276,2277,1990],{},[27,2278,1989],{},[46,2280,2281,1996],{},[27,2282,1995],{},[46,2284,2285,2002],{},[27,2286,2001],{},[46,2288,2289,2008],{},[27,2290,2007],{},[46,2292,2293,2295],{},[27,2294,2013],{}," 2.0%\nTop three stocks make up more than half of the portfolio's value, and these ten stocks account for 87.6% of his portfolio.",[415,2297,2299],{"id":2298},"how-much-dividend-income-does-buffetts-portfolio-generate","How much dividend income does Buffett's portfolio generate?",[15,2301,2302],{},"As of August 2025, the portfolio is projected to generate nearly $4.8 billion in annual dividend income, with a yield on cost (YOC) of 3.25%.",[415,2304,2306],{"id":2305},"does-warren-buffett-still-beat-the-sp-500","Does Warren Buffett still beat the S&P 500?",[15,2308,2309],{},"As of August 2025, over the last decade, the S&P 500 has slightly outperformed Buffett's portfolio, but Buffett has had years of significant outperformance, especially in certain market regimes.",[415,2311,2313],{"id":2312},"what-can-investors-learn-from-warren-buffetts-strategy","What can investors learn from Warren Buffett's strategy?",[15,2315,2316],{},"Key lessons include the importance of conviction, patience, and active portfolio management. Buffett's success is driven by concentrated bets, the ability to withstand drawdowns, and continuous evaluation of his holdings.",[408,2318],{},[1870,2320],{},[15,2322,2323],{},[27,2324,2325,2326,2328],{},"Ready to track your own portfolio like Buffett? ",[519,2327,522],{"href":521}," is your secret weapon. Try it for free!",[15,2330,526],{},{"title":528,"searchDepth":529,"depth":529,"links":2332},[2333,2334,2335,2336,2337,2338,2339,2340,2341],{"id":1852,"depth":532,"text":1853},{"id":1881,"depth":532,"text":1882},{"id":1933,"depth":532,"text":1934},{"id":2035,"depth":532,"text":2036},{"id":2083,"depth":532,"text":2084},{"id":2128,"depth":532,"text":2129},{"id":2173,"depth":532,"text":2174},{"id":2207,"depth":532,"text":2208},{"id":412,"depth":532,"text":413,"children":2342},[2343,2344,2345,2346,2347],{"id":2241,"depth":529,"text":2242},{"id":2248,"depth":529,"text":2249},{"id":2298,"depth":529,"text":2299},{"id":2305,"depth":529,"text":2306},{"id":2312,"depth":529,"text":2313},"A deep dive into Warren Buffett's Berkshire Hathaway portfolio, uncovering his true performance vs. the S&P 500, top holdings, dividend strategy, and more.",{"slug":2350},"ep1-warren-buffett-portfolio","/blog/ep1-warren-buffett-portfolio","2025-08-01",{"title":1831,"description":2348},"A deep dive into Warren Buffett's Berkshire Hathaway portfolio, uncovering his true performance vs. the S&P 500, top holdings, dividend strategy, and more, powered by Portseido.","Warren Buffett Portfolio 2025 - Performance, Holdings, and Lessons","/blog_images/ep1-warren-buffett/banner.png","blog/ep1-warren-buffett-portfolio","WPAoxR-k9DHJDnjgWr0y_IeQMhDlcOc7oBGF4vIu-UM",{"id":4,"title":5,"body":2360,"description":544,"extension":545,"meta":2704,"navigation":548,"path":549,"publishedAt":550,"seo":2705,"seo_description":544,"seo_title":552,"social_image":553,"stem":554,"updatedAt":550,"__hash__":555},{"type":7,"value":2361,"toc":2690},[2362,2364,2366,2368,2374,2376,2378,2380,2384,2386,2394,2398,2400,2408,2410,2412,2418,2420,2422,2424,2426,2434,2448,2450,2452,2460,2462,2464,2466,2470,2480,2484,2492,2494,2536,2540,2542,2552,2574,2576,2580,2584,2592,2594,2596,2610,2614,2616,2618,2620,2622,2624,2626,2668,2670,2672,2676,2678,2680,2682,2688],[10,2363,13],{"id":12},[15,2365,17],{},[15,2367,20],{},[22,2369,2370],{},[15,2371,2372,30],{},[27,2373,29],{},[32,2375,35],{"id":34},[15,2377,38],{},[15,2379,41],{},[43,2381,2382],{},[46,2383,48],{},[15,2385,51],{},[53,2387,55,2388,55,2390,55,2392],{},[57,2389],{"srcSet":59,"type":60},[57,2391],{"srcSet":63,"type":64},[66,2393],{"alt":68,"src":69,"style":70,"width":71,"height":72,"decoding":73},[43,2395,2396],{},[46,2397,78],{},[15,2399,81],{},[53,2401,55,2402,55,2404,55,2406],{},[57,2403],{"srcSet":86,"type":60},[57,2405],{"srcSet":89,"type":64},[66,2407],{"alt":92,"src":93,"style":70,"width":94,"height":95,"decoding":73},[15,2409,98],{},[15,2411,101],{},[43,2413,2414,2416],{},[46,2415,106],{},[46,2417,109],{},[15,2419,112],{},[32,2421,116],{"id":115},[15,2423,119],{},[15,2425,122],{},[53,2427,55,2428,55,2430,55,2432],{},[57,2429],{"srcSet":127,"type":60},[57,2431],{"srcSet":130,"type":64},[66,2433],{"alt":133,"src":134,"style":70,"width":135,"height":136,"decoding":73},[43,2435,2436,2438,2440,2442,2444,2446],{},[46,2437,141],{},[46,2439,144],{},[46,2441,147],{},[46,2443,150],{},[46,2445,153],{},[46,2447,156],{},[15,2449,159],{},[15,2451,162],{},[53,2453,55,2454,55,2456,55,2458],{},[57,2455],{"srcSet":167,"type":60},[57,2457],{"srcSet":170,"type":64},[66,2459],{"alt":173,"src":174,"style":70,"width":175,"height":176,"decoding":73},[15,2461,179],{},[32,2463,183],{"id":182},[15,2465,186],{},[15,2467,2468,192],{},[27,2469,191],{},[43,2471,2472,2474,2476,2478],{},[46,2473,197],{},[46,2475,200],{},[46,2477,203],{},[46,2479,206],{},[15,2481,2482,212],{},[27,2483,211],{},[53,2485,55,2486,55,2488,55,2490],{},[57,2487],{"srcSet":217,"type":60},[57,2489],{"srcSet":220,"type":64},[66,2491],{"alt":223,"src":224,"style":70,"width":225,"height":226,"decoding":73},[15,2493,229],{},[231,2495,2496,2500,2504,2508,2512,2516,2520,2524,2528,2532],{},[46,2497,2498],{},[27,2499,237],{},[46,2501,2502],{},[27,2503,242],{},[46,2505,2506],{},[27,2507,247],{},[46,2509,2510],{},[27,2511,252],{},[46,2513,2514],{},[27,2515,257],{},[46,2517,2518],{},[27,2519,262],{},[46,2521,2522],{},[27,2523,267],{},[46,2525,2526],{},[27,2527,272],{},[46,2529,2530],{},[27,2531,277],{},[46,2533,2534],{},[27,2535,282],{},[15,2537,285,2538,289],{},[27,2539,288],{},[32,2541,293],{"id":292},[15,2543,296,2544],{},[53,2545,2546,2548,2550],{},[57,2547],{"srcSet":301,"type":60},[57,2549],{"srcSet":304,"type":64},[66,2551],{"alt":307,"src":308,"style":70,"width":309,"height":310,"decoding":73},[43,2553,2554,2558,2562,2566,2570],{},[46,2555,2556,318],{},[27,2557,317],{},[46,2559,2560,324],{},[27,2561,323],{},[46,2563,2564,330],{},[27,2565,329],{},[46,2567,2568,336],{},[27,2569,335],{},[46,2571,2572,342],{},[27,2573,341],{},[32,2575,346],{"id":345},[15,2577,349,2578,353],{},[27,2579,352],{},[43,2581,2582],{},[46,2583,358],{},[53,2585,55,2586,55,2588,55,2590],{},[57,2587],{"srcSet":363,"type":60},[57,2589],{"srcSet":366,"type":64},[66,2591],{"alt":369,"src":370,"style":70,"width":371,"height":372,"decoding":73},[32,2593,376],{"id":375},[15,2595,379],{},[231,2597,2598,2602,2606],{},[46,2599,2600,387],{},[27,2601,386],{},[46,2603,2604,393],{},[27,2605,392],{},[46,2607,2608,399],{},[27,2609,398],{},[15,2611,402,2612,406],{},[27,2613,405],{},[408,2615],{},[32,2617,413],{"id":412},[415,2619,418],{"id":417},[15,2621,421],{},[415,2623,425],{"id":424},[15,2625,428],{},[231,2627,2628,2632,2636,2640,2644,2648,2652,2656,2660,2664],{},[46,2629,2630,436],{},[27,2631,435],{},[46,2633,2634,442],{},[27,2635,441],{},[46,2637,2638,448],{},[27,2639,447],{},[46,2641,2642,454],{},[27,2643,453],{},[46,2645,2646,460],{},[27,2647,459],{},[46,2649,2650,466],{},[27,2651,465],{},[46,2653,2654,472],{},[27,2655,471],{},[46,2657,2658,478],{},[27,2659,477],{},[46,2661,2662,484],{},[27,2663,483],{},[46,2665,2666,490],{},[27,2667,489],{},[15,2669,493],{},[415,2671,497],{"id":496},[15,2673,500,2674,503],{},[27,2675,405],{},[415,2677,507],{"id":506},[15,2679,510],{},[408,2681],{},[15,2683,2684],{},[27,2685,517,2686,523],{},[519,2687,522],{"href":521},[15,2689,526],{},{"title":528,"searchDepth":529,"depth":529,"links":2691},[2692,2693,2694,2695,2696,2697,2698],{"id":34,"depth":532,"text":35},{"id":115,"depth":532,"text":116},{"id":182,"depth":532,"text":183},{"id":292,"depth":532,"text":293},{"id":345,"depth":532,"text":346},{"id":375,"depth":532,"text":376},{"id":412,"depth":532,"text":413,"children":2699},[2700,2701,2702,2703],{"id":417,"depth":529,"text":418},{"id":424,"depth":529,"text":425},{"id":496,"depth":529,"text":497},{"id":506,"depth":529,"text":507},{"slug":547},{"title":5,"description":544},{"id":2707,"title":2708,"body":2709,"description":2828,"extension":545,"meta":2829,"navigation":548,"path":2830,"publishedAt":2831,"seo":2832,"seo_description":820,"seo_title":820,"social_image":2722,"stem":2833,"updatedAt":2831,"__hash__":2834},"blog/blog/ex-dividend-date.md","What is Ex-Dividend Date?",{"type":7,"value":2710,"toc":2819},[2711,2724,2727,2731,2734,2738,2741,2755,2759,2762,2766,2769,2773,2776,2780,2783,2789,2795,2801,2804,2806,2812],[53,2712,55,2713,55,2716,55,2719],{},[57,2714],{"srcSet":2715,"type":60},"/blog_images/ex-dividend-date/ex-dividend-date-cover.avif",[57,2717],{"srcSet":2718,"type":64},"/blog_images/ex-dividend-date/ex-dividend-date-cover.webp",[66,2720],{"alt":2721,"src":2722,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":2723},"Ex-Dividend Date cover image","/blog_images/ex-dividend-date/ex-dividend-date-cover.png",[1052],[15,2725,2726],{},"Dividend payments are a common source of income for investors, but understanding when and how these payments are distributed is crucial for making informed investment decisions. In this article, we will explore what ex-dividend is, how it affects dividend investors, and the difference between ex-dividend date and other dividend-related dates such as record and payment dates.",[32,2728,2730],{"id":2729},"what-is-ex-dividend","What is Ex-Dividend?",[15,2732,2733],{},"The ex-dividend date is the first date on which those who buy or sell shares will not receive the upcoming dividend payment. Put simply, if you want to receive a dividend, you must own the stock before the ex-dividend date. Trading on or after this date means you won't be eligible for the next dividend payment. We also say that the stock is ex-dividned if it is traded on or after the ex-dividend date.",[32,2735,2737],{"id":2736},"will-i-get-a-dividend-if-i-buy-on-the-ex-date","Will I get a dividend if I buy on the ex-date?",[15,2739,2740],{},"In short, no. If you purchase a stock on the ex-dividend date, you won't receive the dividend payment. You need to be the owner of the stock before the ex-dividend date to qualify. The graphic below illustrates this clearly.",[53,2742,55,2743,55,2746,55,2749],{},[57,2744],{"srcSet":2745,"type":60},"/blog_images/ex-dividend-date/ex-dividend-date.avif",[57,2747],{"srcSet":2748,"type":64},"/blog_images/ex-dividend-date/ex-dividend-date.webp",[66,2750],{"alt":2751,"src":2752,"style":2753,"width":1048,"height":2754,"decoding":73,"fetchPriority":1050},"Ex-Dividend date","/blog_images/ex-dividend-date/ex-dividend-date.png","max-width:100%;width:700px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",271,[32,2756,2758],{"id":2757},"will-i-get-a-dividend-if-i-sell-on-the-ex-date","Will I get a dividend if I sell on the ex-date?",[15,2760,2761],{},"Yes, If you are the stock's owner and you decide to sell it on the ex-dividend date, you will still receive the pending dividend. This concept might seem counterintuitive, as you are no longer a shareholder when the dividend comes, but it is designed to ensure proper and deterministic criteria and cutoff for who will be receiving the dividends.",[32,2763,2765],{"id":2764},"is-it-better-to-sell-before-the-ex-dividend-date","Is it better to sell before the ex-dividend date?",[15,2767,2768],{},"The decision to sell before or after the ex-dividend date depends on various factors, but, typically, it will not make a substantial difference. In a well-functioning market, due to no-arbitrage opportunity, the stock price should drop by an amount equal to the dividend you're missing out on. The market should adjust for this, leaving investors in a similar financial position whether they sell before or after the ex-dividend date. However, tax circumstances for each investor might vary making the situation differ slightly for each person.",[32,2770,2772],{"id":2771},"do-stocks-rise-after-the-ex-dividend-date","Do stocks rise after the ex-dividend date?",[15,2774,2775],{},"Contrary to what some might expect, stocks tend to fall by an amount equal to the dividend payment on the ex-dividend date. This drop in stock price is a natural adjustment to account for the company's reduced assets due to the dividend payment. Therefore, buying shares before or after the ex-dividend date often leads to nearly the same outcome.",[32,2777,2779],{"id":2778},"what-is-the-difference-between-ex-dividend-date-record-date-and-payment-date","What is the difference between Ex-dividend date, Record Date, and Payment Date?",[15,2781,2782],{},"Understanding the ex-dividend date is just one part of becoming a dividend investor. There are other essential dates related to dividend payments that investors should be aware of:",[15,2784,2785,2788],{},[27,2786,2787],{},"Ex-Dividend Date",": As discussed, this is the date before which investors need to own a stock to be eligible for the upcoming dividend. It typically occurs a few days before the record date to allow time for settling trades.",[15,2790,2791,2794],{},[27,2792,2793],{},"Record Date",": The record date is the day the company closes the book on who is entitled to the pending dividend. This date usually occurs a couple of days after the ex-dividend date to account for time to settle their trades from the ex-dividend date.",[15,2796,2797,2800],{},[27,2798,2799],{},"Payment Date",": The payment date is when the company actually disburses the dividend to the entitled stockholders' accounts. This is the date when you'll see the dividend amount reflected in your brokerage cash account.",[15,2802,2803],{},"In conclusion, understanding ex-dividend dates and their relationship to record and payment dates is essential for investors seeking to maximize their returns from dividend-paying stocks. By knowing these dates, you can ensure that you will receive the dividends you are entitled to while making informed investment decisions.",[32,2805,1523],{"id":1522},[15,2807,1526,2808,1529,2810,1534],{},[519,2809,522],{"href":521},[519,2811,1533],{"href":1532},[15,2813,1537,2814,1542,2817,1547],{},[519,2815,1541],{"href":2816},"/portfolio-tracker/stock/",[519,2818,1546],{"href":1545},{"title":528,"searchDepth":529,"depth":529,"links":2820},[2821,2822,2823,2824,2825,2826,2827],{"id":2729,"depth":532,"text":2730},{"id":2736,"depth":532,"text":2737},{"id":2757,"depth":532,"text":2758},{"id":2764,"depth":532,"text":2765},{"id":2771,"depth":532,"text":2772},{"id":2778,"depth":532,"text":2779},{"id":1522,"depth":532,"text":1523},"The ex-dividend date is the first date on which those who buy or sell shares will not receive the upcoming dividend payment. Put simply, if you want to receive a dividend, you must own the stock before the ex-dividend date.",{},"/blog/ex-dividend-date","2023-10-21",{"title":2708,"description":2828},"blog/ex-dividend-date","naX-BB5o_2lsTVG50nz-alaQW6CpLYxxgpExrBxXuws",{"id":2836,"title":2837,"body":2838,"description":3057,"extension":545,"meta":3058,"navigation":548,"path":3059,"publishedAt":3060,"seo":3061,"seo_description":820,"seo_title":820,"social_image":2851,"stem":3062,"updatedAt":3060,"__hash__":3063},"blog/blog/good-financial-goals.md","6 Steps to Set Good Financial Goals",{"type":7,"value":2839,"toc":3046},[2840,2855,2858,2862,2865,2869,2893,2897,2900,2904,2910,2914,2917,2921,2924,2928,2931,2934,2937,2941,2961,2968,2991,2994,3008,3011,3016],[53,2841,55,2842,55,2845,55,2848],{},[57,2843],{"srcSet":2844,"type":60},"/blog_images/good-financial-goals/how-to-set-financial-goals.avif",[57,2846],{"srcSet":2847,"type":64},"/blog_images/good-financial-goals/how-to-set-financial-goals.webp",[66,2849],{"alt":2850,"src":2851,"style":2852,"width":1048,"height":2853,"decoding":73,"fetchPriority":1050,"className":2854},"How to set good financial goals?","/blog_images/good-financial-goals/how-to-set-financial-goals.png","max-width:100%; width:700px; height:auto;aspect-ratio:'attr(width) / attr(height)'",394,[1052],[15,2856,2857],{},"Whether you are young adults seeking Financial Independence and Early Retire (FIRE) or a parent saving up for college tuition for your children, setting investment goals is an essential element in managing your personal finance successfully.",[32,2859,2861],{"id":2860},"what-is-a-financial-goal","What is a Financial Goal?",[15,2863,2864],{},"A financial goal is a target set for managing money. It is commonly used to create a financial plan further. While there are many frameworks for goal setting, one of the most used methods is SMART.",[32,2866,2868],{"id":2867},"what-is-a-smart-financial-goal","What is a SMART Financial Goal?",[15,2870,2871,2872,2876,2877,2880,2881,2884,2885,2888,2889,2892],{},"SMART is a framework that can be used in any goal setting, not just on investment, although for this article, we will focus on investment-related goal setting. SMART stands for ",[2873,2874,2875],"b",{},"S","pecific, ",[2873,2878,2879],{},"M","easurable, ",[2873,2882,2883],{},"A","chievable, ",[2873,2886,2887],{},"R","elevant, and ",[2873,2890,2891],{},"T","ime-based.",[415,2894,2896],{"id":2895},"specific","Specific",[15,2898,2899],{},"Your investment goal should be specific and well-defined. This step means clarifying what you want to accomplish and how you plan to do it. For example, instead of simply stating, \"I want to make more money,\" a specific goal might be, \"I want to start investing today and continue to save toward my retirement in 20 years.\"",[415,2901,2903],{"id":2902},"measurable","Measurable",[15,2905,2906,2907,2909],{},"Your investment goal should be measurable, so you can track your progress and determine whether you are on track to achieve it. Depending on the type of outcomes, you can use the size of your portfolio at the end of the period as a measure of success. Or you can use the monthly cash flow you receive from dividends as a goal as well if you are looking for passive income. If you are looking for ways to track your financial goals, ",[519,2908,522],{"href":521}," offers you a way to do that easily. Try it for free.",[415,2911,2913],{"id":2912},"achievable","Achievable",[15,2915,2916],{},"This is the most challenging part of goal setting. To set an achievable goal, it is essential to understand the realistic return you can expect, given your risk tolerance, how much you can save and add in over-time, and your time-frame.",[415,2918,2920],{"id":2919},"relevant","Relevant",[15,2922,2923],{},"Personal finance and investing are closely connected, so your investment goal should be relevant to your overall financial situation and personal goals. For example, consider your age, income, debts, and other financial obligations when setting your investment goal to ensure your plan is realized.",[415,2925,2927],{"id":2926},"time-based","Time-based",[15,2929,2930],{},"Setting a specific time frame for achieving your investment goal can help you stay motivated and on track. For example, you might set intermediate goals along the way, with progress checkpoints at regular intervals leading up to your final destination.",[15,2932,2933],{},"By using the SMART method to set your investment goal, you can increase your chances of success and work towards achieving your financial objectives.",[15,2935,2936],{},"Let's look at how to utilize this method in practice with step-by-step processes.",[32,2938,2940],{"id":2939},"how-to-set-your-investment-goals","How to set your investment goals?",[231,2942,2943,2949,2955],{},[46,2944,2945,2948],{},[2873,2946,2947],{},"Set your objective",". The first step is to define the purpose of this investment. The common goal includes things like retirement, college, large purchase, travel, etc.",[46,2950,2951,2954],{},[2873,2952,2953],{},"Set a measurable goal",". Once you have your objective set, the next step is to set a quantifiable goal of what it means to arrive at your goal post. For example, if your purpose is retirement, you can select the goal to be the amount you need for a comfortable retirement. You can calculate that number using many online calculators. Alternatively, you can also set the goal to be the monthly income via dividends or rent.",[46,2956,2957,2960],{},[2873,2958,2959],{},"Set a realistic expected return",". Next, you set what you expect to earn in the longer term. It is crucial that this is realistic and aligns with your risk appetite. For example, suppose you are not comfortable holding a large percentage of your portfolio in equities or other relatively risky assets. In that case, it might not be reasonable to expect a high rate of return. So what is reasonable? Historical data can be helpful in this regard. For example, the S&P 500 has returned an average of around 12.5% annually over the past ten years, while the 10Y treasury has an average yield of 3% over the same period. However, it's important to remember that past performance is no guarantee of future results, although it serves as a good guideline for your projection. The Link below gives you some idea of the 10Y return on various types of investments and can serve as a guideline.",[15,2962,2963],{},[519,2964,2967],{"href":2965,"rel":2966},"https://www.blackrock.com/corporate/insights/blackrock-investment-institute/interactive-charts/return-map",[596],"Link to 10Y returns on various asset classes",[231,2969,2971,2977,2983],{"start":2970},4,[46,2972,2973,2976],{},[2873,2974,2975],{},"Set a timeframe",". Next, you set the period you want to reach that goal. Note that while you might want to get there as soon as possible, setting too short of a time might either turn out to be unrealistic or force you to take a higher risk. It is advisable to set it as realistic as possible subject to your goal, of course.",[46,2978,2979,2982],{},[2873,2980,2981],{},"Set a monthly or annual contribution",". Another essential ingredient to reaching your investment goal more quickly is how much you can add periodically. This could represent a certain fixed percentage of your monthly income set aside for this investment goal.",[46,2984,2985,2988,2989],{},[2873,2986,2987],{},"Adjust your parameters",". One of the most common problems when setting investment goals is it turns out to be unrealistic. When you set the parameters in steps 3.-5, you can use the calculator below to help calculate the expected portfolio towards the end of the period. Often, those sets up might not be sufficient to reach what you set in 2.\n",[1870,2990],{},[15,2992,2993],{},"What you need to do now in such a case is to adjust the parameters by taking at least one of the following actions;",[43,2995,2996,2999,3002,3005],{},[46,2997,2998],{},"Reduce your measurable goal",[46,3000,3001],{},"Increase your expected return which likely means taking more risk",[46,3003,3004],{},"Stretch out the timeframe",[46,3006,3007],{},"Add more on a monthly basis",[15,3009,3010],{},"Once these parameters are adjusted so that your ultimate goal and assumptions are aligned, you are all set with the investment goal setting and can begin planning your investment towards the goal.",[15,3012,3013],{},[2873,3014,3015],{},"References and further readings:",[43,3017,3018,3025,3032,3039],{},[46,3019,3020],{},[519,3021,3024],{"href":3022,"rel":3023},"https://www.mindtools.com/a4wo118/smart-goals",[596],"SMART Goals - How to Make Your Goals Achievable",[46,3026,3027],{},[519,3028,3031],{"href":3029,"rel":3030},"https://www.forbes.com/advisor/in/investing/5-golden-rules-to-create-your-asset-allocation-plan/",[596],"5 Golden Rules To Create Your Asset Allocation Plan",[46,3033,3034],{},[519,3035,3038],{"href":3036,"rel":3037},"https://www.thebalancemoney.com/how-to-calculate-your-retirement-needs-4061547",[596],"How to Calculate Your Retirement Savings Needs",[46,3040,3041],{},[519,3042,3045],{"href":3043,"rel":3044},"https://lifemathmoney.com/how-to-become-financially-independent/",[596],"How to Become Finacially Independent",{"title":528,"searchDepth":529,"depth":529,"links":3047},[3048,3049,3056],{"id":2860,"depth":532,"text":2861},{"id":2867,"depth":532,"text":2868,"children":3050},[3051,3052,3053,3054,3055],{"id":2895,"depth":529,"text":2896},{"id":2902,"depth":529,"text":2903},{"id":2912,"depth":529,"text":2913},{"id":2919,"depth":529,"text":2920},{"id":2926,"depth":529,"text":2927},{"id":2939,"depth":532,"text":2940},"A financial goal is a plan for your money. It is the very first step towards your financial dream. A good financial goal should be Specific, Measurable, Achievable, Relevant, and Time-based (SMART).",{},"/blog/good-financial-goals","2023-01-30",{"title":2837,"description":3057},"blog/good-financial-goals","JLVXCz9Pak_F-Tc7cMfx8Ezqsg2-jAgtkONITAGLzpM",{"id":3065,"title":3066,"body":3067,"description":3227,"extension":545,"meta":3228,"navigation":548,"path":3229,"publishedAt":3230,"seo":3231,"seo_description":820,"seo_title":820,"social_image":3080,"stem":3232,"updatedAt":3230,"__hash__":3233},"blog/blog/how-many-stocks-should-i-own.md","How many stocks should you own?",{"type":7,"value":3068,"toc":3214},[3069,3083,3087,3090,3094,3101,3115,3119,3122,3126,3134,3143,3147,3150,3154,3157,3161,3164,3168,3171,3174,3178,3188,3191],[53,3070,55,3071,55,3074,55,3077],{},[57,3072],{"srcSet":3073,"type":60},"/blog_images/how-many-stocks-should-i-own/how-many-stocks-should-i-own-cover.avif",[57,3075],{"srcSet":3076,"type":64},"/blog_images/how-many-stocks-should-i-own/how-many-stocks-should-i-own-cover.webp",[66,3078],{"alt":3079,"src":3080,"style":3081,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":3082},"How many stocks should I own?","/blog_images/how-many-stocks-should-i-own/how-many-stocks-should-i-own-cover.png","max-width:100%;width:600px;height:auto;aspect-ratio: 'attr(width) / attr(height);margin-left: auto;margin-right: auto;'",[1052],[32,3084,3086],{"id":3085},"how-many-different-stocks-should-you-own-in-your-portfolio","How Many Different Stocks Should You Own in Your Portfolio?",[15,3088,3089],{},"When it comes to building your investment portfolio, the age-old question remains: \"how many stocks should I own?\" There is no one-size-fits-all answer, as the ideal number of stocks can vary depending on your investment perspective and strategy. So, in this article, we explore this question from both theoretical and practical points of view from the most successful investors.",[32,3091,3093],{"id":3092},"theory-point-of-view","Theory Point of View:",[15,3095,3096,3097,3100],{},"The short answer that many suggest is ",[27,3098,3099],{},"20-30 stocks",". However, for a long answer, we need to dive further into the theory. From a theoretical standpoint, the concept of diversification plays a pivotal role in determining the number of stocks in your portfolio. Diversification aims to mitigate risks, and it distinguishes between two types of risks:",[53,3102,55,3103,55,3106,55,3109],{},[57,3104],{"srcSet":3105,"type":60},"/blog_images/how-many-stocks-should-i-own/diversifiable-and-non-diversifiable-risks.avif",[57,3107],{"srcSet":3108,"type":64},"/blog_images/how-many-stocks-should-i-own/diversifiable-and-non-diversifiable-risks.webp",[66,3110],{"alt":3111,"src":3112,"style":3113,"width":1669,"height":3114,"loading":651,"decoding":73},"Diversifiable vs Non-Diversifiable Risks","/blog_images/how-many-stocks-should-i-own/diversifiable-and-non-diversifiable-risks.png","max-width:100%; width:895px; height:auto;aspect-ratio:'attr(width) / attr(height)'",553,[415,3116,3118],{"id":3117},"diversifiable-risks-unsystematic-risks","Diversifiable Risks (Unsystematic Risks)",[15,3120,3121],{},"These are the risks associated with individual stocks or specific companies for example poor management decisions, industry-specific events, or company-specific issues. Diversification is an effective strategy for reducing diversifiable risks. By holding a diversified portfolio, you can reduce the impact of these events affecting a single company. Diversification is designed to smooth out these risks because not all of your investments will be affected in the same way or at the same time.",[415,3123,3125],{"id":3124},"non-diversifiable-risks-systematic-risks","Non-Diversifiable Risks (Systematic Risks)",[15,3127,3128,3129,3133],{},"Non-diversifiable risks are systematic risks that affect the entire market or a broad sector of it, for example economic factors, interest rate changes, political events, and market sentiment. Non-diversifiable risks are typically measured by ",[519,3130,3132],{"href":3131},"/blog/what-is-beta/","the beta of a stock",", which quantifies how sensitive it is to market movements. These risks affect all investments to some degree and cannot be eliminated by merely adding more stocks to your portfolio.",[15,3135,3136,3137,3142],{},"The more stocks you add to your portfolio, the greater the diversification, leading to a reduction in overall risk. However, it's essential to note that as you keep adding more stocks, the incremental impact on risk reduction diminishes. So this makes many suggest that 20-30 stocks are the range that is optimal. For further reading, we would suggest ",[519,3138,3141],{"href":3139,"rel":3140},"https://ndvr.com/journal/how-many-stocks-should-you-own",[596],"a research from NDVR"," where they quantify risks and show how the number works out.",[32,3144,3146],{"id":3145},"according-to-most-successful-investors","According to Most Successful Investors:",[15,3148,3149],{},"Many successful investors suggest that the ideal number of stocks in your portfolio depends on several factors, making it a more nuanced decision.",[415,3151,3153],{"id":3152},"competency","Competency",[15,3155,3156],{},"Warren Buffett, one of the most renowned investors of all time, emphasizes the importance of investing in what you understand. While he prefers holding a relatively small number of stocks in his portfolio to keep it concentrated, he acknowledges that not everyone is comfortable or competent in analyzing individual businesses. For those who lack the expertise or inclination for in-depth analysis, owning a broad market index, essentially owning everything, can be a prudent strategy. Similarly, Charlie Munger, Buffett's long-time business partner, has stated that investing in three outstanding opportunities is sufficient if you truly comprehend what you are doing.",[415,3158,3160],{"id":3159},"opportunities","Opportunities",[15,3162,3163],{},"Another key factor in determining the number of stocks you should own is the quality of investment opportunities you discover. Legendary investors like Peter Lynch and Warren Buffett both advocate investing heavily in the best opportunities available. Buffett famously said, \"To have a super wonderful business and then put money into number 30 or 35 on your list of attractiveness and forgo putting more money into number one just strikes me and Charlie as Madness.\" Peter Lynch echoes this sentiment, suggesting that if you find ten equally attractive investment opportunities, you should consider investing in all of them. This approach aligns with the belief that owning only the best opportunities makes sense, even if they are few and far between.",[415,3165,3167],{"id":3166},"resources-and-time","Resources and Time",[15,3169,3170],{},"Consider the resources, particularly time, at your disposal for managing your investments. Researching and monitoring businesses in your portfolio requires a significant time commitment. The more positions you have, the more time and effort you need to allocate. This can potentially result in less in-depth research per investment. So, the number of stocks you own should also depend on your available time and your willingness to dedicate it to your investments.",[15,3172,3173],{},"In summary, there is no one best answer to the question of how many stocks you should own. Your decision should take into account your level of competency, the quality of investment opportunities you identify, and the time and resources you can commit to managing your portfolio. Whether you opt for a concentrated approach or a diversified one, what matters most is aligning your investment strategy with your goals and risk tolerance.",[32,3175,3177],{"id":3176},"track-all-your-investments-with-portseido","Track All Your Investments with Portseido",[15,3179,3180,3181,3184,3185,3187],{},"We know tracking your portfolios can be painful and high-effort, so we make it easy for you. Portseido helps you ",[519,3182,3183],{"href":521},"track all your investments"," easily and effortlessly with in-depth analytics on your allocation, ",[519,3186,1546],{"href":1545},", and beautiful portfolio visualization, giving you a complete overview of your investments.",[15,3189,3190],{},"Sources:",[231,3192,3193,3200,3207],{},[46,3194,3195],{},[519,3196,3199],{"href":3197,"rel":3198},"https://buffett.cnbc.com/video/1996/05/06/afternoon-session---1996-berkshire-hathaway-annual-meeting.html",[596],"Berkshire Hathaway 1996 Annual Meeting",[46,3201,3202],{},[519,3203,3206],{"href":3204,"rel":3205},"https://www.youtube.com/watch?v=nHWYwsy0Hhc",[596],"Charlie Munger Interview",[46,3208,3209],{},[519,3210,3213],{"href":3211,"rel":3212},"https://youtu.be/myu4Nv0pt0U?si=ZAO6wQevbToNeGbH&t=2553",[596],"Peter Lynch 1997 Lecture On The Stock Market",{"title":528,"searchDepth":529,"depth":529,"links":3215},[3216,3217,3221,3226],{"id":3085,"depth":532,"text":3086},{"id":3092,"depth":532,"text":3093,"children":3218},[3219,3220],{"id":3117,"depth":529,"text":3118},{"id":3124,"depth":529,"text":3125},{"id":3145,"depth":532,"text":3146,"children":3222},[3223,3224,3225],{"id":3152,"depth":529,"text":3153},{"id":3159,"depth":529,"text":3160},{"id":3166,"depth":529,"text":3167},{"id":3176,"depth":532,"text":3177},"There is no one best answer for the optimal number of stocks in the portfolio. So we study from both theory and from the best investors.",{},"/blog/how-many-stocks-should-i-own","2023-11-03",{"title":3066,"description":3227},"blog/how-many-stocks-should-i-own","vfCdqDITCnT8O8rypcD-05znmqjXiWDfa0gG4fnaD4c",{"id":3235,"title":3236,"body":3237,"description":3419,"extension":545,"meta":3420,"navigation":548,"path":3421,"publishedAt":3422,"seo":3423,"seo_description":820,"seo_title":820,"social_image":3354,"stem":3424,"updatedAt":3425,"__hash__":3426},"blog/blog/how-to-benchmark-portfolio.md","Investment Portfolio Benchmarking",{"type":7,"value":3238,"toc":3403},[3239,3243,3250,3254,3265,3268,3272,3275,3278,3282,3287,3290,3294,3297,3301,3304,3308,3311,3315,3318,3322,3325,3329,3332,3339,3343,3356,3363,3376,3387,3398],[32,3240,3242],{"id":3241},"what-is-a-benchmark","What is a Benchmark?",[15,3244,3245,3246,3249],{},"In investing, a ",[27,3247,3248],{},"benchmark"," is a set of reference assets or portfolios employed to assess and compare the performance of investments. Typically, a broad market index of asset category is chosen as a benchmark because it effectively represents a comprehensive cross-section of relevant assets. This selection helps in evaluating the effectiveness of an investment by providing a standard against which its performance can be measured.",[32,3251,3253],{"id":3252},"why-is-portfolio-benchmarking-important","Why is portfolio benchmarking important?",[15,3255,3256,3257,3260,3261,3264],{},"One reason to consider benchmarking is ",[27,3258,3259],{},"opportunity cost",". Opportunity cost is a benefit you forego when choosing one alternative over another. In the case of investing, when considering investing in an asset, investors always have other alternatives to invest the same capital in. As such, we can say that ",[27,3262,3263],{},"foregone benefit is the true cost of investing",". However, comparing every decision made in investing with the next best alternative at the given time can be time consuming. Hence, most people will find that professional investors have been using various indices as a next best alternative instead.",[15,3266,3267],{},"A stock portfolio with a return of 10% might seem good. However, when compared to a benchmark which returns 20%, the portfolio’s true performance might not look so good now. Investors will be able to grade their own skill and find the performance gaps for improvement over time. By comparing to benchmarks, investors can gain more insights in their investments.",[32,3269,3271],{"id":3270},"how-to-choose-appropriate-benchmarks-for-portfolio","How to choose appropriate benchmarks for portfolio?",[15,3273,3274],{},"Since the goal in benchmarking the portfolio is to consider opportunity cost and to learn the most out of it, the benchmark itself should be comparable to the portfolio. What that means is, a benchmark should have a similar risk and return profile as the portfolio because this allows the investor to reflect on how much value has been added by their involvement in actively managing the capital instead of investing the same capital into similar assets. Comparing a portfolio to a benchmark with different risk levels is inappropriate because the difference in returns might be from a more conservative / aggressive risk level.",[15,3276,3277],{},"One of the common ways to match the risk and return profile is to match the asset classes. The asset classes can be as narrow as the same asset class in a specific industry of a country.",[415,3279,3281],{"id":3280},"examples-of-portfolio-benchmarks","Examples of Portfolio Benchmarks",[3283,3284,3286],"h4",{"id":3285},"sp500","S&P500",[15,3288,3289],{},"500 leading publicly-traded companies in U.S. weighted by market capitalization",[3283,3291,3293],{"id":3292},"nasdaq","Nasdaq",[15,3295,3296],{},"3,000+ common equities listed in Nasdaq stock exchange weighted by market capitalization (Although it contains many companies in various industries, it is commonly used as an index representing tech companies since it has a high concentration of them)",[3283,3298,3300],{"id":3299},"nyse","NYSE",[15,3302,3303],{},"2,400+ common stocks listed in New York Stock Exchange (NYSE) weighted by free-float adjusted market capitalization (stock price times the number of shares readily available in the market)",[3283,3305,3307],{"id":3306},"dow-jones-industrial-average-djia","Dow Jones Industrial Average (DJIA)",[15,3309,3310],{},"30 large well-established and financially-sound companies based on certain criteria listed in NYSE and Nasdaq weighted by price",[3283,3312,3314],{"id":3313},"msci-world-index","MSCI World Index",[15,3316,3317],{},"1,500+ large and mid cap companies across 23 developed countries weighted by free-float adjusted market capitalization",[3283,3319,3321],{"id":3320},"qqq","QQQ",[15,3323,3324],{},"ETF that tracks 100 largest non-financial companies listed in Nasdaq (regarded as large cap growth fund)",[3283,3326,3328],{"id":3327},"eem","EEM",[15,3330,3331],{},"ETF that tracks MSCI Emerging Market (large and mid cap companies across 25 emerging markets weighted by free-float adjusted market capitalization)",[15,3333,3334,3335,353],{},"In addition to the popular ones mentioned above, there are still many ETFs specializing in a specific industry in a given stock market / segment. You can search for more information ",[519,3336,704],{"href":3337,"rel":3338},"https://etfdb.com/screener/",[596],[32,3340,3342],{"id":3341},"how-do-you-benchmark-a-portfolio-performance","How do you benchmark a portfolio performance?",[53,3344,55,3345,55,3348,55,3351],{},[57,3346],{"srcSet":3347,"type":60},"/blog_images/how-to-benchmark-portfolio/benchmark-portfolio-with-portseido.avif",[57,3349],{"srcSet":3350,"type":64},"/blog_images/how-to-benchmark-portfolio/benchmark-portfolio-with-portseido.webp",[66,3352],{"alt":3353,"src":3354,"style":611,"width":612,"height":3355,"loading":651,"decoding":73},"benchmarking investment portfolio with Portseido","/blog_images/how-to-benchmark-portfolio/benchmark-portfolio-with-portseido.png",634,[15,3357,3358,3359,3362],{},"One of the most common ways to compare portfolios is to use return. Return can help tell how well investors are in actively managing the funds. In reality, return calculation can be difficult to compute for both portfolio and benchmark. We have that covered in another article ",[519,3360,704],{"href":3361},"/blog/should-you-use-simple-return-time-weighted-or-money-weighted",", but, in summary, calculating return can be problematic when there are multiple cash deposits to or withdraws from a portfolio, so Money-weighted return and Time-weighted return are introduced to solve such a problem.",[53,3364,55,3365,55,3368,55,3371],{},[57,3366],{"srcSet":3367,"type":60},"/blog_images/how-to-benchmark-portfolio/portfolio-vs-sp500.avif",[57,3369],{"srcSet":3370,"type":64},"/blog_images/how-to-benchmark-portfolio/portfolio-vs-sp500.webp",[66,3372],{"alt":3373,"src":3374,"style":611,"width":612,"height":3375,"loading":651,"decoding":73},"Portfolio value vs S&P500","/blog_images/how-to-benchmark-portfolio/portfolio-vs-sp500.png",209,[15,3377,3378,3379,3383,3384,353],{},"Apart from the return, risk is another key aspect to compare. While it is great in beating the benchmark on the return side, it might not tell the whole story if that is the result of taking more risk e.g. leveraging more. There is nothing wrong in taking more risk here, but investors need to see the whole picture of their portfolios, whether the performance gap came from value added by investors themselves or the incremental risks taken. The common metrics for risk measurements are ",[519,3380,3382],{"href":3381},"/blog/drawdown-why-investors-should-track-it/","drawdown",", standard deviation of investment return and ",[519,3385,3386],{"href":3131},"Beta",[15,3388,3389,3390,3393,3394,353],{},"Beyond the previously discussed return and risk, there is also risk-adjusted return. Risk-adjusted return is a financial metric that evaluates the performance of assets while taking into account the level of risk involved. Recognizing that investors may be willing to accept higher risks in pursuit of greater returns, it may not be equitable to compare investments to a benchmark using return and risks alone. Examples of risk-adjusted return measures include the ",[519,3391,3392],{"href":1262},"Sharpe ratio"," and the ",[519,3395,3397],{"href":3396},"/blog/treynor-ratio/","Treynor ratio",[15,3399,3400,3401,802],{},"By tracking a portfolio and comparing it to an appropriate benchmark, investors will be able to dig deeper into their own portfolios and understand more on how every decision made contributes to the end result. At ",[519,3402,522],{"href":521},{"title":528,"searchDepth":529,"depth":529,"links":3404},[3405,3406,3407,3418],{"id":3241,"depth":532,"text":3242},{"id":3252,"depth":532,"text":3253},{"id":3270,"depth":532,"text":3271,"children":3408},[3409],{"id":3280,"depth":529,"text":3281,"children":3410},[3411,3412,3413,3414,3415,3416,3417],{"id":3285,"depth":2970,"text":3286},{"id":3292,"depth":2970,"text":3293},{"id":3299,"depth":2970,"text":3300},{"id":3306,"depth":2970,"text":3307},{"id":3313,"depth":2970,"text":3314},{"id":3320,"depth":2970,"text":3321},{"id":3327,"depth":2970,"text":3328},{"id":3341,"depth":532,"text":3342},"Investors can use benchmarks as an opportunity cost of the investments. Investor has to choose the right benchmark, calculate metrics and compare.",{},"/blog/how-to-benchmark-portfolio","2022-07-08",{"title":3236,"description":3419},"blog/how-to-benchmark-portfolio","2023-10-31","HqEoPV8ZS7-Z2PUeKHEeq_M-VhQd-PAWT0PPRgPvVBI",{"id":3428,"title":3429,"body":3430,"description":3576,"extension":545,"meta":3577,"navigation":548,"path":3578,"publishedAt":3579,"seo":3580,"seo_description":820,"seo_title":820,"social_image":3443,"stem":3581,"updatedAt":822,"__hash__":3582},"blog/blog/how-to-calculate-cost-basis.md","How to keep track of and calculate cost basis?",{"type":7,"value":3431,"toc":3569},[3432,3446,3449,3453,3456,3471,3484,3488,3491,3495,3498,3511,3514,3518,3521,3534,3537,3541,3544,3555,3561,3567],[53,3433,55,3434,55,3437,55,3440],{},[57,3435],{"srcSet":3436,"type":60},"/blog_images/how-to-calculate-cost-basis/track-cost-basis-chart.avif",[57,3438],{"srcSet":3439,"type":64},"/blog_images/how-to-calculate-cost-basis/track-cost-basis-chart.webp",[66,3441],{"alt":3442,"src":3443,"style":611,"width":612,"height":3444,"decoding":73,"fetchPriority":1050,"className":3445},"Track cost basis","/blog_images/how-to-calculate-cost-basis/track-cost-basis-chart.png",391,[1052],[15,3447,3448],{},"If you bought assets (stock, crypto or etfs), average cost would always be one of the main metrics that you looked at. This can be easy and straightforward to calculate. However, things can get complicated when there are multiple buys and sells. In this guide, we attempt to clear out any misconceptions by explaining the two popular methods to calculate cost basis.",[32,3450,3452],{"id":3451},"calculate-cost-basis","Calculate cost basis",[15,3454,3455],{},"Imagine that you bought 10 shares of AAPL at $130, then the stock price dropped, and you bought 30 shares more at $100. Calculating the average price in this case is straightforward. We just need to calculate the weighted average of the price, and use the proportion of the number of shares in each transaction as weight as shown below.",[53,3457,55,3458,55,3461,55,3464],{},[57,3459],{"srcSet":3460,"type":60},"/blog_images/how-to-calculate-cost-basis/average-cost-formula.avif",[57,3462],{"srcSet":3463,"type":64},"/blog_images/how-to-calculate-cost-basis/average-cost-formula.webp",[66,3465],{"alt":3466,"src":3467,"style":3468,"width":3469,"height":3470,"loading":651,"decoding":73},"Average Cost formula","/blog_images/how-to-calculate-cost-basis/average-cost-formula.png","max-width:100%; width:615px; height:auto;aspect-ratio:'attr(width) / attr(height)'",615,71,[53,3472,55,3473,55,3476,55,3479],{},[57,3474],{"srcSet":3475,"type":60},"/blog_images/how-to-calculate-cost-basis/calculate-average-cost.avif",[57,3477],{"srcSet":3478,"type":64},"/blog_images/how-to-calculate-cost-basis/calculate-average-cost.webp",[66,3480],{"alt":3481,"src":3482,"style":3468,"width":3469,"height":3483,"loading":651,"decoding":73},"Calculate average cost","/blog_images/how-to-calculate-cost-basis/calculate-average-cost.png",75,[32,3485,3487],{"id":3486},"what-if-i-sell","What if I sell?",[15,3489,3490],{},"Imagine the scenario above but now the stock price goes up, and you decide to sell 5 shares of AAPL at $150. With 35 shares left, what’s your average cost now? To be able to calculate that correctly, we need to choose the method (assumptions) to deal with the shares sold. Each method is still using the average cost formula above. However, they differ on which of the 40 shares have been sold (from the first or the second transaction).",[32,3492,3494],{"id":3493},"first-in-first-out-fifo","First In, First Out (FIFO)",[15,3496,3497],{},"As the name says, First In, First Out method (FIFO) assumes that the first shares you have bought got sold first. The calculation is shown below:",[53,3499,55,3500,55,3503,55,3506],{},[57,3501],{"srcSet":3502,"type":60},"/blog_images/how-to-calculate-cost-basis/fifo-average-cost.avif",[57,3504],{"srcSet":3505,"type":64},"/blog_images/how-to-calculate-cost-basis/fifo-average-cost.webp",[66,3507],{"alt":3508,"src":3509,"style":3468,"width":3469,"height":3510,"loading":651,"decoding":73},"Average cost for FIFO method","/blog_images/how-to-calculate-cost-basis/fifo-average-cost.png",73,[15,3512,3513],{},"As you can see, the 5 shares that have been sold are assumed to be from the first transaction which makes the first transaction (at $130) left with just 5 shares. While, on the second transaction, it still has the full 30 shares.",[32,3515,3517],{"id":3516},"weighted-average","Weighted Average",[15,3519,3520],{},"The Weighted Average method assumes that the shares sold are proportionally from every transaction. Let's illustrate this by using the above example:",[53,3522,55,3523,55,3526,55,3529],{},[57,3524],{"srcSet":3525,"type":60},"/blog_images/how-to-calculate-cost-basis/weighted-average-cost.avif",[57,3527],{"srcSet":3528,"type":64},"/blog_images/how-to-calculate-cost-basis/weighted-average-cost.webp",[66,3530],{"alt":3531,"src":3532,"style":3468,"width":3469,"height":3533,"loading":651,"decoding":73},"Average cost for Weighted Average method","/blog_images/how-to-calculate-cost-basis/weighted-average-cost.png",80,[15,3535,3536],{},"By selling 5 shares, this method assumes that 1.25 shares are from the first transaction (25% of 5 shares since the first transaction has 10 shares from the total of 40 shares) and 3.75 shares are from the second one (75% of 5 shares since the second transaction has 30 shares from the total of 40 shares). Therefore, the weights of each transaction before and after selling are the same. This means the sell transaction will have no impact on average cost in weighted average method.",[32,3538,3540],{"id":3539},"other-methods","Other Methods",[15,3542,3543],{},"These two methods are just popular ones among others. In most other cases, the methods just assume which shares to be sold differently. Although Portseido does not support such methods, We think it might be useful to mention it here. Here are a few of them:",[43,3545,3546,3549,3552],{},[46,3547,3548],{},"Last In, First Out (LIFO): It’s the opposite of FIFO. The last one coming in is the first one going out.",[46,3550,3551],{},"High-cost method: The highest price shares got sold first.",[46,3553,3554],{},"Low-cost method: The lowest price shares gold sold first.",[15,3556,3557,3558,353],{},"We hope this article helps you figure out the right method for you in calculating average cost. For Portseido user who wants to configure the settings for cost basis, you can do so by following the link ",[519,3559,704],{"href":3560},"/menu?changeCalculationMethodDialog=true",[15,3562,3563,3564,3566],{},"PS. Calculating these metrics might cost you a huge amount of time, so don’t waste your time there. Let us calculate them for you at ",[519,3565,522],{"href":521}," ;)",[15,3568,805],{},{"title":528,"searchDepth":529,"depth":529,"links":3570},[3571,3572,3573,3574,3575],{"id":3451,"depth":532,"text":3452},{"id":3486,"depth":532,"text":3487},{"id":3493,"depth":532,"text":3494},{"id":3516,"depth":532,"text":3517},{"id":3539,"depth":532,"text":3540},"Cost basis is the value the investor paid into the asset. A few popular methods are used to calculate the values including FIFO and Weighted Average.",{},"/blog/how-to-calculate-cost-basis","2022-07-09",{"title":3429,"description":3576},"blog/how-to-calculate-cost-basis","bdXNpsB1XAja48ldDWdzyn0dt9rT8zwVnMW7zJ0camE",{"id":3584,"title":3585,"body":3586,"description":3934,"extension":545,"meta":3935,"navigation":548,"path":3936,"publishedAt":3937,"seo":3938,"seo_description":820,"seo_title":820,"social_image":3599,"stem":3939,"updatedAt":3937,"__hash__":3940},"blog/blog/how-to-calculate-portfolio-return.md","How to Calculate Portfolio Return?",{"type":7,"value":3587,"toc":3912},[3588,3601,3604,3608,3616,3619,3622,3626,3629,3633,3647,3650,3654,3657,3665,3681,3685,3693,3697,3712,3716,3721,3737,3742,3757,3762,3778,3782,3789,3793,3808,3812,3823,3838,3845,3849,3860,3864,3877,3881,3884,3898,3902],[53,3589,55,3590,55,3593,55,3596],{},[57,3591],{"srcSet":3592,"type":60},"/blog_images/how-to-calculate-portfolio-return/how-to-calculate-portfolio-return-cover.avif",[57,3594],{"srcSet":3595,"type":64},"/blog_images/how-to-calculate-portfolio-return/how-to-calculate-portfolio-return-cover.webp",[66,3597],{"alt":3598,"src":3599,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":3600},"How to calculate portfolio return","/blog_images/how-to-calculate-portfolio-return/how-to-calculate-portfolio-return-cover.png",[1052],[15,3602,3603],{},"Understanding portfolio return is important for all investors to gauge the performance of their investments accurately. Whether you're a seasoned investor or just starting, knowing how to calculate portfolio return empowers you to make informed decisions and assess your investment strategies effectively. In this guide, we'll delve into different methods of calculating portfolio return and provide step-by-step instructions on how to do so using Excel.",[32,3605,3607],{"id":3606},"what-is-portfolio-return","What is Portfolio Return?",[15,3609,3610,3611,3615],{},"Portfolio return measures the gain or loss of an investment portfolio over a specified period relative to the initial investment value. It is important for investors like us to ",[519,3612,3614],{"href":3613},"/blog/how-to-benchmark-portfolio/","evaluate our performance and compare them against benchmarks",", so we can know how our portfolio actually performs and learn and improve it.",[32,3617,3585],{"id":3618},"how-to-calculate-portfolio-return",[15,3620,3621],{},"There are multiple methods in calculating portfolio return. The differences in the calculation are mainly data required to calculate them and their limitations which we will lay out further below.",[415,3623,3625],{"id":3624},"holding-period-return","Holding Period Return",[15,3627,3628],{},"When you have all the gains, costs, initial value, and end value, you can calculate the return by using the Holding Period Return method.",[3283,3630,3632],{"id":3631},"holding-period-return-formula","Holding Period Return Formula",[53,3634,55,3635,55,3638,55,3641],{},[57,3636],{"srcSet":3637,"type":60},"/blog_images/how-to-calculate-portfolio-return/holding-period-return-formula.avif",[57,3639],{"srcSet":3640,"type":64},"/blog_images/how-to-calculate-portfolio-return/holding-period-return-formula.webp",[66,3642],{"alt":3632,"src":3643,"style":1047,"width":3644,"height":3645,"decoding":73,"fetchPriority":1050,"className":3646},"/blog_images/how-to-calculate-portfolio-return/holding-period-return-formula.png",756,85,[1052],[15,3648,3649],{},"The formula is quite straightforward. Holding Period Return (HPR) is percent of all the gains over the initial value of the portfolio. Gains include value appreciation of the investment plus other income net with related costs. For example, if we bought AAPL at $175, received $0.24 dividend and, at the end of the period, AAPL was valued at $200, our HPR would be (200 - 175 + 0.24) / 175 = 14.42%.",[3283,3651,3653],{"id":3652},"how-to-calculate-holding-period-return-in-excel","How to calculate Holding Period Return in Excel?",[15,3655,3656],{},"To calculate HPR in Excel, you can follow the instructions below:",[231,3658,3659,3662],{},[46,3660,3661],{},"Input End Value, Initial Value, Income and Cost into your Excel file",[46,3663,3664],{},"Calculate the HPR using the formula above",[53,3666,55,3667,55,3670,55,3673],{},[57,3668],{"srcSet":3669,"type":60},"/blog_images/how-to-calculate-portfolio-return/calculate-holding-period-return-excel.avif",[57,3671],{"srcSet":3672,"type":64},"/blog_images/how-to-calculate-portfolio-return/calculate-holding-period-return-excel.webp",[66,3674],{"alt":3675,"src":3676,"style":3677,"width":3678,"height":3679,"decoding":73,"fetchPriority":1050,"className":3680},"How to calculate holding period return in Excel","/blog_images/how-to-calculate-portfolio-return/calculate-holding-period-return-excel.png","max-width:100%;width:400px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",408,244,[1052],[415,3682,3684],{"id":3683},"weighted-average-portfolio-return","Weighted Average Portfolio Return",[15,3686,3687,3688,3692],{},"To calculate portfolio return using the weighted average portfolio return method, you will need the ",[519,3689,3691],{"href":3690},"/blog/portfolio-weight/","portfolio weight"," of each investment in the portfolio at the beginning of the period and their subsequent returns in the period.",[3283,3694,3696],{"id":3695},"weighted-average-portfolio-return-formula","Weighted Average Portfolio Return Formula",[53,3698,55,3699,55,3702,55,3705],{},[57,3700],{"srcSet":3701,"type":60},"/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-formula.avif",[57,3703],{"srcSet":3704,"type":64},"/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-formula.webp",[66,3706],{"alt":3696,"src":3707,"style":3708,"width":3709,"height":3710,"decoding":73,"fetchPriority":1050,"className":3711},"/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-formula.png","max-width:100%;width:350px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",413,265,[1052],[3283,3713,3715],{"id":3714},"how-to-calculate-weighted-average-portfolio-return-in-excel","How to calculate Weighted Average Portfolio Return in Excel?",[231,3717,3718],{},[46,3719,3720],{},"Create the table with asset name, initial portfolio weight and return for each of them",[53,3722,55,3723,55,3726,55,3729],{},[57,3724],{"srcSet":3725,"type":60},"/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-excel-step-1.avif",[57,3727],{"srcSet":3728,"type":64},"/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-excel-step-1.webp",[66,3730],{"alt":3731,"src":3732,"style":3733,"width":3734,"height":3735,"decoding":73,"fetchPriority":1050,"className":3736},"Calculate weighted portfolio return step 1, inputting portfolio weight and asset return","/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-excel-step-1.png","max-width:100%;width:500px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",513,192,[1052],[231,3738,3739],{"start":532},[46,3740,3741],{},"Multiply the weight and return of each asset to get the return impact on the portfolio",[53,3743,55,3744,55,3747,55,3750],{},[57,3745],{"srcSet":3746,"type":60},"/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-excel-step-2.avif",[57,3748],{"srcSet":3749,"type":64},"/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-excel-step-2.webp",[66,3751],{"alt":3752,"src":3753,"style":1047,"width":3754,"height":3755,"decoding":73,"fetchPriority":1050,"className":3756},"Calculate weighted portfolio return step 2, multiplying portfolio weight and asset return","/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-excel-step-2.png",689,232,[1052],[231,3758,3759],{"start":529},[46,3760,3761],{},"Sum the values to get weighted average portfolio return",[53,3763,55,3764,55,3767,55,3770],{},[57,3765],{"srcSet":3766,"type":60},"/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-excel-step-3.avif",[57,3768],{"srcSet":3769,"type":64},"/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-excel-step-3.webp",[66,3771],{"alt":3772,"src":3773,"style":3774,"width":3775,"height":3776,"decoding":73,"fetchPriority":1050,"className":3777},"Calculate weighted portfolio return step 3, summing up all the values","/blog_images/how-to-calculate-portfolio-return/weighted-average-portfolio-return-excel-step-3.png","max-width:100%;width:800px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",890,219,[1052],[415,3779,3781],{"id":3780},"time-weighted-return","Time-Weighted Return",[15,3783,3784,3788],{},[519,3785,3787],{"href":3786},"/blog/time-weighted-return/","Time-weighted return (TWR)","  is a measure of investment performance that calculates the return for each time period separately and then combines these returns with equal weight. This means to calculate TWR, you will need the cash flow of the portfolio and its values at each time frame.",[3283,3790,3792],{"id":3791},"time-weighted-return-formula","Time-Weighted Return Formula",[53,3794,55,3795,55,3798,55,3801],{},[57,3796],{"srcSet":3797,"type":60},"/blog_images/time-weighted-return/time-weighted-return-formula.avif",[57,3799],{"srcSet":3800,"type":64},"/blog_images/time-weighted-return/time-weighted-return-formula.webp",[66,3802],{"alt":3803,"src":3804,"style":3805,"width":3806,"height":3807,"decoding":73,"fetchPriority":1050},"Time-weighted return formula","/blog_images/time-weighted-return/time-weighted-return-formula.png","max-width:100%;width:728px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",728,208,[3283,3809,3811],{"id":3810},"how-to-calculate-time-weighted-return-in-excel","How to calculate Time-Weighted Return in Excel?",[231,3813,3814,3817,3820],{},[46,3815,3816],{},"Input the portfolio value at the start of each period and record any cash flows (inflows or outflows) during that period.",[46,3818,3819],{},"Calculate the return for each period using the formula mentioned earlier.",[46,3821,3822],{},"Take the one plus return and multiply all the return from all periods to obtain the TWR.",[53,3824,55,3825,55,3828,55,3831],{},[57,3826],{"srcSet":3827,"type":60},"/blog_images/time-weighted-return/time-weighted-return-in-excel.avif",[57,3829],{"srcSet":3830,"type":64},"/blog_images/time-weighted-return/time-weighted-return-in-excel.webp",[66,3832],{"alt":3833,"src":3834,"style":3835,"width":3836,"height":3837,"decoding":73,"fetchPriority":1050},"Calculate Time-weighted return in Excel","/blog_images/time-weighted-return/time-weighted-return-in-excel.png","max-width:100%;width:728px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto; margin-top: 15px;",852,263,[15,3839,3840,3841,353],{},"Alternatively, you can try calculating time-weighted return using our ",[519,3842,3844],{"href":3843},"/tools/time-weighted-return-calculator/","free TWR calculator",[415,3846,3848],{"id":3847},"money-weighted-return","Money-Weighted Return",[15,3850,3851,3855,3856,353],{},[519,3852,3854],{"href":3853},"/blog/money-weighted-return/","Money-weighted return (MWR)",", also known as internal rate of return (IRR) and Dollar-Weighted Return, considers the timing and amount of cash flows in and out of the portfolio. Mathematically, Money-Weighted Return is calculated by solving for a rate of return that equates the current portfolio value to the net present value. The calculation is quite complex to do with a simple calculator, so usually it is calculated using a financial calculator or program such as Excel and Google Spreadsheet. Alternatively, you can try our ",[519,3857,3859],{"href":3858},"/tools/money-weighted-return-calculator/","free MWR calculator",[3283,3861,3863],{"id":3862},"money-weighted-return-formula","Money-Weighted Return Formula",[53,3865,55,3866,55,3869,55,3872],{},[57,3867],{"srcSet":3868,"type":60},"/blog_images/money-weighted-return/money-weighted-return-formula.avif",[57,3870],{"srcSet":3871,"type":64},"/blog_images/money-weighted-return/money-weighted-return-formula.webp",[66,3873],{"alt":3874,"src":3875,"style":2753,"width":1048,"height":3876,"decoding":73,"fetchPriority":1050},"Money-weighted return formula","/blog_images/money-weighted-return/money-weighted-return-formula.png",177,[3283,3878,3880],{"id":3879},"how-to-calculate-money-weighted-return-in-excel","How to calculate Money-Weighted Return in Excel?",[15,3882,3883],{},"To calculate MWR in Excel, you can use the XIRR function to solve the equation above. Simply input the initial portfolio value and all related cash flows with date and size as shown below, and the function will return the MWR for you.",[53,3885,55,3886,55,3889,55,3892],{},[57,3887],{"srcSet":3888,"type":60},"/blog_images/money-weighted-return/money-weighted-return-calculation.avif",[57,3890],{"srcSet":3891,"type":64},"/blog_images/money-weighted-return/money-weighted-return-calculation.webp",[66,3893],{"alt":3894,"src":3895,"style":3896,"width":1048,"height":3897,"decoding":73,"fetchPriority":1050},"Money-weighted return calculation","/blog_images/money-weighted-return/money-weighted-return-calculation.png","max-width:100%;width:700px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto; margin-bottom: 10px;",242,[32,3899,3901],{"id":3900},"measure-your-portfolio-performance-with-portseido","Measure your portfolio performance with Portseido",[15,3903,3904,3905,3908,3909,3911],{},"We know ",[519,3906,3907],{"href":1545},"measuring portfolio performance"," correctly can be lots of work, so we make it easy for you. ",[519,3910,522],{"href":521}," helps you measure your portfolio performance easily and effortlessly. We provide all type of return calculation from simple return, time-weighted return, and money-weighted return. We offer a range of user-friendly performance report features, including monthly report, dividend report, all with easy-to-understand visualizations to help you assess your true financial performance.",{"title":528,"searchDepth":529,"depth":529,"links":3913},[3914,3915,3933],{"id":3606,"depth":532,"text":3607},{"id":3618,"depth":532,"text":3585,"children":3916},[3917,3921,3925,3929],{"id":3624,"depth":529,"text":3625,"children":3918},[3919,3920],{"id":3631,"depth":2970,"text":3632},{"id":3652,"depth":2970,"text":3653},{"id":3683,"depth":529,"text":3684,"children":3922},[3923,3924],{"id":3695,"depth":2970,"text":3696},{"id":3714,"depth":2970,"text":3715},{"id":3780,"depth":529,"text":3781,"children":3926},[3927,3928],{"id":3791,"depth":2970,"text":3792},{"id":3810,"depth":2970,"text":3811},{"id":3847,"depth":529,"text":3848,"children":3930},[3931,3932],{"id":3862,"depth":2970,"text":3863},{"id":3879,"depth":2970,"text":3880},{"id":3900,"depth":532,"text":3901},"Dive into your portfolio return. We break down what portfolio return is and how to calculate is yourself by using multiple methods through the formula & Excel.",{},"/blog/how-to-calculate-portfolio-return","2024-02-02",{"title":3585,"description":3934},"blog/how-to-calculate-portfolio-return","DKSR6dITwP1dlTX7pHPPileKkf9hPPro3e88UAOfcC4",{"id":3942,"title":3943,"body":3944,"description":4090,"extension":545,"meta":4091,"navigation":548,"path":4092,"publishedAt":4093,"seo":4094,"seo_description":820,"seo_title":820,"social_image":4078,"stem":4095,"updatedAt":822,"__hash__":4096},"blog/blog/investing-and-the-game-of-chance.md","Investing and the game of chance",{"type":7,"value":3945,"toc":4085},[3946,3949,3954,3958,3961,3969,3972,3975,3981,3984,3986,3992,3995,3998,4001,4009,4012,4016,4019,4022,4025,4031,4037,4040,4045,4048,4052,4055,4058,4061,4067,4080],[15,3947,3948],{},"Investing and trading are games of chance, unlike chess and other deterministic games, which means there is a random element involved in the game. This can be frustrating, but it is still the reality. Although you make the right decisions, it can still turn out wrong in the end by chance. So what should a player do in this case then? In this article, we break up each component of this game to try to understand it more and see how we can factor in these strategies in investing.",[15,3950,3951,3952,353],{},"If you find this article helpful, don’t forget to share it with your fellow investors. If you also think that tracking your portfolio performance is useful and want to track it regularly and effortlessly, visit us at ",[519,3953,522],{"href":521},[32,3955,3957],{"id":3956},"flipping-a-coin","Flipping a coin",[15,3959,3960],{},"We demonstrate this with the simplest game, flipping a coin. In this game, given a coin with a known chance of landing heads or tails, the player will have to decide whether to bet on it or not. If the coin lands heads, the player will win some money. On the other hand, the player will lose some should the coin land tails. In this game, the only work that the player needs to do is assess whether the given probability and payout are on the player’s side or not. For example,",[1637,3962,3967],{"className":3963,"code":3965,"language":3966},[3964],"language-text","Coin with 50% chance to land heads and 50% chance to land tails\n* Land Heads => Player wins $ 10\n* Land Tails => Player loses $ 10\n","text",[1643,3968,3965],{"__ignoreMap":528},[15,3970,3971],{},"In this case, it’s a fair game which means, on average, players gain nothing from betting on it. Of course, if you toss the coin one time, you will either win $ 10 or lose $ 10. However, if you toss it enough times, the profit will likely head toward $ 0 on average.",[15,3973,3974],{},"Another example is",[1637,3976,3979],{"className":3977,"code":3978,"language":3966},[3964],"Coin with 51% chance to land heads and 49% chance to land tails\n* Land Heads => Player wins $ 10\n* Land Tails => Player loses $ 10\n",[1643,3980,3978],{"__ignoreMap":528},[15,3982,3983],{},"In this case, it’s an unfair game which benefits the player. The chance that you will be at profit after 100 tosses has now jumped from 0.46 in the last case to 0.54.",[15,3985,3974],{},[1637,3987,3990],{"className":3988,"code":3989,"language":3966},[3964],"Coin with 50% chance to land heads and 50% chance to land tails\n* Land Heads => Player wins $ 10\n* Land Tails => Player loses $ 15\n",[1643,3991,3989],{"__ignoreMap":528},[15,3993,3994],{},"In this case too, it’s an unfair game but now it worsens the odds for the player to be profitable in the long term. The chance that you will be at profit after 100 tosses has now reduced to 0.02.",[15,3996,3997],{},"As you can see, there are only 2 components in this game which are Outcomes (amount of money you will receive and pay) and Probability of each outcome. The way to play this game is quite straightforward. We just play the game every time the expected outcome is greater than 0.",[15,3999,4000],{},"The characteristics of such game are:",[43,4002,4003,4006],{},[46,4004,4005],{},"High chance of winning, low chance of losing",[46,4007,4008],{},"High prize when we win, low penalty when we lose",[15,4010,4011],{},"Many times we need just one of the statements to be true. For example, the coin (investment) might have a low chance of winning, but, when we win, we win big, and, when we lose, we lose by not so much. If the gap is big enough, it can offset the fact that it has a low chance of winning.",[32,4013,4015],{"id":4014},"tossing-multiple-coins-at-a-time-with-limited-funds","Tossing multiple coins at a time with limited funds",[15,4017,4018],{},"In this game, we still stick with tossing coins. However, multiple coins will be tossed at a time, and for each coin that has been tossed, you have to pay some money upfront. Although it’s almost the same game as before, how to play it is totally different now. With limited funds and a lot of opportunities, you cannot play every coin with a positive expected return available. Therefore, we have to consider all opportunities and allocate our capital to maximize returns.",[15,4020,4021],{},"Although our goal is to maximize returns, there is still a component that needs to be mentioned which is “Risk”. In an investing world, there are many different definitions of risk. In this article, we are not going to dig into each of them. However, one that is worth considering for all types of investors and traders is Risk of Ruin.",[15,4023,4024],{},"Risk of ruin is the risk that the investment will be lost to the point that there is no chance of recovering. In other words, it is game over in investing. For example, given two coins below",[1637,4026,4029],{"className":4027,"code":4028,"language":3966},[3964],"COIN 1\nCoin with 50% chance to land heads and 50% chance to land tails\n* Land Heads => Player receives 20% of the capital\n* Land Tails => Player loses 10% of the capital\n",[1643,4030,4028],{"__ignoreMap":528},[1637,4032,4035],{"className":4033,"code":4034,"language":3966},[3964],"COIN 2\nCoin with 50% chance to land heads and 50% chance to land tails\n* Land Heads => Player receives 200% of the capital\n* Land Tails => Player loses 100% of the capital\n",[1643,4036,4034],{"__ignoreMap":528},[15,4038,4039],{},"We can easily calculate expected returns for both coins. COIN 1’s expected return is 5% while COIN 2’s 50%. If we looked at the returns alone, COIN 2 seems like a no brainer. Some might pour all the capital available into COIN 2. However, if we consider that there is a 50% chance that we will ruin all the capital, we might not pour all of our money there. Imagine yourself building all your fortunes over thousands of coin tosses, and, with a flip of a coin, everything vanishes. The risk of such a game over is called risk of ruin.",[66,4041],{"alt":4042,"src":4043,"style":611,"width":612,"height":4044,"loading":651,"decoding":73},"Aim for head","/blog_images/investing-and-the-game-of-chance/aim-for-head.gif",557,[15,4046,4047],{},"To summarize, in this game, in addition to considering each investment (coin) individually like the last game, we have to compare them in both risk and reward aspects in order to allocate our capital efficiently. While we aim to maximize returns, we also have to minimize the chance of being ruined too.",[32,4049,4051],{"id":4050},"investing-unknown-chance-unknown-outcome-unknown-payout-with-limited-funds","Investing (Unknown chance, unknown outcome, unknown payout with limited funds)",[15,4053,4054],{},"We finally made it to investing. In investing and trading, all the components in the former two games still exist. However, in investing, no one tells us the chances of winning or losing and how much you gain or lose. Furthermore, unlike tossing coins whose number of outcomes is finite which is either heads or tails (discrete), in investing, the number of outcomes is unlimited (continuous). Therefore, our job as investors or traders is to estimate such outcomes, in order to make informed decisions based on those estimates. The methods we adopt might be different, but our goal is still the same.",[15,4056,4057],{},"In conclusion, our job as an investor / trader is to study each investment individually, try to estimate the outcomes and allocate our capital based on such estimations to achieve optimal risk-adjusted return. Many can go wrong in the process- we might miscalculate the risks or the returns or make the wrong decisions on allocation. Furthermore, even if we correctly calculate all that and make the right decisions, things can still go against us anyway by chance.",[15,4059,4060],{},"Therefore, what we can do is to learn from it and improve our process to minimize such a chance.",[15,4062,4063,4064,4066],{},"If investing is a game, consider ",[519,4065,522],{"href":521}," a scoreboard.",[53,4068,55,4069,55,4072,55,4075],{},[57,4070],{"srcSet":4071,"type":60},"/blog_images/investing-and-the-game-of-chance/portseido-dashboard-dark-theme.avif",[57,4073],{"srcSet":4074,"type":64},"/blog_images/investing-and-the-game-of-chance/portseido-dashboard-dark-theme.webp",[66,4076],{"alt":4077,"src":4078,"style":611,"width":612,"height":4079,"loading":651,"decoding":73},"Portseido portfolio tracker dark theme","/blog_images/investing-and-the-game-of-chance/portseido-dashboard-dark-theme.png",642,[15,4081,799,4082,4084],{},[519,4083,522],{"href":521},", we aim to help investors track their investments with less effort and improve their process by learning from their own past decisions. Furthermore, we offer a bunch of analytics on top of that with risk measurements, benchmarking, trade analysis and more.",{"title":528,"searchDepth":529,"depth":529,"links":4086},[4087,4088,4089],{"id":3956,"depth":532,"text":3957},{"id":4014,"depth":532,"text":4015},{"id":4050,"depth":532,"text":4051},"Although you make the right decisions in investing, it can still turn out wrong in the end by chance. So what should an investor do in this case then?",{},"/blog/investing-and-the-game-of-chance","2022-07-10",{"title":3943,"description":4090},"blog/investing-and-the-game-of-chance","XmDNSy3cWYsdn0jcOy1WPZpGUtTMR5xI5QrqaqbwuBU",{"id":4098,"title":4099,"body":4100,"description":4249,"extension":545,"meta":4250,"navigation":548,"path":4251,"publishedAt":4252,"seo":4253,"seo_description":820,"seo_title":820,"social_image":4113,"stem":4254,"updatedAt":4252,"__hash__":4255},"blog/blog/money-weighted-return.md","What is Money-Weighted Return (MWR)?",{"type":7,"value":4101,"toc":4240},[4102,4115,4118,4121,4128,4132,4135,4143,4146,4149,4155,4159,4162,4170,4173,4181,4185,4188,4192,4200,4205,4210,4214,4217,4220,4223,4226,4228,4234],[53,4103,55,4104,55,4107,55,4110],{},[57,4105],{"srcSet":4106,"type":60},"/blog_images/money-weighted-return/money-weighted-return-cover.avif",[57,4108],{"srcSet":4109,"type":64},"/blog_images/money-weighted-return/money-weighted-return-cover.webp",[66,4111],{"alt":4112,"src":4113,"style":3081,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":4114},"Money-Weighted Return (MWR) cover image","/blog_images/money-weighted-return/money-weighted-return-cover.png",[1052],[15,4116,4117],{},"Measuring the performance of investments is a fundamental task for all investors and portfolio managers. One of the key metrics used for this purpose is the Money-Weighted Return (MWR). This article will delve into what MWR is, how it's calculated, its relationship with Internal Rate of Return (IRR), and how it differs from other methods.",[32,4119,4099],{"id":4120},"what-is-money-weighted-return-mwr",[15,4122,4123,4124,4127],{},"Money-Weighted Return or Dollar-Weighted Return, often referred to as MWR, is a performance measurement that considers all cash flows entering and exiting a portfolio. Unlike other methods of calculating returns, such as simple return or ",[519,4125,4126],{"href":3786},"time-weighted return",", MWR provides a comprehensive assessment of portfolio performance by taking into account both the size and timing of all cash flows within the portfolio, hence reflecting the true performance of your portfolio.",[32,4129,4131],{"id":4130},"how-do-you-calculate-money-weighted-returns","How do you calculate Money-Weighted Returns?",[15,4133,4134],{},"Mathematically, Money-Weighted Return is calculated by solving for a rate of return that equates the current portfolio value to the net present value or discounted value of all future cash flows. The equation reads",[53,4136,55,4137,55,4139,55,4141],{},[57,4138],{"srcSet":3868,"type":60},[57,4140],{"srcSet":3871,"type":64},[66,4142],{"alt":3874,"src":3875,"style":2753,"width":1048,"height":3876,"decoding":73,"fetchPriority":1050},[15,4144,4145],{},"Here, the cash flows include not only contributions and withdrawals but also dividends and the terminal portfolio value. Note that CF_k reflects the cashflow received, so if we deposit more cash, then it will be a negative number, while if you withdraw or receive a dividend, then it will be a positive number. We can see that MWR incorporates the size and timing of all relevant cash flows, resulting in a performance measure that truly reflects the portfolio's performance.",[15,4147,4148],{},"The formula describing the cash flows in the portfolio above involves solving for the Internal Rate of Return (IRR) variable shown there. The solution of such an equation is precisely the Money-Weighted Return.",[15,4150,4151,4152,353],{},"Alternatively, you can try calculating money-weighted return using our ",[519,4153,4154],{"href":3858},"free money-weighted return calculator",[32,4156,4158],{"id":4157},"how-do-you-calculate-money-weighted-returns-in-excel-or-google-sheets","How do you calculate Money-Weighted Returns in Excel or Google Sheets?",[15,4160,4161],{},"Solving for the IRR that makes the equation above equal is difficult to do by hand or even with a simple calculator. Fortunately, you can do this quite easily in Excel or Google Sheets. In either Excel or Google Sheets, you can use the XIRR function to solve the equation above and calculate the Money-Weighted Return. Simply input the initial portfolio value and all related cash flows with date and size as shown below, and the function will determine the rate of return that equates to the equation mentioned earlier. The output is precisely the money-weighted return you want.",[53,4163,55,4164,55,4166,55,4168],{},[57,4165],{"srcSet":3888,"type":60},[57,4167],{"srcSet":3891,"type":64},[66,4169],{"alt":3894,"src":3895,"style":3896,"width":1048,"height":3897,"decoding":73,"fetchPriority":1050},[15,4171,4172],{},"A couple of things to note when inputting the data for such calculation",[43,4174,4175,4178],{},[46,4176,4177],{},"We put in negative value for the initial portfolio and all further contributions/deposits. Essentially, anything that considered our invested capital.",[46,4179,4180],{},"We put in positive value for all dividends, cash withdrawal, sale proceeds, and the final portfolio value.",[32,4182,4184],{"id":4183},"is-a-money-weighted-return-the-same-as-an-irr","Is a Money-Weighted Return the same as an IRR?",[15,4186,4187],{},"Yes, Money-Weighted Return is the same as the Internal Rate of Return (IRR). It's also referred to as Dollar-Weighted Return because it places more weight on the performance during periods when the dollar amount is high, reflecting the influence of cash flows on returns.",[32,4189,4191],{"id":4190},"what-is-the-difference-between-time-weighted-and-money-weighted-returns","What is the difference between Time-Weighted and Money-Weighted Returns?",[15,4193,4194,4195,4199],{},"There are significant ",[519,4196,4198],{"href":4197},"/blog/should-you-use-simple-return-time-weighted-or-money-weighted/","differences between Time-Weighted and Money-Weighted Returns",":",[15,4201,4202,4204],{},[27,4203,3781],{},": This method focuses on computing the return at each time frame and then takes the average of these returns. It is particularly useful when you have limited control over your cash flows and want to evaluate your performance over specific time intervals.",[15,4206,4207,4209],{},[27,4208,3848],{},": In contrast, Money-Weighted Return considers the timing and size of all cash flows. It provides a more accurate reflection of portfolio performance but may not necessarily represent the skill of a portfolio manager if they lack control over cash flows coming in and out.",[32,4211,4213],{"id":4212},"is-money-weighted-return-better","Is Money-Weighted Return Better?",[15,4215,4216],{},"The short answer is it depends. The suitability of Money-Weighted Return versus Time-Weighted Return depends on what you aim to capture:",[15,4218,4219],{},"Money-Weighted Return is excellent for reflecting the genuine portfolio performance, especially when you want to account for the impact of cash flows. However, it may not accurately gauge the skill of a portfolio manager if they have limited control over cash flows.",[15,4221,4222],{},"Time-Weighted Return is better at measuring performance over specific time intervals, making it useful for assessing the skills and performance of a manager, especially when cash flow control is limited.",[15,4224,4225],{},"In conclusion, Money-Weighted Return is a valuable tool for assessing investment performance, particularly when it's essential to account for the influence of cash flows. However, the choice between Money-Weighted and Time-Weighted Returns depends on the specific context and what you want to evaluate in your investment strategy.",[32,4227,3901],{"id":3900},[15,4229,3904,4230,3908,4232,3911],{},[519,4231,3907],{"href":1545},[519,4233,522],{"href":521},[15,4235,4236,4237,4239],{},"But that's not all – Portseido isn't limited to just performance measurment. We provide a comprehensive ",[519,4238,1541],{"href":1540}," that covers global stocks, ETFs, mutual funds, and cryptocurrencies. Supporting multiple currencies and the management of multiple portfolios, our platform generates powerful performance reports, in-depth analytics, and beautiful portfolio visualization, giving you a complete overview of your investments. With Portseido, tracking your portfolio performance and managing your portfolio has never been simpler.",{"title":528,"searchDepth":529,"depth":529,"links":4241},[4242,4243,4244,4245,4246,4247,4248],{"id":4120,"depth":532,"text":4099},{"id":4130,"depth":532,"text":4131},{"id":4157,"depth":532,"text":4158},{"id":4183,"depth":532,"text":4184},{"id":4190,"depth":532,"text":4191},{"id":4212,"depth":532,"text":4213},{"id":3900,"depth":532,"text":3901},"Money-Weighted Return, often referred to as MWR, is a performance measurement that considers all cash flows entering and exiting a portfolio.",{},"/blog/money-weighted-return","2023-10-23",{"title":4099,"description":4249},"blog/money-weighted-return","tQsLBVRm_1YLFb9G7YA7QG5jDRenVTHk_Gz7fIDX_EU",{"id":4257,"title":4258,"body":4259,"description":4477,"extension":545,"meta":4478,"navigation":548,"path":4479,"publishedAt":4480,"seo":4481,"seo_description":820,"seo_title":820,"social_image":4482,"stem":4483,"updatedAt":4480,"__hash__":4484},"blog/blog/nancy-pelosi-stock-trading.md","Nancy Pelosi Stock Portfolio Performance 2024",{"type":7,"value":4260,"toc":4468},[4261,4265,4268,4280,4284,4287,4291,4294,4306,4310,4313,4325,4337,4355,4362,4366,4369,4381,4387,4399,4405,4417,4421,4424,4436,4442,4456,4460,4466],[32,4262,4264],{"id":4263},"nancy-pelosi-a-political-powerhouse","Nancy Pelosi: A Political Powerhouse",[15,4266,4267],{},"Nancy Patricia Pelosi, born March 26, 1940, is an American icon as she has played significant roles in the United States House of Representatives. A political force to be reckoned with, she's the first woman to serve as U.S. House Speaker and the first woman to lead a major political party. Her career is one of historic milestones, but it turns out, her investment skills are just as sharp as her political instincts.",[53,4269,55,4270,55,4273,55,4276],{},[57,4271],{"srcSet":4272,"type":60},"/blog_images/nancy-pelosi-stock-trading/0-pelosi.avif",[57,4274],{"srcSet":4275,"type":64},"/blog_images/nancy-pelosi-stock-trading/0-pelosi.webp",[66,4277],{"alt":4278,"src":4279,"style":611,"width":612,"height":613,"decoding":73},"Nancy Pelosi stock portfolio","/blog_images/nancy-pelosi-stock-trading/0-pelosi.png",[32,4281,4283],{"id":4282},"outside-the-office","Outside the Office",[15,4285,4286],{},"When she's not crafting policy in Washington, Pelosi demonstrates a keen eye for profitable investments. There's a long track record of her being involved in various investments and financial endeavors throughout her career.",[32,4288,4290],{"id":4289},"pelosis-portfolio-performance","Pelosi's Portfolio Performance",[15,4292,4293],{},"Pelosi's investment prowess is as sharp as her political wit. In January 2024, the NY Post revealed her portfolio's stunning 65% gain, far outpacing the S&P 500's 24% return. Wall Street titans, take note and think again if you want to compete with her performances!",[53,4295,55,4296,55,4299,55,4302],{},[57,4297],{"srcSet":4298,"type":60},"/blog_images/nancy-pelosi-stock-trading/4-benchmark.avif",[57,4300],{"srcSet":4301,"type":64},"/blog_images/nancy-pelosi-stock-trading/4-benchmark.webp",[66,4303],{"alt":4304,"src":4305,"style":611,"width":612,"height":613,"decoding":73},"Benchmark from Nancy Pelosi portfolio","/blog_images/nancy-pelosi-stock-trading/4-benchmark.png",[32,4307,4309],{"id":4308},"pelosis-portfolio-deep-dive-powered-by-portseido","Pelosi's Portfolio Deep Dive (Powered by Portseido)",[15,4311,4312],{},"So, how does she do it? Let's break down Pelosi's portfolio using your very own tool, Portseido. Here's the inside scoop:",[15,4314,4315,4318,4319,4324],{},[27,4316,4317],{},"The Source:"," We get our data straight from ",[519,4320,4323],{"href":4321,"rel":4322},"https://disclosures-clerk.house.gov/public_disc/ptr-pdfs/2023/20023192.pdf",[596],"official filings"," by the United States House of Representatives. Members of Congress must disclose their trades. We took Pelosi's 2021 data to give you a hypothetical Portseido view.",[53,4326,55,4327,55,4330,55,4333],{},[57,4328],{"srcSet":4329,"type":60},"/blog_images/nancy-pelosi-stock-trading/1-gov-report.avif",[57,4331],{"srcSet":4332,"type":64},"/blog_images/nancy-pelosi-stock-trading/1-gov-report.webp",[66,4334],{"alt":4335,"src":4336,"style":611,"width":612,"height":613,"decoding":73},"official filings by the United States House of Representatives","/blog_images/blog_images/nancy-pelosi-stock-trading/1-gov-report.png",[15,4338,4339,4342,4343,4346,4347,4350,4351,4354],{},[27,4340,4341],{},"The Limitations:"," We only see ",[27,4344,4345],{},"ticker symbols",", ",[27,4348,4349],{},"transaction dates",", and a ",[27,4352,4353],{},"transaction size range",". For our analysis, we're taking on the conservative side by using the minimum possible transaction amounts. This way, we showcase the least she could have made.",[15,4356,4357,4358,4361],{},"For simplicity - ",[853,4359,4360],{},"we use the asset price on that date"," instead of the call or put option that she used.",[32,4363,4365],{"id":4364},"the-results-jaw-dropping","The Results? Jaw-Dropping.",[15,4367,4368],{},"Performance: Pelosi has been smoking hot recently. Using Portseido's performance tab, we see her Feb 24 total return for the last year (50.89%) absolutely steamrolls major indices like the S&P500 (26.83%), Nasdaq (38%), and NYSE (13%).",[53,4370,55,4371,55,4374,55,4377],{},[57,4372],{"srcSet":4373,"type":60},"/blog_images/nancy-pelosi-stock-trading/3-overall-performance.avif",[57,4375],{"srcSet":4376,"type":64},"/blog_images/nancy-pelosi-stock-trading/3-overall-performance.webp",[66,4378],{"alt":4379,"src":4380,"style":611,"width":612,"height":613,"decoding":73},"overall stock performance from Nancy Pelosi portfolio","/blog_images/nancy-pelosi-stock-trading/3-overall-performance.png",[15,4382,4383,4386],{},[27,4384,4385],{},"Allocation:"," Pelosi is all about tech. Roughly 90% of her portfolio is allocated to those stocks – a strategy that's clearly paid off given how the sector has outperformed since late 2023.",[53,4388,55,4389,55,4392,55,4395],{},[57,4390],{"srcSet":4391,"type":60},"/blog_images/nancy-pelosi-stock-trading/5-allocation.avif",[57,4393],{"srcSet":4394,"type":64},"/blog_images/nancy-pelosi-stock-trading/5-allocation.webp",[66,4396],{"alt":4397,"src":4398,"style":611,"width":612,"height":613,"decoding":73},"Portfolio allocation from Nancy Pelosi portfolio","/blog_images/nancy-pelosi-stock-trading/5-allocation.png",[15,4400,4401,4404],{},[27,4402,4403],{},"Legendary Trades:"," Remember her now-famous purchase of Nvidia call options in November 2023? Even if she used regular stock prices instead of options, she still saw a 61% return in just half a year!",[53,4406,55,4407,55,4410,55,4413],{},[57,4408],{"srcSet":4409,"type":60},"/blog_images/nancy-pelosi-stock-trading/6-nvidia.avif",[57,4411],{"srcSet":4412,"type":64},"/blog_images/nancy-pelosi-stock-trading/6-nvidia.webp",[66,4414],{"alt":4415,"src":4416,"style":611,"width":612,"height":613,"decoding":73},"Portfolio allocation in Nvidia from Nancy Pelosi portfolio","/blog_images/nancy-pelosi-stock-trading/6-nvidia.png",[32,4418,4420],{"id":4419},"you-can-crush-the-market-too","You Can Crush the Market Too",[15,4422,4423],{},"Inspired by Pelosi's moves? Here's how to join in:",[53,4425,55,4426,55,4429,55,4432],{},[57,4427],{"srcSet":4428,"type":60},"/blog_images/nancy-pelosi-stock-trading/7-gain.avif",[57,4430],{"srcSet":4431,"type":64},"/blog_images/nancy-pelosi-stock-trading/7-gain.webp",[66,4433],{"alt":4434,"src":4435,"style":611,"width":612,"height":613,"decoding":73},"Portfolio gain from Nancy Pelosi portfolio","/blog_images/nancy-pelosi-stock-trading/7-gain.png",[15,4437,4438,4441],{},[27,4439,4440],{},"DIY Investing:"," Get started on your own investment journey and take charge.",[15,4443,4444,4447,4448,4455],{},[27,4445,4446],{},"Follow the Leader:"," Check out ETFs like ",[27,4449,4450],{},[519,4451,4454],{"href":4452,"rel":4453},"https://markets.ft.com/data/etfs/tearsheet/summary?s=NANC:BTQ:USD",[596],"NANC"," which debuted in Feb 2023 and tracks equities purchased by Democratic members of Congress.\nThe Key: Stay invested consistently. Time in the market tends to beat timing the market.",[32,4457,4459],{"id":4458},"level-up-with-portseido","Level Up with Portseido",[15,4461,4462,4463,4465],{},"Ready to make Pelosi-worthy moves? ",[519,4464,522],{"href":521}," is your secret weapon. Track your portfolio like a pro, for free",[15,4467,805],{},{"title":528,"searchDepth":529,"depth":529,"links":4469},[4470,4471,4472,4473,4474,4475,4476],{"id":4263,"depth":532,"text":4264},{"id":4282,"depth":532,"text":4283},{"id":4289,"depth":532,"text":4290},{"id":4308,"depth":532,"text":4309},{"id":4364,"depth":532,"text":4365},{"id":4419,"depth":532,"text":4420},{"id":4458,"depth":532,"text":4459},"Not just a political powerhouse – Pelosi is also a stock market guru. Let's see how her portfolio stacks up against the market.",{},"/blog/nancy-pelosi-stock-trading","2024-02-25",{"title":4258,"description":4477},"/blog_images/nancy-pelosi-stock-trading/2-banner-pelosi.png","blog/nancy-pelosi-stock-trading","krqBBV6cV_wp_ezUXssQsqKxt_Kzwsv_k5Si0c4p2is",{"id":4486,"title":4487,"body":4488,"description":4839,"extension":545,"meta":4840,"navigation":548,"path":4841,"publishedAt":4842,"seo":4843,"seo_description":820,"seo_title":820,"social_image":4501,"stem":4844,"updatedAt":4842,"__hash__":4845},"blog/blog/portfolio-performance-evaluation.md","Portfolio Performance Evaluation - Metrics to Use",{"type":7,"value":4489,"toc":4812},[4490,4503,4506,4510,4513,4517,4520,4524,4527,4531,4534,4538,4541,4556,4560,4567,4575,4579,4586,4594,4598,4602,4608,4623,4627,4630,4634,4637,4652,4656,4659,4674,4678,4683,4698,4702,4707,4715,4719,4722,4726,4729,4732,4737,4752,4756,4761,4775,4779,4782,4797,4801],[53,4491,55,4492,55,4495,55,4498],{},[57,4493],{"srcSet":4494,"type":60},"/blog_images/portfolio-performance-evaluation/portfolio-performance-evaluation-cover.avif",[57,4496],{"srcSet":4497,"type":64},"/blog_images/portfolio-performance-evaluation/portfolio-performance-evaluation-cover.webp",[66,4499],{"alt":4500,"src":4501,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":4502},"How to evaluate portfolio performance","/blog_images/portfolio-performance-evaluation/portfolio-performance-evaluation-cover.png",[1052],[15,4504,4505],{},"One of the most important things but mostly overlooked in investing is evaluating how well your investments are doing. It's like checking a map to make sure you're on the right path. In this article, we'll look at why evaluating portfolio performance matters, what it aims to achieve, and the key measures used to understand both risk and return.",[32,4507,4509],{"id":4508},"why-evaluate-portfolio-performance","Why Evaluate Portfolio Performance?",[15,4511,4512],{},"Checking how your portfolio is performing helps you see if your investments are meeting your goals. Whether you're new to investing or experienced, regularly assessing your portfolio's performance helps you make better decisions and improve your investment strategy.",[32,4514,4516],{"id":4515},"goals-of-portfolio-performance-evaluation","Goals of Portfolio Performance Evaluation",[15,4518,4519],{},"There are two main sides in investing regardless of the strategy in use. One is return. The other one is risk. Therefore, the main goal of portfolio evaluation is to see how well your investments are balancing risk and return. This involves looking at three main things: how much you're making (return), how risky your investments are (risk), and how well your returns justify the risks you're taking (risk-adjusted return). So, in this article, we are going through important metrics for each one of these aspects.",[32,4521,4523],{"id":4522},"return-metrics","Return Metrics",[15,4525,4526],{},"Return metrics show how much money your investments are making over time. Here are some common return metrics:",[415,4528,4530],{"id":4529},"total-return","Total Return",[15,4532,4533],{},"This is the total gain or loss from your investments including capital gains from price appreciation and the distributions or payments received from the investment such as interests and dividends over initial investment. In most of the cases, total return usually refers to Simple Return. However, there are multiple ways in calculating total return.",[3283,4535,4537],{"id":4536},"simple-return-sr","Simple Return (SR)",[15,4539,4540],{},"This is the basic percentage change in your investment's value. We can calculate simple returns by dividing the total gains by initial investment.",[53,4542,55,4543,55,4546,55,4549],{},[57,4544],{"srcSet":4545,"type":60},"/blog_images/portfolio-performance-evaluation/simple-return-formula.avif",[57,4547],{"srcSet":4548,"type":64},"/blog_images/portfolio-performance-evaluation/simple-return-formula.webp",[66,4550],{"alt":4551,"src":4552,"style":4553,"width":4554,"height":4555,"decoding":73,"fetchPriority":1050},"Simple return formula","/blog_images/portfolio-performance-evaluation/simple-return-formula.png","max-width:100%;width:508px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",508,84,[3283,4557,4559],{"id":4558},"time-weighted-return-twr","Time-Weighted Return (TWR)",[15,4561,4562,4563,4566],{},"On the other hand, simple return is not a good metric to measure investment return when there is multiple cash flow into or out of the portfolio. ",[519,4564,4565],{"href":3786},"Time-weighted returns"," solve the problem by accounting for the timing of your investments to calculate the average return.",[53,4568,55,4569,55,4571,55,4573],{},[57,4570],{"srcSet":3797,"type":60},[57,4572],{"srcSet":3800,"type":64},[66,4574],{"alt":3803,"src":3804,"style":3805,"width":3806,"height":3807,"decoding":73,"fetchPriority":1050},[3283,4576,4578],{"id":4577},"money-weighted-return-mwr","Money-Weighted Return (MWR)",[15,4580,4581,4582,4585],{},"Time-weighted return method also has its drawback mainly because it ignores the “size” and gives an equal weight to each sub-periods. This means your return figures can be misleading when there is a large cash inflow or outflow of the portfolio. ",[519,4583,4584],{"href":3853},"Money-weighted return"," takes a step further by taking into account both time and size. Money-Weighted Return is calculated by solving for a rate of return that equates the current portfolio value to the net present value or discounted value of all future cash flows.",[53,4587,55,4588,55,4590,55,4592],{},[57,4589],{"srcSet":3868,"type":60},[57,4591],{"srcSet":3871,"type":64},[66,4593],{"alt":3874,"src":3875,"style":2753,"width":1048,"height":3876,"decoding":73,"fetchPriority":1050},[415,4595,4597],{"id":4596},"excess-return","Excess Return",[3283,4599,4601],{"id":4600},"alpha-α","Alpha (α)",[15,4603,4604,4607],{},[519,4605,4601],{"href":4606},"/blog/what-is-alpha/"," is a measure of the excess return of an investment relative to the expected return of a portfolio as determined by the capital asset pricing model (CAPM).",[53,4609,55,4610,55,4613,55,4616],{},[57,4611],{"srcSet":4612,"type":60},"/blog_images/portfolio-performance-evaluation/alpha-formula.avif",[57,4614],{"srcSet":4615,"type":64},"/blog_images/portfolio-performance-evaluation/alpha-formula.webp",[66,4617],{"alt":4618,"src":4619,"style":4620,"width":4621,"height":4622,"decoding":73,"fetchPriority":1050},"Alpha formula","/blog_images/portfolio-performance-evaluation/alpha-formula.png","max-width:100%;width:424px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",424,193,[32,4624,4626],{"id":4625},"risk-metrics","Risk Metrics",[15,4628,4629],{},"Risk metrics help you understand how risky your investments are. Here are some key risk metrics:",[415,4631,4633],{"id":4632},"standard-deviation-of-returns","Standard Deviation of Returns",[15,4635,4636],{},"This shows how much your investment returns vary over time, indicating volatility. This approach quantifies the risk by measuring how volatile the return of the investment is. Its rationale is that if two investments have the same average return, the one with more certainty on the return is a less risky one. For example, if stock A has an average return of 10% with 9% return in period 1, 10% in period 2 and 11% period 3 and stock B has the same 10% average return but with 0% return in period 1, 10% in period 2 and 20% in period 3, stock B is riskier than stock A.",[53,4638,55,4639,55,4642,55,4645],{},[57,4640],{"srcSet":4641,"type":60},"/blog_images/portfolio-performance-evaluation/return-standard-deviation-formula.avif",[57,4643],{"srcSet":4644,"type":64},"/blog_images/portfolio-performance-evaluation/return-standard-deviation-formula.webp",[66,4646],{"alt":4647,"src":4648,"style":4649,"width":4650,"height":4651,"decoding":73,"fetchPriority":1050},"Return standard deviation formula","/blog_images/portfolio-performance-evaluation/return-standard-deviation-formula.png","max-width:100%;width:475px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",475,247,[415,4653,4655],{"id":4654},"downside-risk-deviation","Downside Risk Deviation",[15,4657,4658],{},"One of the downsides of standard deviation of return is that it penalizes all the positive returns too. This means, even if the portfolio has positive returns in all the periods, they all get penalized by the metrics too. Downside Risk Deviation solves this problem by focusing only on returns that fall below the minimum threshold return.",[53,4660,55,4661,55,4664,55,4667],{},[57,4662],{"srcSet":4663,"type":60},"/blog_images/portfolio-performance-evaluation/downside-risk-deviation-formula.avif",[57,4665],{"srcSet":4666,"type":64},"/blog_images/portfolio-performance-evaluation/downside-risk-deviation-formula.webp",[66,4668],{"alt":4669,"src":4670,"style":4671,"width":4672,"height":4673,"decoding":73,"fetchPriority":1050},"Downside risk deviation formula","/blog_images/portfolio-performance-evaluation/downside-risk-deviation-formula.png","max-width:100%;width:602px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",602,251,[415,4675,4677],{"id":4676},"beta-β","Beta (β)",[15,4679,4680,4682],{},[519,4681,4677],{"href":3131}," is one of the risk measurements for a stock or portfolio by measuring the volatility of the asset or portfolio compared to the market. This approach quantifies how much the investment return will be given the benchmark return. For example, if Beta is equal to 2, if the benchmark is up x% in a period, it on average will go up 2 times as much.",[53,4684,55,4685,55,4688,55,4691],{},[57,4686],{"srcSet":4687,"type":60},"/blog_images/what-is-beta/beta-formula.avif",[57,4689],{"srcSet":4690,"type":64},"/blog_images/what-is-beta/beta-formula.webp",[66,4692],{"alt":4693,"src":4694,"style":4695,"width":4696,"height":4697,"loading":651,"decoding":73},"Beta formula","/blog_images/what-is-beta/beta-formula.png","max-width:100%; width:400px; height:auto;aspect-ratio:'attr(width) / attr(height)'",400,94,[415,4699,4701],{"id":4700},"maximum-drawdown","Maximum Drawdown",[15,4703,4704,4706],{},[519,4705,4701],{"href":3381}," is the biggest decline of investment value from the peak to the trough value which is typically measured in percentage value. It is used to infer the downside risks of an investment. Many investors consider risk as the permanent loss of capital, and maximum drawdown is one metric that has the nearest definition to that.",[53,4708,55,4709,55,4711,55,4713],{},[57,4710],{"srcSet":1604,"type":60},[57,4712],{"srcSet":1607,"type":64},[66,4714],{"alt":1599,"src":1610,"style":1611,"width":1612,"height":1613,"decoding":73,"fetchPriority":1050},[415,4716,4718],{"id":4717},"challenges-with-risk-measurements","Challenges with Risk Measurements",[15,4720,4721],{},"While risk metrics are useful, they don't always tell the whole story. Some of these metrics quantify an underlying investment's volatility relative to its benchmark, which might not fully capture its risk profile. All of these are also lagging metrics which means they represent the historical performance, but they might not indicate the real current level of risks. For example, a portfolio might start with no leverage at all making these risk metrics to be low. However, by using more leverage now, it is clearly more risky, but these metrics are not yet capturing that.",[32,4723,4725],{"id":4724},"risk-adjusted-return","Risk-Adjusted Return",[15,4727,4728],{},"This attempts to capture both risks and returns by combining them in the metrics. The concepts of the following metrics are quite similar in that they try to capture how much return the portfolio generates per one unit of risk. However, the returns and risks used may differ.",[415,4730,1263],{"id":4731},"sharpe-ratio",[15,4733,4734,4736],{},[519,4735,3392],{"href":1262}," measures how much extra return you're getting per unit of risk by using standard deviation of returns as risk and return over risk-free rate as extra return from taking more risk over the risk-free asset.",[53,4738,55,4739,55,4742,55,4745],{},[57,4740],{"srcSet":4741,"type":60},"/blog_images/portfolio-performance-evaluation/sharpe-ratio-formula.avif",[57,4743],{"srcSet":4744,"type":64},"/blog_images/portfolio-performance-evaluation/sharpe-ratio-formula.webp",[66,4746],{"alt":4747,"src":4748,"style":4749,"width":4750,"height":4751,"decoding":73,"fetchPriority":1050},"Sharpe ratio formula","/blog_images/portfolio-performance-evaluation/sharpe-ratio-formula.png","max-width:100%;width:426px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",426,210,[415,4753,4755],{"id":4754},"treynor-ratio","Treynor Ratio",[15,4757,4758,4760],{},[519,4759,3397],{"href":3396}," is almost the same as Sharpe ratio but, instead of standard deviation of return, it uses Beta as the risk measurement.",[53,4762,55,4763,55,4766,55,4769],{},[57,4764],{"srcSet":4765,"type":60},"/blog_images/treynor-ratio/treynor-ratio-formula.avif",[57,4767],{"srcSet":4768,"type":64},"/blog_images/treynor-ratio/treynor-ratio-formula.webp",[66,4770],{"alt":4771,"src":4772,"style":3708,"width":4773,"height":4774,"decoding":73},"Treynor ratio formula","/blog_images/treynor-ratio/treynor-ratio-formula.png",596,367,[415,4776,4778],{"id":4777},"sortino-ratio","Sortino Ratio",[15,4780,4781],{},"Sortino ratio is a modification of Sharpe ratio by adjusting the risk part of it. Instead of using standard deviation of return, it uses downside risk deviation.",[53,4783,55,4784,55,4787,55,4790],{},[57,4785],{"srcSet":4786,"type":60},"/blog_images/portfolio-performance-evaluation/sortino-ratio-formula.avif",[57,4788],{"srcSet":4789,"type":64},"/blog_images/portfolio-performance-evaluation/sortino-ratio-formula.webp",[66,4791],{"alt":4792,"src":4793,"style":4794,"width":4795,"height":4796,"decoding":73,"fetchPriority":1050},"Sortino ratio formula","/blog_images/portfolio-performance-evaluation/sortino-ratio-formula.png","max-width:100%;width:496px;height:auto;aspect-ratio: 'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",496,160,[32,4798,4800],{"id":4799},"evaluating-portfolio-performance-in-real-life","Evaluating Portfolio Performance in Real Life",[15,4802,4803,4804,4808,4809,4811],{},"Evaluating portfolio performance is key to making informed investment decisions. In the real world, assessing your investments can be difficult. Calculating these metrics and monitoring over time can be difficult and time consuming. So many have used tools like ",[519,4805,4807],{"href":4806},"/blog/stock-tracking-spreadsheet/","Google Spreadsheet",", Excel and other portfolio trackers in keeping track of investments. We really encourage you to give ",[519,4810,522],{"href":521}," a try. It’s always our goal to help investors around the world to keep track of their investments and track their portfolio performance. So you can become a better investor and achieve your financial success over time.",{"title":528,"searchDepth":529,"depth":529,"links":4813},[4814,4815,4816,4826,4833,4838],{"id":4508,"depth":532,"text":4509},{"id":4515,"depth":532,"text":4516},{"id":4522,"depth":532,"text":4523,"children":4817},[4818,4823],{"id":4529,"depth":529,"text":4530,"children":4819},[4820,4821,4822],{"id":4536,"depth":2970,"text":4537},{"id":4558,"depth":2970,"text":4559},{"id":4577,"depth":2970,"text":4578},{"id":4596,"depth":529,"text":4597,"children":4824},[4825],{"id":4600,"depth":2970,"text":4601},{"id":4625,"depth":532,"text":4626,"children":4827},[4828,4829,4830,4831,4832],{"id":4632,"depth":529,"text":4633},{"id":4654,"depth":529,"text":4655},{"id":4676,"depth":529,"text":4677},{"id":4700,"depth":529,"text":4701},{"id":4717,"depth":529,"text":4718},{"id":4724,"depth":532,"text":4725,"children":4834},[4835,4836,4837],{"id":4731,"depth":529,"text":1263},{"id":4754,"depth":529,"text":4755},{"id":4777,"depth":529,"text":4778},{"id":4799,"depth":532,"text":4800},"Portfolio performance evaluation is the process to assess investment performance and decisions. It acts as a scoreboard to help investors improve strategy.",{},"/blog/portfolio-performance-evaluation","2024-04-24",{"title":4487,"description":4839},"blog/portfolio-performance-evaluation","1G8b3KU7a27oTuuShdlxiDrAMIklig9sepzA97LXiu0",{"id":4847,"title":4848,"body":4849,"description":5006,"extension":545,"meta":5007,"navigation":548,"path":5008,"publishedAt":5009,"seo":5010,"seo_description":820,"seo_title":820,"social_image":4862,"stem":5011,"updatedAt":5009,"__hash__":5012},"blog/blog/portfolio-turnover.md","Portfolio Turnover - What is it? How to calculate?",{"type":7,"value":4850,"toc":4995},[4851,4864,4867,4870,4878,4882,4885,4889,4902,4905,4910,4914,4917,4920,4923,4926,4930,4943,4946,4952,4956,4974,4978],[53,4852,55,4853,55,4856,55,4859],{},[57,4854],{"srcSet":4855,"type":60},"/blog_images/portfolio-turnover/portfolio-turnover-cover.avif",[57,4857],{"srcSet":4858,"type":64},"/blog_images/portfolio-turnover/portfolio-turnover-cover.webp",[66,4860],{"alt":4861,"src":4862,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":4863},"What is Portfolio Turnover?","/blog_images/portfolio-turnover/portfolio-turnover-cover.png",[1052],[15,4865,4866],{},"In the world of investing, understanding portfolio turnover is crucial for investors aiming to optimize their returns while minimizing costs. In this article, we'll dive into what portfolio turnover is, how to calculate it and what is a good turnover ratio",[32,4868,4861],{"id":4869},"what-is-portfolio-turnover",[15,4871,4872,4873,4877],{},"Portfolio turnover is a metric to measure how frequently the investments within a portfolio are bought and sold over a specific period. It is usually measured on a 12-month basis. A high turnover rate indicates frequent trading activity, while a low turnover rate implies a more passive investment approach. So a ",[519,4874,4876],{"href":1067,"rel":4875},[596],"long-term investor"," will usually have a lower turnover than a day trader does.",[32,4879,4881],{"id":4880},"how-to-calculate-portfolio-turnover","How to calculate portfolio turnover?",[15,4883,4884],{},"The portfolio turnover ratio is calculated by dividing the total value of assets bought or sold within a specific period by the average value of assets held in the portfolio during the same period.",[415,4886,4888],{"id":4887},"portfolio-turnover-formula","Portfolio Turnover Formula:",[53,4890,55,4891,55,4894,55,4897],{},[57,4892],{"srcSet":4893,"type":60},"/blog_images/portfolio-turnover/portfolio-turnover-formula.avif",[57,4895],{"srcSet":4896,"type":64},"/blog_images/portfolio-turnover/portfolio-turnover-formula.webp",[66,4898],{"alt":4899,"src":4900,"style":3805,"width":3806,"height":4901,"decoding":73,"fetchPriority":1050},"Portfolio Turnover Formula","/blog_images/portfolio-turnover/portfolio-turnover-formula.png",90,[15,4903,4904],{},"Where:",[43,4906,4907],{},[46,4908,4909],{},"Total Value of Assets Bought or Sold =  Total value of assets bought or sold within a specific period (whichever is less)",[32,4911,4913],{"id":4912},"what-does-portfolio-turnover-mean-to-investors","What does portfolio turnover mean to investors?",[15,4915,4916],{},"Portfolio turnover indicates how frequent the portfolio activities are. The higher portfolio turnover means there are more trading activities. When there's a lot of buying and selling, it usually means paying more fees, taxes and other costs. These costs can eat into your profits, leaving you with less money in the end. On the transaction cost side, it is obvious since every transaction has a cost related to it (i.e. transaction fees / commissions, price spread & more).",[15,4918,4919],{},"On the capital gain taxes, by realizing the gain every period instead of deferring it to the future period, it will cost every gain more. Charlie Munger illustrates it as followed:",[15,4921,4922],{},"“If you're going to buy something which compounds for 30 years at 15% per annum and you pay one 35% tax at the very end, the way that works out is that after taxes, you keep 13.3% per annum. In contrast, if you bought the same investment, but had to pay taxes every year of 35% out of the 15% that you earned, then your return would be 15% minus 35% of 15%-or only 9.75% per year compounded. So the difference there is over 3.5%. And what 3.5% does to the numbers over long holding periods like 30 years is truly eye-opening.”",[15,4924,4925],{},"How much of a difference? You asked. Assuming we invest $10,000 at the beginning, we will end up with $162,981 if we pay the 35% tax rate every year. On the other hand, you will end up with $430,377 if you pay it once at the end of 30 years. That’s right. It’s 2.64 times more.",[32,4927,4929],{"id":4928},"whats-a-good-portfolio-turnover-ratio","What's a Good Portfolio Turnover Ratio?",[15,4931,4932,4933,587,4938,353],{},"A good portfolio turnover ratio depends on various factors, including investment strategy, market conditions, and investor objectives. Generally, given the same strategy and return profile, a portfolio with lower turnover rate is preferred since the transaction costs are lower. For the long-term investor, the portfolio turnover can be lower than 10% or even 0% (no action at all). For example, Terry Smith’s Fundsmith, one of the greatest long-term investors, has a record of very low turnover with most of the time the turnover rates are between ",[519,4934,4937],{"href":4935,"rel":4936},"https://www.linkedin.com/pulse/terry-smiths-philosophy-giuliano-mana/",[596],"2-5%",[519,4939,4942],{"href":4940,"rel":4941},"https://www.fundsmith.co.uk/media/31plodnq/2023-fef-annual-letter-to-shareholders.pdf",[596],"11.1% in 2023",[15,4944,4945],{},"Charlie Munger famously stated, \"Investing is where you find a few great companies and then sit on your ass,\" highlighting the value of patience and conviction in long-term investing. Terry Smith also states a similar investing philosophy, “Buy good companies. Don’t overpay. Do nothing.” He’s so committed to the “Do nothing” part that he also tracks and discloses the portfolio turnover every year.",[15,4947,4948,4949,4951],{},"Understanding portfolio turnover is one of the important aspects which are often overlooked by investors. By calculating and monitoring turnover ratios, investors can make informed decisions, minimize costs, and align their investment approach with their long-term goals. With tools like ",[519,4950,522],{"href":521},", tracking portfolio turnover has never been easier, empowering investors to navigate the complexities of the market with confidence.",[32,4953,4955],{"id":4954},"great-further-reads","Great further reads:",[43,4957,4958,4966],{},[46,4959,4960,4965],{},[519,4961,4964],{"href":4962,"rel":4963},"https://www.goodreads.com/book/show/55656572-investing-for-growth",[596],"Investing for growth"," by Terry Smith",[46,4967,4968,4973],{},[519,4969,4972],{"href":4970,"rel":4971},"https://www.goodreads.com/book/show/944652.Poor_Charlie_s_Almanack",[596],"Poor Charlie's Almanack"," by Charles T. Munger",[415,4975,4977],{"id":4976},"other-references","Other References:",[43,4979,4980,4988],{},[46,4981,4982,4987],{},[519,4983,4986],{"href":4984,"rel":4985},"https://fs.blog/great-talks/a-lesson-on-worldly-wisdom/",[596],"A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business"," by Charlie Munger",[46,4989,4990],{},[519,4991,4994],{"href":4992,"rel":4993},"https://www.fundsmith.co.uk/documents/",[596],"Fundsmith’s letter to shareholders",{"title":528,"searchDepth":529,"depth":529,"links":4996},[4997,4998,5001,5002,5003],{"id":4869,"depth":532,"text":4861},{"id":4880,"depth":532,"text":4881,"children":4999},[5000],{"id":4887,"depth":529,"text":4888},{"id":4912,"depth":532,"text":4913},{"id":4928,"depth":532,"text":4929},{"id":4954,"depth":532,"text":4955,"children":5004},[5005],{"id":4976,"depth":529,"text":4977},"Portfolio turnover is a metric to measure how frequently the investments within a portfolio are bought and sold over a specific period.",{},"/blog/portfolio-turnover","2024-04-04",{"title":4848,"description":5006},"blog/portfolio-turnover","VlPkTqcS7_6luBOKiYlnkUSysJp06Sy1H1N8MCHeRMo",{"id":5014,"title":5015,"body":5016,"description":5134,"extension":545,"meta":5135,"navigation":548,"path":5136,"publishedAt":1827,"seo":5137,"seo_description":820,"seo_title":820,"social_image":5029,"stem":5138,"updatedAt":1827,"__hash__":5139},"blog/blog/portfolio-weight.md","Portfolio Weight - What is it? How to calculate?",{"type":7,"value":5017,"toc":5126},[5018,5031,5034,5037,5041,5044,5048,5062,5070,5074,5077,5083,5089,5095,5099,5114,5117,5120,5123],[53,5019,55,5020,55,5023,55,5026],{},[57,5021],{"srcSet":5022,"type":60},"/blog_images/portfolio-weight/portfolio-weight-cover.avif",[57,5024],{"srcSet":5025,"type":64},"/blog_images/portfolio-weight/portfolio-weight-cover.webp",[66,5027],{"alt":5028,"src":5029,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":5030},"What is Portfolio Weight?","/blog_images/portfolio-weight/portfolio-weight-cover.png",[1052],[32,5032,5028],{"id":5033},"what-is-portfolio-weight",[15,5035,5036],{},"Portfolio weight is the percentage of a specific position or asset type in an investment portfolio. It indicates the extent of exposure the portfolio has to that particular asset. Understanding portfolio weight is vital because it allows investors to assess the concentration and diversification of their investment holdings.",[32,5038,5040],{"id":5039},"how-to-calculate-portfolio-weight","How to Calculate Portfolio Weight?",[15,5042,5043],{},"Portfolio weight can be calculated by dividing the value of a specific position by the total value of the entire investment portfolio. Typically, values are measured in monetary terms, but in some cases, it can also be measured in the number of shares held.",[415,5045,5047],{"id":5046},"portfolio-weight-formula","Portfolio Weight Formula:",[53,5049,55,5050,55,5053,55,5056],{},[57,5051],{"srcSet":5052,"type":60},"/blog_images/portfolio-weight/portfolio-weight-formula.avif",[57,5054],{"srcSet":5055,"type":64},"/blog_images/portfolio-weight/portfolio-weight-formula.webp",[66,5057],{"alt":5058,"src":5059,"style":1047,"width":5060,"height":5061,"decoding":73,"fetchPriority":1050},"Portfolio Weight Formula","/blog_images/portfolio-weight/portfolio-weight-formula.png",600,83,[15,5063,5064,5065,5069],{},"Portfolio weight is the percentage of asset value to the total portfolio value. It can be calculated by dividing asset position value by total portfolio value. Alternatively, you can also use our ",[519,5066,5068],{"href":5067},"/tools/portfolio-weight-calculator/","free Portfolio Weight Calculator"," to calculate it for you.",[32,5071,5073],{"id":5072},"why-is-portfolio-weight-important","Why is Portfolio Weight Important?",[15,5075,5076],{},"Understanding and monitoring portfolio weight is crucial for several reasons:",[15,5078,5079,5082],{},[27,5080,5081],{},"Risk Management",": By knowing the portfolio weight of each asset, investors can assess the risk associated with their holdings. Overconcentration in a single asset or asset class can lead to heightened risk if that asset experiences a downturn.",[15,5084,5085,5088],{},[27,5086,5087],{},"Diversification",": Portfolio weight analysis facilitates diversification. Investors can adjust their portfolio weightings to achieve the desired level of diversification.",[15,5090,5091,5094],{},[27,5092,5093],{},"Performance Attribution",": It helps in evaluating the performance of individual assets within the portfolio. By tracking changes in portfolio weight over time, investors can identify which assets have contributed the most to portfolio gains or losses.",[32,5096,5098],{"id":5097},"examples-of-portfolio-weights","Examples of Portfolio Weights",[53,5100,55,5101,55,5104,55,5107],{},[57,5102],{"srcSet":5103,"type":60},"/blog_images/portfolio-weight/berkshire-hathaway-portfolio-allocation.avif",[57,5105],{"srcSet":5106,"type":64},"/blog_images/portfolio-weight/berkshire-hathaway-portfolio-allocation.webp",[66,5108],{"alt":5109,"src":5110,"style":5111,"width":5112,"height":5113,"loading":651,"decoding":73},"Berkshire Hathaway Portfolio Allocation","/blog_images/portfolio-weight/berkshire-hathaway-portfolio-allocation.png","max-width:100%; width:800px; height:auto;aspect-ratio:'attr(width) / attr(height)';margin-left: auto;margin-right: auto;",800,385,[15,5115,5116],{},"The above image is Warren Buffett’s Berkshire Hathaway public company portfolio as of November 1st, 2023 (excluding cash). With $156 billion of AAPL position and $331 billion of portfolio value, we can calculate the portfolio weight on the AAPL position as follows.",[15,5118,5119],{},"Portfolio Weight = $156 billion / $331 billion = 47.1%",[15,5121,5122],{},"This means almost half of the portfolio is invested in AAPL.",[15,5124,5125],{},"On the other hand, we can also aggregate the value into the company's sector too. For example, calculating portfolio of the financial services sector of Berkshire Hathaway portfolio. This can give us more light on the exposure of the kind of sector dependent on the portfolio.",{"title":528,"searchDepth":529,"depth":529,"links":5127},[5128,5129,5132,5133],{"id":5033,"depth":532,"text":5028},{"id":5039,"depth":532,"text":5040,"children":5130},[5131],{"id":5046,"depth":529,"text":5047},{"id":5072,"depth":532,"text":5073},{"id":5097,"depth":532,"text":5098},"Portfolio weight is the percentage of a specific position or asset type in an investment portfolio. It indicates the extent of exposure the portfolio has to that particular asset.",{},"/blog/portfolio-weight",{"title":5015,"description":5134},"blog/portfolio-weight","HiKOsvN4yZdhRaJgZhtWsfAv9JDAdaelESeyAh4jN-0",{"id":5141,"title":5142,"body":5143,"description":5249,"extension":545,"meta":5250,"navigation":548,"path":5251,"publishedAt":5252,"seo":5253,"seo_description":820,"seo_title":820,"social_image":5156,"stem":5254,"updatedAt":5252,"__hash__":5255},"blog/blog/roce.md","Return on Capital Employed (ROCE) - Definition, Formula & Example",{"type":7,"value":5144,"toc":5238},[5145,5158,5162,5165,5169,5173,5186,5189,5193,5196,5205,5209,5212,5215,5219,5222,5226,5229,5233,5236],[53,5146,55,5147,55,5150,55,5153],{},[57,5148],{"srcSet":5149,"type":60},"/blog_images/roce/roce-cover.avif",[57,5151],{"srcSet":5152,"type":64},"/blog_images/roce/roce-cover.webp",[66,5154],{"alt":5155,"src":5156,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":5157},"What is ROCE?","/blog_images/roce/roce-cover.png",[1052],[32,5159,5161],{"id":5160},"what-is-return-on-capital-employed-roce","What is Return on Capital Employed (ROCE)?",[15,5163,5164],{},"Return on Capital Employed, or ROCE, is a popular financial metric that measures a company's efficiency in utilizing its capital to generate profit. The higher the ROCE, the better a company is at efficiently using its capital resources.",[32,5166,5168],{"id":5167},"how-to-calculate-roce","How to Calculate ROCE?",[415,5170,5172],{"id":5171},"formula","Formula",[53,5174,55,5175,55,5178,55,5181],{},[57,5176],{"srcSet":5177,"type":60},"/blog_images/roce/roce-formula.avif",[57,5179],{"srcSet":5180,"type":64},"/blog_images/roce/roce-formula.webp",[66,5182],{"alt":5183,"src":5184,"style":5185,"width":4773,"height":4774,"decoding":73},"ROCE formula","/blog_images/roce/roce-formula.png","max-width:100%;width:350px;height:auto;aspect-ratio: 'attr(width) / attr(height);margin-left: auto;margin-right: auto;'",[15,5187,5188],{},"Where:\nEBIT is earnings before interests and taxes for the period and Total Capital Employed is a sum of Shareholder’s Equity and Non-Current Liabilities at the beginning of the period.",[415,5190,5192],{"id":5191},"roce-example","ROCE Example",[15,5194,5195],{},"Let's consider a real company in this case. From AAPL 10k document, for the financial year 2022, AAPL earned EBIT of $119,437 million while, at the beginning of 2022 financial year, its shareholder’s equity and non-current liabilities were at $63,090 million and $162,431 million respectively. Since we try to consider how efficient the company is in utilizing its capital, the capital employed at the beginning of the period should be used.",[1637,5197,5199],{"className":1639,"code":5198,"language":1641,"meta":528,"style":528},"ROCE = 119437 / (63090 + 162431) = 52.96%\n",[1643,5200,5201],{"__ignoreMap":528},[1646,5202,5203],{"class":1648,"line":1649},[1646,5204,5198],{},[32,5206,5208],{"id":5207},"why-is-roce-important","Why is ROCE Important?",[15,5210,5211],{},"ROCE holds significant importance for various reasons. First, it serves as a representative indicator of a company's capital efficiency and profitability. Second, ROCE is a valuable tool for comparing the efficiency of different companies within the same industry or across industries.",[15,5213,5214],{},"It is often analyzed in conjunction with a company's growth opportunities. Companies with high ROCE and substantial growth opportunities can reinvest their profits in these opportunities. This reinvestment can result in higher profits and more capital being reinvested, creating a cycle of growth and prosperity.",[32,5216,5218],{"id":5217},"roce-vs-roic-return-on-invested-capital","ROCE vs. ROIC (Return on Invested Capital):",[15,5220,5221],{},"ROCE and ROIC both measure capital efficiency, but ROIC typically considers only the capital directly invested in a company, excluding excess cash. While ROCE uses Capital Employed which is Shareholder’s Equity plus Non-Current Liabilities, ROIC uses Invested Capital which also includes Shareholder’s Equity but the Liabilities portion is a bit different. Instead of Non-Current Liabilities, it uses all the interest-bearing debt which can be in both Current Liabilities and Non-Current Liabilities. For example, in the AAPL case, invested capital may include only Term Debt from Non-Current Liabilities and Commercial Paper and Term Debt from Current Liabilities.",[32,5223,5225],{"id":5224},"roce-vs-roa-return-on-assets","ROCE vs. ROA (Return on Assets):",[15,5227,5228],{},"ROA measures a company's ability to generate profit from its total assets, not just the capital employed. This means the only part that it differs is that ROCE excludes Current Liabilities from the calculation.",[32,5230,5232],{"id":5231},"roce-vs-roe-return-on-equity","ROCE vs. ROE (Return on Equity):",[15,5234,5235],{},"ROE measures profitability relative to shareholders' equity. Since it only includes the equity portion in the balance sheet, the higher ROE might be resulted from a higher leverage the company uses. ROCE offers a broader view by incorporating both equity and non-current liabilities, making it more comprehensive.",[1806,5237,1808],{},{"title":528,"searchDepth":529,"depth":529,"links":5239},[5240,5241,5245,5246,5247,5248],{"id":5160,"depth":532,"text":5161},{"id":5167,"depth":532,"text":5168,"children":5242},[5243,5244],{"id":5171,"depth":529,"text":5172},{"id":5191,"depth":529,"text":5192},{"id":5207,"depth":532,"text":5208},{"id":5217,"depth":532,"text":5218},{"id":5224,"depth":532,"text":5225},{"id":5231,"depth":532,"text":5232},"Return on Capital Employed, or ROCE, is a popular financial metric that measures a company's efficiency in utilizing its capital to generate profit.",{},"/blog/roce","2023-10-29",{"title":5142,"description":5249},"blog/roce","49V_W1SbAnFUm_I_SQhEsMtUd9ofo1sCwAQrjbBVrqk",{"id":5257,"title":5258,"body":5259,"description":5317,"extension":545,"meta":5318,"navigation":548,"path":5319,"publishedAt":5320,"seo":5321,"seo_description":820,"seo_title":820,"social_image":5271,"stem":5322,"updatedAt":5320,"__hash__":5323},"blog/blog/should-you-have-multiple-investment-accounts.md","Should you have multiple investment accounts?",{"type":7,"value":5260,"toc":5311},[5261,5273,5276,5280,5283,5287,5290,5294,5301,5305,5308],[53,5262,55,5263,55,5266,55,5269],{},[57,5264],{"srcSet":5265,"type":60},"/blog_images/should-you-have-multiple-investment-accounts/should-you-have-multiple-investment-accounts-cover.avif",[57,5267],{"srcSet":5268,"type":64},"/blog_images/should-you-have-multiple-investment-accounts/should-you-have-multiple-investment-accounts-cover.webp",[66,5270],{"alt":5155,"src":5271,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":5272},"/blog_images/should-you-have-multiple-investment-accounts/should-you-have-multiple-investment-accounts-cover.png",[1052],[15,5274,5275],{},"In the dynamic world of investing, the choice of a brokerage account strategy is pivotal for maximizing returns and managing risks. Investors often grapple with the decision of whether to maintain a single brokerage account or diversify across multiple platforms. This article delves into the benefits and drawbacks of both approaches to empower investors in making informed decisions.",[32,5277,5279],{"id":5278},"whats-the-benefit-of-having-multiple-brokerage-accounts","What’s the benefit of having multiple brokerage accounts?",[15,5281,5282],{},"Diversification becomes a critical advantage when considering multiple brokerage accounts. By spreading funds across different platforms, you establish a layer of protection in case one brokerage faces bankruptcy or financial instability. Additionally, varied fee structures for different trades or asset classes at different brokerages enable you to optimize cost-efficiency, tailoring their portfolios to capitalize on the most financially advantageous options. Moreover, multiple accounts also make it easier for us to organize our investments toward different goals or investment strategies.",[32,5284,5286],{"id":5285},"how-many-brokerage-accounts-can-you-have","How many brokerage accounts can you have?",[15,5288,5289],{},"Legally you can have as many investment accounts as you want. Having multiple accounts even helps you organize your investment better too. However, on the other hand, having too many may lead to more effort and time spent in managing all of them instead of one for example managing assets allocation, tax forms, etc.",[32,5291,5293],{"id":5292},"is-there-a-downside-to-having-multiple-brokerage-accounts","Is there a downside to having multiple brokerage accounts?",[15,5295,5296,5297,5300],{},"The primary challenge associated with maintaining multiple brokerage accounts lies in the difficulty of tracking overall performance. You may find it cumbersome and high effort to manage and consolidate performance data from various accounts to have an overview look at the total portfolio. Or you might have to use online portfolio trackers, with tools like ",[519,5298,522],{"href":5299},"/portfolio-manager-software/",", to keep your investments organized within one place. In addition to tracking performance, having to deal with multiple tax forms separately can be quite painful. Lastly, having to manage multiple log-in and credentials can also be troublesome.",[32,5302,5304],{"id":5303},"should-i-keep-all-my-money-in-a-brokerage-account","Should I keep all my money in a brokerage account?",[15,5306,5307],{},"The decision depends on factors like the platform's returns and how often you trade. If a platform consistently delivers good returns and aligns with your strategy, consolidating funds could be a good idea. Brokerages often offer insurance coverage for added safety. For instance, SIPC member brokerages in the US extend coverage up to $250,000 for cash and $500,000 for total assets.",[15,5309,5310],{},"In the end, whether to have one or multiple brokerage accounts depends on your risk tolerance, goals, and preference for simplicity or diversification. Balancing these factors will help you make decisions that align with your financial objectives.",{"title":528,"searchDepth":529,"depth":529,"links":5312},[5313,5314,5315,5316],{"id":5278,"depth":532,"text":5279},{"id":5285,"depth":532,"text":5286},{"id":5292,"depth":532,"text":5293},{"id":5303,"depth":532,"text":5304},"Legally you can have as many investment accounts as you want. Having multiple accounts helps you organize and diversify your investments. On the other hand, having too many may lead to more troubles too.",{},"/blog/should-you-have-multiple-investment-accounts","2023-11-28",{"title":5258,"description":5317},"blog/should-you-have-multiple-investment-accounts","ORtk-wn32bTO_XMbwF1Ta2_1nhYEAoDjr2w5nztkbU4",{"id":5325,"title":5326,"body":5327,"description":5474,"extension":545,"meta":5475,"navigation":548,"path":3361,"publishedAt":5476,"seo":5477,"seo_description":820,"seo_title":820,"social_image":5446,"stem":5478,"updatedAt":5479,"__hash__":5480},"blog/blog/should-you-use-simple-return-time-weighted-or-money-weighted.md","Time-Weighted (TWR) vs Money-Weighted Return (MWR)",{"type":7,"value":5328,"toc":5462},[5329,5336,5339,5341,5354,5357,5359,5365,5369,5382,5387,5391,5394,5396,5405,5409,5422,5425,5429,5432,5436,5448,5451,5454,5459],[15,5330,5331,5332,5335],{},"At Portseido, one of the most frequently asked questions is which metric should the investor use to ",[519,5333,5334],{"href":1545},"track portfolio performance",". Thus, in this article, we will discuss about the three methods for calculating return; Simple Return (SR), Time-Weighted Return (TWR) and Money-Weighted Return (MWR).",[15,5337,5338],{},"First, why does it matter? Let’s start with an example. Imagine your portfolio has gained $500 in the past year over an $1,000 initial investment. It’s a 50% gain over a one-year period (what a great return!). Then you get a bonus from your work and decide to put in another $2,000 (your port is now $3500). A week goes by and your port is up another 1% (from $3500 to $3535), not bad for a one-week return. The question is what is your total return now?",[32,5340,4537],{"id":4536},[53,5342,55,5343,55,5346,55,5349],{},[57,5344],{"srcSet":5345,"type":60},"/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/simple_return_calculation.avif",[57,5347],{"srcSet":5348,"type":64},"/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/simple_return_calculation.webp",[66,5350],{"alt":5351,"src":5352,"style":1738,"width":1739,"height":5353,"decoding":73},"Simple Return Calculation","/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/simple_return_calculation.png",182,[15,5355,5356],{},"One simple way (hence called Simple Return) is to simply take the total gain divided by your total investment. Using this method, your return will be 50% at the 1-year mark, then drop to 16.67% after you put in $2000, then up to 17.78% after a week. This does not seem fair. You performed remarkably well last year and got off with even better performance (1% for 1-week which annualizes to 67%!) but somehow the return does not seem to reflect that. It is because the SR method doesn’t care about “how long” the capital has been in your port (the last $2000 has only been in the portfolio for a week, what do you expect the gain gonna be?!). So when there is cash inflow and outflow of the portfolio, SR is not a good method to measure your investment ability but a mere tool for book-keeping.",[32,5358,4559],{"id":4558},[15,5360,5361,5362,5364],{},"So instead of ignoring the “time”, let’s instead ignore the “size” and compute the return separately in each subperiods. We then combine them to get the compound return over the total period. This method is called ",[519,5363,4559],{"href":3786},". For example, the portfolio above gives the TWR of 51.5% (or you can annualize it to get 50.32%). TWR is better at measuring your ability as it tries to average your “ability” over time regardless of the portfolio size.",[415,5366,5368],{"id":5367},"how-to-calculate-twr","How to calculate TWR?",[53,5370,55,5371,55,5374,55,5377],{},[57,5372],{"srcSet":5373,"type":60},"/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/time_weighted_return_calculation.avif",[57,5375],{"srcSet":5376,"type":64},"/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/time_weighted_return_calculation.webp",[66,5378],{"alt":5379,"src":5380,"style":1738,"width":1739,"height":5381,"loading":651,"decoding":73},"Time-Weighted Return Calculation","/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/time_weighted_return_calculation.png",123,[15,5383,5384,5385,353],{},"To calculate TWR, you can try using our ",[519,5386,3844],{"href":3843},[415,5388,5390],{"id":5389},"limitations-of-twr","Limitations of TWR",[15,5392,5393],{},"This method also has its drawback mainly because it ignores the “size” and gives an equal weight to each sub-periods. This means your return figures can be misleading when there is a large cash inflow or outflow of the portfolio. For example, imagine the portfolio above, suppose in the second year, your portfolio ends up being down 20% (from $3500 to $2800). You actually incur a loss of $200 for a two-year period, but your TWR over the same period is actually +20%.",[32,5395,4578],{"id":4577},[15,5397,5398,5399,5402,5403,353],{},"So how can we combine both “time” and “size” then? We need to resort to the concept of discounted cash flow. Essentially, we want to find the rate of return that makes the sum of discounted cash inflow (all invested amount) equal to the sum of discounted cash outflow (current portfolio value). This method is called ",[519,5400,5401],{"href":3853},"Money-Weighted Return (MWR) or Dollar-Weighted Return",". This method requires some math to solve for such a return when there are multiple cash flows deposited into the portfolio. You can try to calculate that by using our ",[519,5404,3859],{"href":3858},[415,5406,5408],{"id":5407},"how-to-calculate-mwr","How to calculate MWR?",[53,5410,55,5411,55,5414,55,5417],{},[57,5412],{"srcSet":5413,"type":60},"/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/money_weighted_return_calculation.avif",[57,5415],{"srcSet":5416,"type":64},"/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/money_weighted_return_calculation.webp",[66,5418],{"alt":5419,"src":5420,"style":1738,"width":1739,"height":5421,"loading":651,"decoding":73},"Money-Weighted Return Calculation","/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/money_weighted_return_calculation.png",178,[15,5423,5424],{},"In the portfolio above, we will get the MWR return of 52.13%. Note that it is slightly higher than TWR because it gives more weight to the last 1-week return (67% annualized) due to more capital invested during that period.",[415,5426,5428],{"id":5427},"limitations-of-mwr","Limitations of MWR",[15,5430,5431],{},"While this method seems best as it captures both “time” and “size”, its limitation arises when your cash movement decisions are not based on investment reasons. Since MWR gives more weight to the performance when the portfolio size is largest, while you might not invest more during a period because you think there are opportunities but more from a personal reason, MWR can distort the return from those cash movements. For example, a part-time investor who receives annual bonuses from his or her full time job might decide to invest most of that amount immediately. However, while such a decision is not based on investment reasons, the investments have gone up, and, since MWR gives more weight to such a period, MWR will be significantly higher due to higher weight while it does not truly reflect investor’s investment skill.",[32,5433,5435],{"id":5434},"twr-vs-mwr","TWR vs MWR",[53,5437,55,5438,55,5441,55,5444],{},[57,5439],{"srcSet":5440,"type":60},"/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/which_return_should_you_use.avif",[57,5442],{"srcSet":5443,"type":64},"/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/which_return_should_you_use.webp",[66,5445],{"alt":5326,"src":5446,"style":611,"width":612,"height":5447,"loading":651,"decoding":73},"/blog_images/should-you-use-simple-return-time-weighted-or-money-weighted/which_return_should_you_use.png",376,[15,5449,5450],{},"So which method is better? Like all great questions, the answer is “it depends”. If you are able to make cash flow decisions based on investment reasons (e.g. be able to raise more cash when opportunity arises), Money-Weighted Return (MWR) will be a good fit. On the other hand, if you have no control over cash flow, Time-Weighted Return will be more appropriate. Moreover, both MWR and TWR are the answers for their own questions. If you are asking how your investments were doing over a period of time, MWR will be the one to look at. While, on the other hand, if you try to assess how well you allocated the portfolios over the period, TWR will be more appropriate.",[15,5452,5453],{},"Lastly, note that if you do not deposit any cash except at the beginning, the three methods will give the same number, so no worries there!",[15,5455,5456,5457,353],{},"P.S. Calculating these metrics might cost you a huge amount of time, so don’t waste your time there. Let us calculate them for you at ",[519,5458,522],{"href":521},[15,5460,5461],{},"Happy investing",{"title":528,"searchDepth":529,"depth":529,"links":5463},[5464,5465,5469,5473],{"id":4536,"depth":532,"text":4537},{"id":4558,"depth":532,"text":4559,"children":5466},[5467,5468],{"id":5367,"depth":529,"text":5368},{"id":5389,"depth":529,"text":5390},{"id":4577,"depth":532,"text":4578,"children":5470},[5471,5472],{"id":5407,"depth":529,"text":5408},{"id":5427,"depth":529,"text":5428},{"id":5434,"depth":532,"text":5435},"Three methods for calculating return; Simple Return (SR), Time-Weighted Return (TWR) and Money-Weighted Return (MWR)",{},"2022-07-11",{"title":5326,"description":5474},"blog/should-you-use-simple-return-time-weighted-or-money-weighted","2022-10-09","tq2ev-2NPBaKq5kRoplm1yQ4ldLcqyv8SPePk9iSj9k",{"id":5482,"title":5483,"body":5484,"description":5830,"extension":545,"meta":5831,"navigation":548,"path":5832,"publishedAt":5833,"seo":5834,"seo_description":820,"seo_title":820,"social_image":5497,"stem":5835,"updatedAt":5833,"__hash__":5836},"blog/blog/stock-tracking-spreadsheet.md","Stock Investment Tracking using Google Sheets",{"type":7,"value":5485,"toc":5814},[5486,5499,5502,5506,5513,5519,5523,5529,5535,5538,5542,5545,5551,5554,5558,5561,5567,5570,5574,5577,5583,5586,5590,5593,5599,5602,5606,5609,5615,5618,5622,5625,5631,5634,5638,5641,5647,5650,5660,5664,5670,5699,5703,5709,5733,5736,5740,5759,5763,5766,5811],[53,5487,55,5488,55,5491,55,5494],{},[57,5489],{"srcSet":5490,"type":60},"/blog_images/stock-tracking-spreadsheet/stock-tracking-spreadsheet-cover.avif",[57,5492],{"srcSet":5493,"type":64},"/blog_images/stock-tracking-spreadsheet/stock-tracking-spreadsheet-cover.webp",[66,5495],{"alt":5496,"src":5497,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":5498},"Stock tracking spreadsheet using Google Finance","/blog_images/stock-tracking-spreadsheet/stock-tracking-spreadsheet-cover.png",[1052],[15,5500,5501],{},"In today's dynamic financial landscape, staying on top of stock market trends is crucial for investors. One way to streamline this process is by utilizing the powerful combination of Google Sheets and Google Finance functions. In this article, we will explore how to use these tools to create customized watchlists and portfolio trackers. Additionally, we'll provide links to free templates created by other investors to jumpstart your stock tracking journey.",[32,5503,5505],{"id":5504},"how-do-i-track-stocks-in-google-sheets","How do I track stocks in Google Sheets?",[15,5507,5508,5509,5512],{},"The backbone of stock tracking in Google Sheets lies in the ",[1643,5510,5511],{},"GOOGLEFINANCE"," function. This super useful function enables users to pull data not only on stock prices but also on various fundamental and metadata aspects. If you understand how to use this function well, you can build powerful and customized stock trackers to fit your needs.",[15,5514,5515,5516,5518],{},"Let's delve deeper into the ",[1643,5517,5511],{}," function by exploring more examples related to stock prices, fundamental information like Price-to-Earnings (P/E) ratio, dividend details, and other key financial metrics.",[415,5520,5522],{"id":5521},"_1-stock-price","1. Stock Price",[15,5524,5525,5526,5528],{},"The most basic use of the ",[1643,5527,5511],{}," function is to fetch the current stock price. For example:",[1637,5530,5533],{"className":5531,"code":5532,"language":3966},[3964],"=GOOGLEFINANCE(\"AAPL\", \"price\")\n",[1643,5534,5532],{"__ignoreMap":528},[15,5536,5537],{},"This formula provides the current market price of Apple Inc. stock.",[415,5539,5541],{"id":5540},"_2-historical-stock-prices","2. Historical Stock Prices",[15,5543,5544],{},"Retrieve historical stock prices within a specified date range:",[1637,5546,5549],{"className":5547,"code":5548,"language":3966},[3964],"=GOOGLEFINANCE(\"AAPL\", \"close\", DATE(2022,1,1), DATE(2022,12,31), \"DAILY\")\n",[1643,5550,5548],{"__ignoreMap":528},[15,5552,5553],{},"This formula fetches the daily closing prices of Apple stock for the year 2022.",[415,5555,5557],{"id":5556},"_3-price-to-earnings-pe-ratio","3. Price-to-Earnings (P/E) Ratio",[15,5559,5560],{},"Get the P/E ratio, a fundamental valuation metric:",[1637,5562,5565],{"className":5563,"code":5564,"language":3966},[3964],"=GOOGLEFINANCE(\"AAPL\", \"pe\")\n",[1643,5566,5564],{"__ignoreMap":528},[15,5568,5569],{},"This formula provides the current Price-to-Earnings ratio for Apple stock.",[415,5571,5573],{"id":5572},"_4-earning-per-share","4. Earning per share",[15,5575,5576],{},"Retrieve earning per share of a stock:",[1637,5578,5581],{"className":5579,"code":5580,"language":3966},[3964],"=GOOGLEFINANCE(\"AAPL\", \"eps\")\n",[1643,5582,5580],{"__ignoreMap":528},[15,5584,5585],{},"This formula displays the latest annual eps for Apple stock.",[415,5587,5589],{"id":5588},"_5-market-capitalization","5. Market Capitalization",[15,5591,5592],{},"Obtain the market capitalization of a company:",[1637,5594,5597],{"className":5595,"code":5596,"language":3966},[3964],"=GOOGLEFINANCE(\"AAPL\", \"marketcap\")\n",[1643,5598,5596],{"__ignoreMap":528},[15,5600,5601],{},"This formula shows the current market capitalization of Apple Inc.",[415,5603,5605],{"id":5604},"_6-trading-volume","6. Trading Volume",[15,5607,5608],{},"Analyze the trading volume of a stock:",[1637,5610,5613],{"className":5611,"code":5612,"language":3966},[3964],"=GOOGLEFINANCE(\"AAPL\", \"volume\")\n",[1643,5614,5612],{"__ignoreMap":528},[15,5616,5617],{},"This formula provides the current trading volume for Apple stock.",[415,5619,5621],{"id":5620},"_7-beta-coefficient","7. Beta Coefficient",[15,5623,5624],{},"Calculate the beta coefficient, a measure of a stock's volatility:",[1637,5626,5629],{"className":5627,"code":5628,"language":3966},[3964],"=GOOGLEFINANCE(\"AAPL\", \"beta\")\n",[1643,5630,5628],{"__ignoreMap":528},[15,5632,5633],{},"This formula displays the beta coefficient for Apple stock.",[415,5635,5637],{"id":5636},"_8-52-week-highlow","8. 52-Week High/Low",[15,5639,5640],{},"Retrieve the 52-week high and low prices:",[1637,5642,5645],{"className":5643,"code":5644,"language":3966},[3964],"=GOOGLEFINANCE(\"AAPL\", \"high52\")\n=GOOGLEFINANCE(\"AAPL\", \"low52\")\n",[1643,5646,5644],{"__ignoreMap":528},[15,5648,5649],{},"This formula displays the 52-week high and low price of Apple stock.",[15,5651,5652,5653,5655,5656],{},"By leveraging these functions, you can build your own watchlist and/or portfolio tracker to display almost any information you would like to see. If you want to read more on the functionality of ",[1643,5654,5511],{},", you can visit ",[519,5657,704],{"href":5658,"rel":5659},"https://support.google.com/docs/answer/3093281",[596],[32,5661,5663],{"id":5662},"how-to-effectively-use-googlefinance-function-for-stock-tracking","How to effectively use GOOGLEFINANCE function for stock tracking?",[15,5665,5666,5667,5669],{},"As seen above, ",[1643,5668,5511],{}," can be quite powerful. Here are some quick tips on how to fully utilize it.",[231,5671,5672,5678,5687,5693],{},[46,5673,5674,5677],{},[27,5675,5676],{},"Dynamic Date Ranges",": Utilize dynamic date ranges or cell references for start and end dates to easily update and analyze different time periods.",[46,5679,5680,5683,5684,5686],{},[27,5681,5682],{},"Combine Functions",": Combine ",[1643,5685,5511],{}," with other spreadsheet functions to perform more complex calculations or create dynamic dashboards.",[46,5688,5689,5692],{},[27,5690,5691],{},"Multiple Tickers",": Extend your analysis by using the function with multiple tickers to compare stocks or create a portfolio tracker.",[46,5694,5695,5698],{},[27,5696,5697],{},"Automation",": Leverage Google Sheets' automatic refresh feature to keep your financial data up-to-date without manual intervention.",[32,5700,5702],{"id":5701},"how-do-i-create-a-stock-spreadsheet-in-google-sheets","How do I create a stock spreadsheet in Google Sheets?",[15,5704,5705,5706,5708],{},"Armed with the ",[1643,5707,5511],{}," function discussed above, you can build a robust stock spreadsheet for personalized tracking. Here's a step-by-step guide to creating a watchlist:",[231,5710,5711,5714,5717,5730],{},[46,5712,5713],{},"Open Google Sheets: Navigate to Google Sheets and open a new or existing spreadsheet.",[46,5715,5716],{},"Enter Stock Symbols: In a column, enter the stock symbols of the companies you want to track.",[46,5718,5719,5720,5722,5723,5725,5726,5729],{},"Utilize ",[1643,5721,5511],{},": In adjacent columns, use the ",[1643,5724,5511],{}," function to pull relevant data. For example, ",[1643,5727,5728],{},"=GOOGLEFINANCE(\"AAPL\", \"price\")"," fetches the current price of Apple stock.",[46,5731,5732],{},"Customize Your Spreadsheet: Add additional columns for metrics like market cap, P/E ratio, and dividend yield. Format the sheet to suit your preferences.",[15,5734,5735],{},"By following these steps, you can create a tailored watchlist that aligns with your investment strategy.",[32,5737,5739],{"id":5738},"does-google-have-a-stock-tracker","Does Google have a stock tracker?",[15,5741,5742,5743,5745,5746,5751,5752,5754,5755,353],{},"Yes, given that Google provides a useful ",[1643,5744,5511],{}," function, it’s no surprise that it also offers the stock tracker functionality directly. Google provides a stock tracker through the Google Finance website with a couple of functionalities, including a Watchlist and Portfolio tracker. You can begin by visiting ",[519,5747,5750],{"href":5748,"rel":5749},"https://www.google.com/finance",[596],"Google Finance",". Click on the hamburger icon on the left to access both the watchlist and portfolio tracking functionality. It's worth noting that Google's portfolio tracker offers a snapshot of your current holdings only. If you are interested in historical performance tracking and other in-depth analytics, consider using online portfolio trackers like ",[519,5753,522],{"href":521},". You can also see ",[519,5756,5758],{"href":5757},"/portfolio-tracker/google-finance-alternative/","how Portseido is different from Google Finance here",[32,5760,5762],{"id":5761},"is-there-a-free-stock-tracker-in-google-sheets","Is there a free stock tracker in Google Sheets?",[15,5764,5765],{},"Absolutely! Google does not provide a free stock tracker in Google Sheets, but many fellow investors have developed and shared free stock tracking tools utilizing Google Sheets. Here are links to the free stock trackers that we think might be valueable to you:",[43,5767,5768,5783,5797],{},[46,5769,5770,5777,5778],{},[27,5771,5772],{},[519,5773,5776],{"href":5774,"rel":5775},"https://docs.google.com/spreadsheets/d/1qMOtNi3BA3xrvkji21ykRJpdbCCNLffXMkwhWDHLo-w/edit#gid=4",[596],"Old School Value Stock Tracking Spreadsheet"," by ",[519,5779,5782],{"href":5780,"rel":5781},"https://www.oldschoolvalue.com/",[596],"Old School Value",[46,5784,5785,5777,5792],{},[27,5786,5787],{},[519,5788,5791],{"href":5789,"rel":5790},"https://docs.google.com/spreadsheets/d/1swxMXLMtSkpwsnVFbOpJnwCu5mv8rIrIy65B16hRmEs/template/preview",[596],"General Trading Stock Portfolio Template",[519,5793,5796],{"href":5794,"rel":5795},"https://www.spreadsheetclass.com/",[596],"SpreadsheetClass.com",[46,5798,5799,5777,5806],{},[27,5800,5801],{},[519,5802,5805],{"href":5803,"rel":5804},"https://docs.google.com/spreadsheets/d/1lW0SUfsty7qEVJpWuV7ANkBZK027RI_CouSsDM0XfmQ/edit#gid=0",[596],"Stock Dashboard",[519,5807,5810],{"href":5808,"rel":5809},"https://www.youtube.com/@brianturgeon",[596],"Brian Turgeon",[15,5812,5813],{},"Feel free to explore these resources and choose the one that best fits your needs. Happy investing!",{"title":528,"searchDepth":529,"depth":529,"links":5815},[5816,5826,5827,5828,5829],{"id":5504,"depth":532,"text":5505,"children":5817},[5818,5819,5820,5821,5822,5823,5824,5825],{"id":5521,"depth":529,"text":5522},{"id":5540,"depth":529,"text":5541},{"id":5556,"depth":529,"text":5557},{"id":5572,"depth":529,"text":5573},{"id":5588,"depth":529,"text":5589},{"id":5604,"depth":529,"text":5605},{"id":5620,"depth":529,"text":5621},{"id":5636,"depth":529,"text":5637},{"id":5662,"depth":532,"text":5663},{"id":5701,"depth":532,"text":5702},{"id":5738,"depth":532,"text":5739},{"id":5761,"depth":532,"text":5762},"The backbone of stock tracking in Google Sheets lies in the GOOGLEFINANCE function. This super useful function enables users to pull data not only on stock prices but also on various fundamental and metadata aspects.",{},"/blog/stock-tracking-spreadsheet","2024-01-05",{"title":5483,"description":5830},"blog/stock-tracking-spreadsheet","5Sxu0w0irT86FUHzmFO_1Bx-Y5hwPIojYm-FhQmhOsY",{"id":5838,"title":5839,"body":5840,"description":5987,"extension":545,"meta":5988,"navigation":548,"path":5989,"publishedAt":5990,"seo":5991,"seo_description":820,"seo_title":820,"social_image":5853,"stem":5992,"updatedAt":5990,"__hash__":5993},"blog/blog/time-weighted-return.md","What is Time-Weighted Return (TWR)?",{"type":7,"value":5841,"toc":5975},[5842,5855,5858,5861,5864,5868,5871,5882,5884,5892,5896,5899,5907,5915,5920,5924,5927,5931,5940,5944,5947,5951,5954,5957,5960,5963,5965,5971],[53,5843,55,5844,55,5847,55,5850],{},[57,5845],{"srcSet":5846,"type":60},"/blog_images/time-weighted-return/time-weighted-return-cover.avif",[57,5848],{"srcSet":5849,"type":64},"/blog_images/time-weighted-return/time-weighted-return-cover.webp",[66,5851],{"alt":5852,"src":5853,"style":3081,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":5854},"Time-Weighted Return (TWR) cover image","/blog_images/time-weighted-return/time-weighted-return-cover.png",[1052],[15,5856,5857],{},"There are multiple methods to calculate return to evaluate the performance of your investment portfolio, from time-weighted return and money-weighted return to simple return. As a result, it’s essential to use return metrics that provide an accurate picture of your performance and capture what you aim to gauge. Time-weighted return is one such metric that allows investors to see their success while eliminating the impact of external factors like cash flows. In this article, we'll explore what time-weighted return is, how it's calculated, and how it differs from other methods of measuring performance.",[32,5859,5839],{"id":5860},"what-is-time-weighted-return-twr",[15,5862,5863],{},"Time-weighted return (TWR)  is a measure of investment performance that calculates the return for each time period separately and then combines these returns with equal weight, hence the name \"time-weighted\" as it weights each time period equally regardless of the portfolio size at each time. Unlike other methods, such as simple return or money-weighted return, TWR removes the influence of cash flows and assesses the performance at each time period without any bias introduced by the timing or size of cash inflows or outflows.",[32,5865,5867],{"id":5866},"how-do-you-calculate-time-weighted-returns","How Do You Calculate Time-Weighted Returns?",[15,5869,5870],{},"To calculate time-weighted returns, you need to follow these steps:",[231,5872,5873,5876,5879],{},[46,5874,5875],{},"Determine the initial portfolio value at the beginning of the investment period and cash deposited.",[46,5877,5878],{},"Calculate the return for each time period separately. This can be done by taking the ratio of the ending portfolio value to the beginning portfolio value plus cash change.",[46,5880,5881],{},"Combine these returns by adding 1 to each of them and multiplying them. Then minus 1 to the end result.",[415,5883,3792],{"id":3791},[53,5885,55,5886,55,5888,55,5890],{},[57,5887],{"srcSet":3797,"type":60},[57,5889],{"srcSet":3800,"type":64},[66,5891],{"alt":3803,"src":3804,"style":3805,"width":3806,"height":3807,"decoding":73,"fetchPriority":1050},[415,5893,5895],{"id":5894},"how-do-you-calculate-time-weighted-returns-in-excel","How Do You Calculate Time-Weighted Returns in Excel?",[15,5897,5898],{},"From the formula above, we can see that calculating time-weighted returns in Excel is relatively straightforward. You can use the following steps:",[231,5900,5901,5903,5905],{},[46,5902,3816],{},[46,5904,3819],{},[46,5906,3822],{},[53,5908,55,5909,55,5911,55,5913],{},[57,5910],{"srcSet":3827,"type":60},[57,5912],{"srcSet":3830,"type":64},[66,5914],{"alt":3833,"src":3834,"style":3835,"width":3836,"height":3837,"decoding":73,"fetchPriority":1050},[15,5916,3840,5917,353],{},[519,5918,5919],{"href":3843},"free time-weighted return calculator",[32,5921,5923],{"id":5922},"is-a-time-weighted-return-the-same-as-a-cagr","Is a Time-Weighted Return the Same as a CAGR?",[15,5925,5926],{},"While time-weighted return and the Compound Annual Growth Rate (CAGR) are similar in that they both consider investment returns over time, they are not the same. CAGR is a specific term referring to a time-weighted return that assumes a constant growth rate over the entire investment period, while TWR calculates the returns separately for each time period and then combines them.",[32,5928,5930],{"id":5929},"what-is-the-difference-between-time-weighted-and-money-weighted-returns-or-irr","What Is the Difference Between Time-Weighted and Money-Weighted Returns or IRR?",[15,5932,4194,5933,5936,5937,5939],{},[519,5934,5935],{"href":4197},"differences between time-weighted return and money-weighted return (Internal Rate of Return, IRR)",". ",[519,5938,4584],{"href":3853}," considers the timing and size of all cash flows in and out of the portfolio. It can be heavily influenced by the timing of contributions or withdrawals. On the other hand, time-weighted return focuses on computing the return at each time period and then takes the geometric average of these returns. It eliminates the influence of external cash flows, making it a more suitable measure when you have limited control over cash flow timing.",[32,5941,5943],{"id":5942},"what-is-the-difference-between-roi-and-time-weighted-return","What Is the Difference Between ROI and Time-Weighted Return?",[15,5945,5946],{},"Return on Investment (ROI) is another metric used to assess investment performance and it is often confused with time-weighted return. They are both similar in the sense that both do not account for the timing or size of cash flows. However, the calculation of both are slightly different. ROI is a relatively simpler measurement that only calculates the percentage gain or loss relative to the initial investment, whereas time-weighted return is a bit more detailed as it measures each time period separately before equally weighing those performances over time.",[32,5948,5950],{"id":5949},"is-time-weighted-return-better","Is Time-Weighted Return Better?",[15,5952,5953],{},"The suitability of time-weighted returns depends on your specific objectives and circumstances.",[15,5955,5956],{},"Time-weighted return excels at measuring performance at each time period equally, making it a valuable tool for evaluating the skills and performance of an investment manager without being influenced by external factors.",[15,5958,5959],{},"On the other hand, money-weighted return or IRR is better at reflecting the true portfolio performance, but it may not accurately reflect the manager's skills if they have limited control over cash flows.",[15,5961,5962],{},"In conclusion, the choice between time-weighted return and other performance metrics depends on your investment goals and the level of control you have over cash flows. Understanding the nuances of each method can help you make more informed investment decisions and accurately assess your portfolio's performance.",[32,5964,3901],{"id":3900},[15,5966,3904,5967,3908,5969,3911],{},[519,5968,3907],{"href":1545},[519,5970,522],{"href":521},[15,5972,4236,5973,4239],{},[519,5974,1541],{"href":1540},{"title":528,"searchDepth":529,"depth":529,"links":5976},[5977,5978,5982,5983,5984,5985,5986],{"id":5860,"depth":532,"text":5839},{"id":5866,"depth":532,"text":5867,"children":5979},[5980,5981],{"id":3791,"depth":529,"text":3792},{"id":5894,"depth":529,"text":5895},{"id":5922,"depth":532,"text":5923},{"id":5929,"depth":532,"text":5930},{"id":5942,"depth":532,"text":5943},{"id":5949,"depth":532,"text":5950},{"id":3900,"depth":532,"text":3901},"Time-weighted return (TWR)  is a measure of investment performance that calculates the return for each time period separately and then combines these returns with equal weight.",{},"/blog/time-weighted-return","2023-11-02",{"title":5839,"description":5987},"blog/time-weighted-return","Hxu_x5tzApNc0KeW3H9j9NbEGM7A-CEBRt1bANL595g",{"id":5995,"title":5996,"body":5997,"description":6113,"extension":545,"meta":6114,"navigation":548,"path":6115,"publishedAt":6116,"seo":6117,"seo_description":820,"seo_title":820,"social_image":6010,"stem":6118,"updatedAt":6116,"__hash__":6119},"blog/blog/treynor-ratio.md","Treynor Ratio - What is it? How to calculate?",{"type":7,"value":5998,"toc":6099},[5999,6012,6016,6023,6027,6035,6038,6042,6045,6049,6054,6058,6061,6065,6071,6075,6078,6082,6085,6089,6092,6096],[53,6000,55,6001,55,6004,55,6007],{},[57,6002],{"srcSet":6003,"type":60},"/blog_images/treynor-ratio/treynor-ratio-cover.avif",[57,6005],{"srcSet":6006,"type":64},"/blog_images/treynor-ratio/treynor-ratio-cover.webp",[66,6008],{"alt":6009,"src":6010,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":6011},"What is Treynor ratio?","/blog_images/treynor-ratio/treynor-ratio-cover.png",[1052],[32,6013,6015],{"id":6014},"what-is-the-treynor-ratio","What is the Treynor Ratio?",[15,6017,6018,6019,6022],{},"The Treynor ratio, also known as Treynor Index, reward-to-volatility ratio or Treynor measure, is the financial metric that ",[519,6020,6021],{"href":1545},"measures portfolio performance"," adjusted by systematic risk. It helps investors to assess how much excess return generated for additional risk taken.",[32,6024,6026],{"id":6025},"the-treynor-ratio-formula","The Treynor Ratio Formula",[53,6028,55,6029,55,6031,55,6033],{},[57,6030],{"srcSet":4765,"type":60},[57,6032],{"srcSet":4768,"type":64},[66,6034],{"alt":4771,"src":4772,"style":3708,"width":4773,"height":4774,"decoding":73},[15,6036,6037],{},"In the Treynor ratio calculation, there are two main components:",[415,6039,6041],{"id":6040},"_1-excess-return","1. Excess return",[15,6043,6044],{},"This refers to portfolio return in excess to risk-free rate. This is represented by the numerator of the equation which is the portfolio return minus by risk-free rate. Portfolio return is the portfolio actual return over the given period of time. While the risk-free rate is the rate of the return of a risk-free asset which is usually assumed to be the treasury bond of the same currency.",[415,6046,6048],{"id":6047},"_2-beta","2. Beta",[15,6050,6051,6053],{},[519,6052,4677],{"href":3131}," is a financial metric measuring the volatility of the asset or portfolio return compared to its benchmark.",[32,6055,6057],{"id":6056},"is-a-higher-or-lower-treynor-ratio-better","Is a higher or lower Treynor ratio better?",[15,6059,6060],{},"The higher the Treynor Ratio is generally considered better. A higher ratio signifies that the investment or portfolio is generating more return per unit of systematic risk (as measured by beta). This suggests that the investment is providing a better risk-adjusted return.",[32,6062,6064],{"id":6063},"treynor-ratio-vs-sharpe-ratio","Treynor ratio vs Sharpe ratio",[15,6066,6067,6068,6070],{},"The Treynor ratio and ",[519,6069,3392],{"href":1262}," have many characteristics in common since they both measure risk-adjusted return for portfolio. The only difference between the two is how they measure risk related to the investment. While Treynor ratio uses Beta which is a portfolio return volatility relative to market’s (systematic risk), Sharpe ratio uses the actual portfolio return volatility (total risk).",[32,6072,6074],{"id":6073},"limitations-of-the-treynor-ratio","Limitations of the Treynor Ratio",[15,6076,6077],{},"Although Treynor ratio is a good metric in measuring risk-adjusted return, there is no one perfect metric. Here are a few limitations of Treynor Ratio:",[415,6079,6081],{"id":6080},"_1-negative-beta","1. Negative Beta",[15,6083,6084],{},"The Treynor Ratio loses its meaning if Beta is negative. Therefore, to use the Treynor Ratio effectively, Beta must be positive.",[415,6086,6088],{"id":6087},"_2-beta-as-a-risk-measure","2. Beta as a Risk Measure",[15,6090,6091],{},"Beta may not always be a perfect measurement of risk. It quantifies an underlying investment's volatility relative to its benchmark, which might not fully capture its risk profile. Relying solely on Beta may overlook certain nuances of risk associated with the investment.",[415,6093,6095],{"id":6094},"_3-treynor-ratio-as-an-ordinal-number","3. Treynor Ratio as an Ordinal Number",[15,6097,6098],{},"The Treynor Ratio is an ordinal number, meaning it provides a ranking of portfolios or investments based on their risk-adjusted performance but doesn't convey the magnitude of the difference in performance. It tells you which portfolio is better than another but doesn't indicate how much better.",{"title":528,"searchDepth":529,"depth":529,"links":6100},[6101,6102,6106,6107,6108],{"id":6014,"depth":532,"text":6015},{"id":6025,"depth":532,"text":6026,"children":6103},[6104,6105],{"id":6040,"depth":529,"text":6041},{"id":6047,"depth":529,"text":6048},{"id":6056,"depth":532,"text":6057},{"id":6063,"depth":532,"text":6064},{"id":6073,"depth":532,"text":6074,"children":6109},[6110,6111,6112],{"id":6080,"depth":529,"text":6081},{"id":6087,"depth":529,"text":6088},{"id":6094,"depth":529,"text":6095},"Treynor Ratio is the financial metric that measures portfolio excess return adjusted by systematic risk (beta).",{},"/blog/treynor-ratio","2023-09-28",{"title":5996,"description":6113},"blog/treynor-ratio","cfpQisax8b-JV5XwaIOlcKh_346nb6nwvNBqXsLVEeA",{"id":6121,"title":6122,"body":6123,"description":6248,"extension":545,"meta":6249,"navigation":548,"path":6250,"publishedAt":6251,"seo":6252,"seo_description":820,"seo_title":820,"social_image":6136,"stem":6253,"updatedAt":6251,"__hash__":6254},"blog/blog/what-is-alpha.md","What is alpha in investing? What does alpha mean?",{"type":7,"value":6124,"toc":6238},[6125,6139,6142,6145,6149,6152,6167,6170,6174,6177,6186,6189,6192,6196,6199,6203,6206,6210,6217,6221,6224,6227,6230,6233,6236],[53,6126,55,6127,55,6130,55,6133],{},[57,6128],{"srcSet":6129,"type":60},"/blog_images/what-is-alpha/what-is-alpha-in-investing.avif",[57,6131],{"srcSet":6132,"type":64},"/blog_images/what-is-alpha/what-is-alpha-in-investing.webp",[66,6134],{"alt":6135,"src":6136,"style":6137,"width":1048,"height":2853,"decoding":73,"fetchPriority":1050,"className":6138},"What is Alpha?","/blog_images/what-is-alpha/what-is-alpha-in-investing.png","max-width:100%; width:600px; height:auto;aspect-ratio:'attr(width) / attr(height)'",[1052],[32,6140,6135],{"id":6141},"what-is-alpha",[15,6143,6144],{},"In finance, Alpha (α) or Jensen's alpha is a measure of the excess return of an investment relative to the expected return of a portfolio as determined by the capital asset pricing model (CAPM). In other words, it represents the part of the investment's return that is not due to the general movement of the market but rather is a result of the specific characteristics of the investment itself.",[32,6146,6148],{"id":6147},"how-to-calculate-alpha","How to calculate Alpha?",[15,6150,6151],{},"Mathematically, Alpha can be calculated as the excess return as follows:",[1637,6153,6155],{"className":1639,"code":6154,"language":1641,"meta":528,"style":528},"α = Actual Portfolio Return - Expected Portfolio Return\nα = R_p - ( R_f + Beta * (R_m - R_f))\n",[1643,6156,6157,6162],{"__ignoreMap":528},[1646,6158,6159],{"class":1648,"line":1649},[1646,6160,6161],{},"α = Actual Portfolio Return - Expected Portfolio Return\n",[1646,6163,6164],{"class":1648,"line":532},[1646,6165,6166],{},"α = R_p - ( R_f + Beta * (R_m - R_f))\n",[15,6168,6169],{},"where R_p = the portfolio return, R_f = risk-free rate, R_m = the benchmark or market return, Beta is the measure of a stock's volatility relative to the overall market.",[415,6171,6173],{"id":6172},"example-of-how-to-calculate-alpha","Example of how to calculate Alpha",[15,6175,6176],{},"For example, if a portfolio generates a return of 25% over a certain period of time with risk free rate = 2% , portfolio beta = 1.2, and the benchmark index returns 20% over the same period, then the alpha of the investment would be:",[1637,6178,6180],{"className":1639,"code":6179,"language":1641,"meta":528,"style":528},"α = 25% - (2% + 1.2 * (20%-2%)) = 25% - 23.6% = 1.4%\n",[1643,6181,6182],{"__ignoreMap":528},[1646,6183,6184],{"class":1648,"line":1649},[1646,6185,6179],{},[15,6187,6188],{},"The interpretation is as follows; given the portfolio beta = 1.2 which is slightly riskier than the market/benchmark, we expect a higher return as calculated by CAPM model which in this case is equal to 23.6%. The actual return is 25% which is 1.4% above that expectation and that is what Alpha is.",[15,6190,6191],{},"Alpha is often used as a measure of the skill or active management of a fund manager.",[415,6193,6195],{"id":6194},"positive-alpha","Positive Alpha",[15,6197,6198],{},"A positive alpha means that the investment manager's active management has a positive impact on portfolio return compared to the benchmark at the same risk level (return volatility).",[415,6200,6202],{"id":6201},"negative-alpha","Negative Alpha",[15,6204,6205],{},"A negative alpha, on the other hand, means that the manager has underperformed the benchmark at the same risk level.",[32,6207,6209],{"id":6208},"alpha-vs-beta-what-is-the-difference","Alpha vs Beta, what is the difference?",[15,6211,6212,6213,6216],{},"Alpha and beta are different measurements that capture different aspects of investments and investment strategies. Alpha refers to the performance of an investment relative to the expected return as calculated by CAPM. A positive alpha indicates that the investment has outperformed the expected return, while a negative alpha means it has underperformed. Beta, on the other hand, is part of CAPM which measures the volatility of an investment relative to the overall market. A beta of 1 means the investment is as volatile as the market, while a beta greater than 1 indicates higher volatility and a beta less than 1 indicates lower volatility. You can read more about Beta on the \"",[519,6214,6215],{"href":3131},"What is beta?","\" article.",[32,6218,6220],{"id":6219},"what-is-alpha-investing","What is alpha investing?",[15,6222,6223],{},"Alpha investing is a term used to describe a strategy for selecting stocks or other investments that are expected to outperform the market as a whole. This type of investing is often associated with active management, in which a fund manager or individual investor actively selects and trades securities in an effort to achieve superior returns.",[15,6225,6226],{},"Alpha investing involves trying to identify investments that are likely to generate positive alpha. This can be done through a variety of methods, including fundamental analysis, technical analysis, and even using data analytics to identify patterns and trends in financial markets.",[15,6228,6229],{},"One of the main goals of alpha investing is to generate returns that are not correlated with the market as a whole. This can be attractive to investors who are looking for a way to diversify their portfolio and potentially reduce risk.",[15,6231,6232],{},"It's important to note that alpha investing is not without risk. While the goal is to generate positive alpha, there is no guarantee that an investment will outperform the benchmark index. In addition, alpha investing requires a higher level of active management and a deeper understanding of financial markets, which may not be suitable for all investors.",[15,6234,6235],{},"Overall, alpha investing is a strategy that seeks to identify investments that are expected to outperform the market and generate excess returns. While it can be a potentially rewarding approach for experienced investors, it also carries a certain level of risk and may not be suitable for everyone.",[1806,6237,1808],{},{"title":528,"searchDepth":529,"depth":529,"links":6239},[6240,6241,6246,6247],{"id":6141,"depth":532,"text":6135},{"id":6147,"depth":532,"text":6148,"children":6242},[6243,6244,6245],{"id":6172,"depth":529,"text":6173},{"id":6194,"depth":529,"text":6195},{"id":6201,"depth":529,"text":6202},{"id":6208,"depth":532,"text":6209},{"id":6219,"depth":532,"text":6220},"Alpha is a measure of the excess return of an investment relative to the expected return of a portfolio as determined by the capital asset pricing model (CAPM).",{},"/blog/what-is-alpha","2023-01-03",{"title":6122,"description":6248},"blog/what-is-alpha","OpHX2M3rTNIvy-qAUH7heOI1o9bFUL4IUegkP-2yI3A",{"id":6256,"title":6257,"body":6258,"description":6423,"extension":545,"meta":6424,"navigation":548,"path":6425,"publishedAt":6426,"seo":6427,"seo_description":820,"seo_title":820,"social_image":6271,"stem":6428,"updatedAt":6426,"__hash__":6429},"blog/blog/what-is-beta.md","What is Beta and what does it mean for investors?",{"type":7,"value":6259,"toc":6412},[6260,6275,6279,6282,6286,6289,6292,6295,6298,6301,6303,6309,6314,6317,6330,6333,6337,6340,6344,6347,6351,6354,6358,6361,6369,6372,6375,6379,6382,6385,6388,6401,6404,6407],[53,6261,55,6262,55,6265,55,6268],{},[57,6263],{"srcSet":6264,"type":60},"/blog_images/what-is-beta/what-is-beta.avif",[57,6266],{"srcSet":6267,"type":64},"/blog_images/what-is-beta/what-is-beta.webp",[66,6269],{"alt":6270,"src":6271,"style":6272,"width":1048,"height":6273,"decoding":73,"fetchPriority":1050,"className":6274},"What is Beta?","/blog_images/what-is-beta/what-is-beta.png","max-width:100%;width:600px;height:auto;aspect-ratio: 'attr(width) / attr(height)'",498,[1052],[32,6276,6278],{"id":6277},"what-does-beta-mean","What does Beta mean?",[15,6280,6281],{},"Beta (β) is one of the risk measurements for a stock or portfolio by measuring the volatility of the asset or portfolio compared to the market. It is originally used in the Capital Asset Pricing Model (CAPM) to calculate expected returns of an investment. In this article, we will first dive into the CAPM, Beta, its implication to investors and lastly its limitations.",[32,6283,6285],{"id":6284},"capital-asset-pricing-model-capm","Capital Asset Pricing Model (CAPM)",[15,6287,6288],{},"CAPM is a model intended to estimate the expected return of an investment by assuming a linear relationship between the risks and the returns. This means if the asset’s risk is higher, the return that an investor should expect will be higher too. The CAPM formula states that:",[15,6290,6291],{},"Expected Return = Risk-free Rate + Risk Premium",[15,6293,6294],{},"The formula states that, by investing in a risky asset, the expected return will be equal to the return of the risk-free asset plus the premium the investor should receive from bearing more risk over risk-free asset. Risk-free rate is the rate of return on the risk-free asset which is theoretically assumed to be a short-term government bond. Risk premium is an extra expected rate of return by bearing more risk. Therefore, the risk premium should behave in a way that this risk premium should be low in a low risk asset and should be high in a high risk asset. Beta is playing a critical role in calculating such a premium.",[32,6296,3386],{"id":6297},"beta",[15,6299,6300],{},"As stated above, the key of the CAPM is Risk Premium.",[15,6302,6291],{},[15,6304,6305,6306],{},"Expected Return = Risk-free Rate + ",[1646,6307,6308],{},"Beta x Market Risk Premium",[15,6310,6305,6311],{},[1646,6312,6313],{},"Beta x (Market Return - Risk-free Rate)",[15,6315,6316],{},"As shown in the formula above, risk premium in any given investment is calculated as relative to market risk premium. Market risk premium is an additional return the investor should expect by investing in the market. This means if one stock is two times riskier than the market, the risk premium should be two times the market risk premium too. To quantify the risk of an investment, CAPM uses volatility of the asset’s return as a measurement of risk. This means the more volatile the asset’s return is, the riskier the asset. The value that shows how risky the investment is relative to the market is “Beta”.",[53,6318,55,6319,55,6322,55,6325],{},[57,6320],{"srcSet":6321,"type":60},"/blog_images/what-is-beta/beta-table.avif",[57,6323],{"srcSet":6324,"type":64},"/blog_images/what-is-beta/beta-table.webp",[66,6326],{"alt":6327,"src":6328,"style":611,"width":612,"height":6329,"loading":651,"decoding":73},"Beta example","/blog_images/what-is-beta/beta-table.png",396,[15,6331,6332],{},"In the example above, we have simplified the number to make it more understandable. While beta of a stock or portfolio can take any value from very negative number to super high positive value, we can look at three cases for interpretation",[415,6334,6336],{"id":6335},"_1-beta-1","1) Beta > 1:",[15,6338,6339],{},"Stock with beta > 1 means that when the benchmark is up, it tends to move up even more. For example, Stock B with beta = 2.0 means that if the benchmark is up x% in a period, it on average will go up 2 times as much. Good examples of this type of stocks are high-growth stocks.",[415,6341,6343],{"id":6342},"_2-beta-1","2) Beta \u003C 1",[15,6345,6346],{},"On the other hand, stock with beta \u003C 1 means that when the market is up, it tends to move up as well but not as much. For example, Stock C with beta = 0.5, means that if the benchmark is up x% on a day, it on average will only go up 0.5 times as much. An example of low beta stocks are utility stocks.",[415,6348,6350],{"id":6349},"_3-beta-0","3) Beta \u003C 0",[15,6352,6353],{},"Negative beta, by definition, refers to a scenario when the stock, portfolio, or investment strategy tends to move in an opposite direction with the benchmark as shown in the table as Stock D.",[32,6355,6357],{"id":6356},"beta-calculation","Beta Calculation",[15,6359,6360],{},"So how is beta calculated exactly? The mathematical formula for computing beta is as follows",[53,6362,55,6363,55,6365,55,6367],{},[57,6364],{"srcSet":4687,"type":60},[57,6366],{"srcSet":4690,"type":64},[66,6368],{"alt":4693,"src":4694,"style":4695,"width":4696,"height":4697,"loading":651,"decoding":73},[15,6370,6371],{},"Where R_s = return of an asset or portfolio, R_m = return of a benchmark or market, Covariance is a statistical measurement that captures how much two data tends to move in the same direction.",[15,6373,6374],{},"In practice, these values are usually estimated from historical data by running a regression on the actual data of benchmark return vs stock return as shown in (1). As a result, they can vary from time to time as the relation between the return of stock and market can change and fluctuate as well.",[32,6376,6378],{"id":6377},"limitations","Limitations",[15,6380,6381],{},"Although beta has been in the financial world for a long time. There are downsides on the method in measuring risks.",[15,6383,6384],{},"Firstly, as Beta is estimated from historical data, it might not hold true for predicting the future, so one should bear in mind such limitations when inferring risk from it or trying to forecast future expected return using Beta. For example, a company might change its strategy to use more debt in financing their operation. This action might make its stock return more volatile in the future. By using historical data to estimate Beta, it might misrepresent the risk in this case.",[15,6386,6387],{},"Secondly, Beta infers return volatility as risk which might not represent the ideal definition of risk for investors (risk of permanently losing the capital). The limitation of volatility as risk can be shown in the sample below.",[53,6389,55,6390,55,6393,55,6396],{},[57,6391],{"srcSet":6392,"type":60},"/blog_images/what-is-beta/beta-limitations.avif",[57,6394],{"srcSet":6395,"type":64},"/blog_images/what-is-beta/beta-limitations.webp",[66,6397],{"alt":6398,"src":6399,"style":4695,"width":4696,"height":6400,"loading":651,"decoding":73},"Beta limitations","/blog_images/what-is-beta/beta-limitations.png",348,[15,6402,6403],{},"As shown, Stock E has outperformed the market for all periods and has never yielded any negative return in any period. Yet it has a beta of 1.78. Is Stock E riskier than the market? Beta alone might not be able to answer the question.",[15,6405,6406],{},"In the end, Beta is just a measurement of an investment’s return sensitivity relative to its benchmark’s. Although it is not the best measurement of an investment risk since the historical risk might not infer the future and the return volatility might not imply the real investment risk, it can help characterize the asset or the investment portfolio.",[15,6408,6409,6410,353],{},"Calculating Beta by yourself can be troublesome. Let us do that for you, so you can focus on what really matters. Visit us at ",[519,6411,522],{"href":521},{"title":528,"searchDepth":529,"depth":529,"links":6413},[6414,6415,6416,6421,6422],{"id":6277,"depth":532,"text":6278},{"id":6284,"depth":532,"text":6285},{"id":6297,"depth":532,"text":3386,"children":6417},[6418,6419,6420],{"id":6335,"depth":529,"text":6336},{"id":6342,"depth":529,"text":6343},{"id":6349,"depth":529,"text":6350},{"id":6356,"depth":532,"text":6357},{"id":6377,"depth":532,"text":6378},"Beta is a measurement of an asset's return volatility relative to the market. It is originally used in the CAPM to calculate expected returns.",{},"/blog/what-is-beta","2022-10-27",{"title":6257,"description":6423},"blog/what-is-beta","o0wNYup9TauyVT975O93gMqxIKhqwtRYh7PwAhRoTVs",{"id":6431,"title":6432,"body":6433,"description":6535,"extension":545,"meta":6536,"navigation":548,"path":6537,"publishedAt":822,"seo":6538,"seo_description":820,"seo_title":820,"social_image":6464,"stem":6539,"updatedAt":822,"__hash__":6540},"blog/blog/what-is-dca.md","How Dollar Cost Averaging affects Portfolio Performance",{"type":7,"value":6434,"toc":6532},[6435,6440,6443,6447,6450,6453,6466,6469,6472,6485,6488,6491,6504,6507,6510,6523,6526],[15,6436,6437,6438,353],{},"Dollar Cost Averaging is one of the most popular strategies for investors around the world. Many claim that Dollar Cost Averaging helps reduce risk one overpay for an asset before the price of such an asset drops. In this article, we discuss the rationale behind the DCA methodology and how it impacts an investment performance. If you find this article helpful, don’t forget to share it with your fellow investors. If you also think that tracking your investment strategy is useful and want to track it regularly and effortlessly, visit us at ",[519,6439,522],{"href":521},[15,6441,6442],{},"The purpose of this article is to show how Dollar Cost Averaging affected portfolio performance in the past. Nothing contained in this article should be construed as investment advice.",[32,6444,6446],{"id":6445},"what-is-dollar-cost-averaging","What is Dollar Cost Averaging?",[15,6448,6449],{},"Dollar Cost Averaging, also known as DCA, is an investment strategy that tries to minimize the risk of overpaying for any asset by dividing the invested capital into same small amounts and periodically investing that amount into an asset over time instead of one lump sum investment.",[15,6451,6452],{},"In this way, investors are able to buy more in the period when the price is low and buy less shares when the price is high. Moreover, DCA helps avoid market timing which many investors consider counter productive. As an example, we look at how DCA impacts a portfolio performance in 2008 as shown below. In this example, we use $SPY (SPDR S&P 500 ETF Trust) as the main asset to be invested.",[53,6454,55,6455,55,6458,55,6461],{},[57,6456],{"srcSet":6457,"type":60},"/blog_images/what-is-dca/averaging-down.avif",[57,6459],{"srcSet":6460,"type":64},"/blog_images/what-is-dca/averaging-down.webp",[66,6462],{"alt":6463,"src":6464,"style":611,"width":612,"height":6465,"decoding":73},"DCA over bear market","/blog_images/what-is-dca/averaging-down.png",452,[15,6467,6468],{},"An investment of $10,000 in $SPY at the beginning of 2008 (just ahead of stock market crash) would result in $32,783.62 today. This is equivalent to +227.84% return or +8.76% annualized return. On the other hand, an investment of $10,000 with monthly DCA over 12 months of 2008 would result in $38,628.44 today or +286.28% return or +10.03% annualized return.",[15,6470,6471],{},"The difference in returns is due to the fact that with DCA an investor was able to buy more shares of $SPY during the financial crisis instead of buying it at the highest during the bubble. Moreover, since investors were averaging down during the crisis, DCA also reduced the maximum drawdown in 2009 as well. With DCA, the maximum drawdown experienced during 2009 was reduced to -43.91% compared to -51.13% without DCA.",[53,6473,55,6474,55,6477,55,6480],{},[57,6475],{"srcSet":6476,"type":60},"/blog_images/what-is-dca/averaging-up.avif",[57,6478],{"srcSet":6479,"type":64},"/blog_images/what-is-dca/averaging-up.webp",[66,6481],{"alt":6482,"src":6483,"style":611,"width":612,"height":6484,"loading":651,"decoding":73},"DCA over bull market","/blog_images/what-is-dca/averaging-up.png",451,[15,6486,6487],{},"On the other hand, in 2019 when the market recovered strongly, DCA did worse in every metric since an investor was buying less shares during the bullish market. With monthly DCA, an investment of 10,000 would give $15,184 today or a return of +51.84% (+14.05% annualized return) compared to 17,445.64 or a return of +74.46% (+19.17% annualized return) without DCA. As shown, DCA yields different results based on the market condition investors are in.",[15,6489,6490],{},"In the next section, we zoom out to compare what really happened when investors deployed their whole capital with DCA and without DCA at different times since 1994. To simplify things, we simulate the results by comparing two scenarios, investing $10,000 at the beginning of any given year against doing a monthly DCA over the same year. The results are shown below:",[53,6492,55,6493,55,6496,55,6499],{},[57,6494],{"srcSet":6495,"type":60},"/blog_images/what-is-dca/historical-dca-results.avif",[57,6497],{"srcSet":6498,"type":64},"/blog_images/what-is-dca/historical-dca-results.webp",[66,6500],{"alt":6501,"src":6502,"style":3468,"width":3469,"height":6503,"loading":651,"decoding":73},"Historical return for portfolio with DCA and without DCA","/blog_images/what-is-dca/historical-dca-results.png",821,[15,6505,6506],{},"To summarize the table above, the average annualized return without DCA is +10.42%, and with DCA it is +10.02%. On an aggregate, there is not much difference in the return perspective. Furthermore, if we exclude the recent years (2017-present) which still have a short time horizon and can overstate the annualized return, the difference is even smaller with +9.63% and +9.44% respectively.",[15,6508,6509],{},"You might wonder what is the benefit of DCA at this point. To answer this question, we have to look deeper at three of these data points. A DCA based strategy shines most during 2002, 2009 and 2020 when the stock market retracted sharply at the time. By using DCA, performances based on drawdown are much better as shown below.",[53,6511,55,6512,55,6515,55,6518],{},[57,6513],{"srcSet":6514,"type":60},"/blog_images/what-is-dca/historical-max-drawdown-on-dca-during-market-crash.avif",[57,6516],{"srcSet":6517,"type":64},"/blog_images/what-is-dca/historical-max-drawdown-on-dca-during-market-crash.webp",[66,6519],{"alt":6520,"src":6521,"style":3468,"width":3469,"height":6522,"loading":651,"decoding":73},"Historical Max Drawdown during stock market crashes with DCA and without DCA","/blog_images/what-is-dca/historical-max-drawdown-on-dca-during-market-crash.png",183,[15,6524,6525],{},"In conclusion, what DCA has achieved is that it helps investors avoid an extreme. Buying assets at their highest price is always painful for investors. DCA helps make such scenarios less likely. As a result, investors were able to achieve average return while being able to reduce the drawdowns significantly.",[15,6527,6528,6529,6531],{},"If you like the cool charts and graphs in this article, be sure to check out ",[519,6530,522],{"href":521},". We make tracking your portfolio and performance simple, so you can focus on what’s important. Invest, Measure and Learn.",{"title":528,"searchDepth":529,"depth":529,"links":6533},[6534],{"id":6445,"depth":532,"text":6446},"Dollar Cost Averaging (DCA) is an investment strategy that divides the capital into same small amounts and investing that amount into an asset over time.",{},"/blog/what-is-dca",{"title":6432,"description":6535},"blog/what-is-dca","_oKsIlPoo9Wlb4e7YobiqyNCoi4GK4DtN8Ep6wOZtfI",{"id":6542,"title":6543,"body":6544,"description":6625,"extension":545,"meta":6626,"navigation":548,"path":6627,"publishedAt":6628,"seo":6629,"seo_description":820,"seo_title":820,"social_image":6556,"stem":6630,"updatedAt":6628,"__hash__":6631},"blog/blog/what-is-sharpe-ratio.md","What is Sharpe Ratio?",{"type":7,"value":6545,"toc":6619},[6546,6559,6562,6566,6569,6572,6581,6585,6588,6597,6600,6604,6607,6611,6614,6617],[53,6547,55,6548,55,6551,55,6554],{},[57,6549],{"srcSet":6550,"type":60},"/blog_images/what-is-sharpe-ratio/what-is-sharpe-ratio.avif",[57,6552],{"srcSet":6553,"type":64},"/blog_images/what-is-sharpe-ratio/what-is-sharpe-ratio.webp",[66,6555],{"alt":6135,"src":6556,"style":6557,"width":1048,"height":2853,"decoding":73,"fetchPriority":1050,"className":6558},"/blog_images/what-is-sharpe-ratio/what-is-sharpe-ratio.png","max-width:100%;width:700px;height:auto;aspect-ratio: 'attr(width) / attr(height)'",[1052],[15,6560,6561],{},"The Sharpe Ratio is a risk-adjusted return ratio that compares an investment's return to its risk. It was created in the 1960s by Nobel winner William Sharpe as a means to assess the success of investment portfolios.",[32,6563,6565],{"id":6564},"how-to-calculate-sharpe-ratio","How to calculate Sharpe Ratio?",[15,6567,6568],{},"You'll need three pieces of information to compute the Sharpe Ratio: the investment's return, the risk-free rate, and the standard deviation of the investment's returns.",[15,6570,6571],{},"The Sharpe Ratio is calculated as follows:",[1637,6573,6575],{"className":1639,"code":6574,"language":1641,"meta":528,"style":528},"Sharpe Ratio = (Investment Return - Risk-Free Rate) / Investment Return Standard Deviation\n",[1643,6576,6577],{"__ignoreMap":528},[1646,6578,6579],{"class":1648,"line":1649},[1646,6580,6574],{},[32,6582,6584],{"id":6583},"example-of-how-to-calculate-sharpe-ratio","Example of how to calculate Sharpe Ratio",[15,6586,6587],{},"Assume you have a stock that has returned 10% in the last year and the risk-free rate (such as the yield on a Treasury bond) is 3%. The stock's returns have a standard deviation of 5%. When we enter these figures into the formula, we get:",[1637,6589,6591],{"className":1639,"code":6590,"language":1641,"meta":528,"style":528},"Sharpe Ratio = (5% - 10%) / 5% = 1.4\n",[1643,6592,6593],{"__ignoreMap":528},[1646,6594,6595],{"class":1648,"line":1649},[1646,6596,6590],{},[15,6598,6599],{},"With a Sharpe Ratio of 1.4, the stock has earned 1.4 times greater return per a unit of risk than the risk-free rate.",[32,6601,6603],{"id":6602},"what-is-a-good-sharpe-ratio","What is a good Sharpe Ratio?",[15,6605,6606],{},"A decent Sharpe Ratio is generally thought to be greater than 1.0, though this can vary depending on the conditions. A greater Sharpe Ratio suggests that the investment delivered a higher amount of return per unit of risk.",[32,6608,6610],{"id":6609},"how-to-use-sharpe-ratio","How to use Sharpe Ratio?",[15,6612,6613],{},"It's crucial to remember that the Sharpe Ratio is only one measure of risk-adjusted return, and it should be used with other measures to get a complete picture of an investment's performance. The Sharpe Ratio does not take into consideration certain categories of risk, such as liquidity risk or tail risk, since it uses standard deviation of historical return as risk. This means it assumes that the more volatile the return, the riskier the assets. Furthermore, it is calculated using historical returns rather than future projections.",[15,6615,6616],{},"Finally, the Sharpe Ratio is a valuable measure for determining an investment's risk-adjusted return. It can be used to compare the performance of different assets and helps investors understand how much return they are getting for the level of risk they are taking on.",[1806,6618,1808],{},{"title":528,"searchDepth":529,"depth":529,"links":6620},[6621,6622,6623,6624],{"id":6564,"depth":532,"text":6565},{"id":6583,"depth":532,"text":6584},{"id":6602,"depth":532,"text":6603},{"id":6609,"depth":532,"text":6610},"The Sharpe Ratio is a risk-adjusted return ratio that compares an investment's return to its risk. It measures how much the assets has earned greater return per a unit of risk than the risk-free rate.",{},"/blog/what-is-sharpe-ratio","2023-01-04",{"title":6543,"description":6625},"blog/what-is-sharpe-ratio","qz1LkzfbrKxdvHK9oMDZiyql53RSw5VkBcrL367z6Ks",{"id":6633,"title":6634,"body":6635,"description":6713,"extension":545,"meta":6714,"navigation":548,"path":6715,"publishedAt":6716,"seo":6717,"seo_description":820,"seo_title":820,"social_image":6651,"stem":6718,"updatedAt":6716,"__hash__":6719},"blog/blog/when-growth-stocks-pay-dividend.md","When Growth Stocks Pay Dividends - A New Opportunity?",{"type":7,"value":6636,"toc":6705},[6637,6640,6652,6656,6659,6662,6665,6669,6672,6676,6679,6683,6686,6690,6693,6696,6698,6703],[15,6638,6639],{},"Investors have traditionally been divided into two camps: those who invest for growth and those who invest for yield. These two investment styles, while distinct, can sometimes overlap. However, a recent development in the market has blurred these lines even further in a surprising way.",[53,6641,55,6642,55,6645,55,6648],{},[57,6643],{"srcSet":6644,"type":60},"/blog_images/when-growth-stocks-pay-dividend/when-growth-stocks-pay-dividend-cover.avif",[57,6646],{"srcSet":6647,"type":64},"/blog_images/when-growth-stocks-pay-dividend/when-growth-stocks-pay-dividend-cover.webp",[66,6649],{"alt":6650,"src":6651,"style":611,"width":612,"height":613,"decoding":73},"When Growth Stocks Pay Dividends","/blog_images/when-growth-stocks-pay-dividend/when-growth-stocks-pay-dividend-cover.png",[32,6653,6655],{"id":6654},"yields-vs-growth-the-traditional-divide","Yields vs. Growth - The Traditional Divide",[15,6657,6658],{},"Investors focused on yield often look at dividend yield as key metric to make decisions. At the same time, companies that do not have a stellar growth trajectory usually pay attractive rate to incentivize investors to buy their stocks.",[15,6660,6661],{},"After all, why put money into a risky company when you can earn around 5.37% from supposedly risk-free government bonds (SGOV)?  Any asset in this category should offer a higher return to compete with this benchmark.",[15,6663,6664],{},"Growth investors, instead, bet on the companies of tomorrow - often in technology sectors - where explosive share price increases are the goal. To them, current profitability or dividends matter less than the potential for outsized growth. This can range from the Magnificent Seven (Mag 7) to small tech stocks.",[32,6666,6668],{"id":6667},"the-2024-shakeup-big-tech-embraces-dividends","The 2024 Shakeup: Big Tech Embraces Dividends",[15,6670,6671],{},"However, 2024 has brought a surprising twist. The Mag 7 stocks, long considered growth stocks, have started paying dividends. This unprecedented move has sent ripples through the investment community. Meta announced a 50 cent dividend per share in February 2024, and Google’s Q1 earnings released on April 26, 2024, followed suit. As a result, both stocks rose by more than 15% overnight, leaving investors amazed and intrigued.",[32,6673,6675],{"id":6674},"the-case-for-big-tech-with-dividends","The Case for Big Tech (with Dividends!)",[15,6677,6678],{},"There's a strong argument for buying into these dividend-paying giants. They still drive incredible growth and dominate their markets. Now, on top of their share price potential, you also get regular income. This combination of growth and stable payments could be incredibly lucrative.",[32,6680,6682],{"id":6681},"the-case-for-looking-beyond","The Case for Looking Beyond",[15,6684,6685],{},"Before clicking a buy button, it is good to consider opportunity cost. While big tech stocks shine, there may be smaller, nimbler companies with even greater growth potential waiting to be discovered. If your main goal is maximizing returns, casting a wider net could unearth some good opportunities given that the price of these big tech stocks are already skyrocketing.",[32,6687,6689],{"id":6688},"your-call-growth-dividends-or-a-perfect-blend","Your Call: Growth, Dividends, or a Perfect Blend",[15,6691,6692],{},"This is a question only you can answer, based on your investment goals and risk tolerance. However, one thing is clear: the investment landscape is evolving, and as investors, we must adapt and seize the opportunities coming our way. Whether you’re a yield-focused investor or a growth-focused investor, the current market offers exciting possibilities.",[15,6694,6695],{},"Stay informed, stay flexible, and most importantly, stay invested.",[32,6697,4459],{"id":4458},[15,6699,6700,6701,4465],{},"Ready to load up dividend-paying, Tech megacap stocks? ",[519,6702,522],{"href":521},[15,6704,805],{},{"title":528,"searchDepth":529,"depth":529,"links":6706},[6707,6708,6709,6710,6711,6712],{"id":6654,"depth":532,"text":6655},{"id":6667,"depth":532,"text":6668},{"id":6674,"depth":532,"text":6675},{"id":6681,"depth":532,"text":6682},{"id":6688,"depth":532,"text":6689},{"id":4458,"depth":532,"text":4459},"A Game-Changer for Your Portfolio? How to Navigate Big Tech's Dividend Revolution",{},"/blog/when-growth-stocks-pay-dividend","2024-04-26",{"title":6634,"description":6713},"blog/when-growth-stocks-pay-dividend","j3NvvLs9z4ljpcNwm06CmnjT-P9hJt8Zdjkg5vfSLhQ",{"id":6721,"title":6722,"body":6723,"description":6819,"extension":545,"meta":6820,"navigation":548,"path":6821,"publishedAt":6822,"seo":6823,"seo_description":820,"seo_title":820,"social_image":6735,"stem":6824,"updatedAt":6822,"__hash__":6825},"blog/blog/yield-on-cost.md","Yield on Cost - Definition and Formula",{"type":7,"value":6724,"toc":6810},[6725,6737,6740,6744,6747,6751,6754,6766,6770,6777,6781,6784,6788,6791,6793,6796,6798,6804],[53,6726,55,6727,55,6730,55,6733],{},[57,6728],{"srcSet":6729,"type":60},"/blog_images/yield-on-cost/yield-on-cost-cover.avif",[57,6731],{"srcSet":6732,"type":64},"/blog_images/yield-on-cost/yield-on-cost-cover.webp",[66,6734],{"alt":1508,"src":6735,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050,"className":6736},"/blog_images/yield-on-cost/yield-on-cost-cover.png",[1052],[15,6738,6739],{},"For dividend investors, many metrics are quite useful for evaluating the performance of their investments and helping them make informed decisions about their portfolios. One of the metrics that many dividend investors use is the \"yield on cost.\" In this article, we will delve into this metric, understanding what it is, how to calculate it, and its applications.",[32,6741,6743],{"id":6742},"what-is-the-yield-on-cost","What is the Yield on Cost?",[15,6745,6746],{},"Yield on Cost is a financial metric measuring dividend paid as a percentage of initial cost of the stock purchased. As the name suggests, the yield on cost aims to capture the yield from stocks in relation to their cost basis. This metric allows investors to see the dividend return on their initial investment in a stock. Put simply, the yield on cost measures a stock's annual dividend divided by the average cost basis. It provides a way to assess how the income generated by an investment has grown over time, making it particularly valuable for long-term investors.",[32,6748,6750],{"id":6749},"how-to-calculate-the-yield-on-cost","How to Calculate the Yield on Cost?",[15,6752,6753],{},"Calculating the yield on cost is a straightforward process. To determine it, you need to know the annual dividend income you receive from a particular stock and your average cost basis for that stock. The formula for calculating the yield on cost is:",[53,6755,55,6756,55,6759,55,6762],{},[57,6757],{"srcSet":6758,"type":60},"/blog_images/yield-on-cost/yield-on-cost-formula.avif",[57,6760],{"srcSet":6761,"type":64},"/blog_images/yield-on-cost/yield-on-cost-formula.webp",[66,6763],{"alt":6764,"src":6765,"style":1047,"width":1048,"height":1049,"decoding":73,"fetchPriority":1050},"Yield on Cost Formula","/blog_images/yield-on-cost/yield-on-cost-formula.png",[32,6767,6769],{"id":6768},"what-is-the-difference-between-the-dividend-yield-and-yield-on-cost","What is the Difference Between the Dividend Yield and Yield on Cost?",[15,6771,6772,6773,6776],{},"It's important to distinguish between the ",[519,6774,6775],{"href":1385},"dividend yield"," and yield on cost, as they serve different purposes. The dividend yield measures the annual dividend paid by a security divided by its current market price. On the other hand, the yield on cost looks at the annual dividend income in relation to the average cost basis. While both metrics are related to dividends, they capture different aspects of an investment. The dividend yield reflects the current return on your investment, while the yield on cost reflects how that return has changed over time.",[32,6778,6780],{"id":6779},"what-is-the-yield-on-cost-used-for","What is the Yield on Cost Used For?",[15,6782,6783],{},"The yield on cost is primarily used by long-term investors to assess the performance of their investments over time. It helps them understand how the income generated from their initial investment has grown, providing a valuable perspective on the effectiveness of their investment decisions. Investors can use this metric to evaluate the success of their long-term strategies and to make informed decisions about whether to hold, sell, or add to their positions.",[32,6785,6787],{"id":6786},"what-is-a-good-yield-on-cost","What is a Good Yield on Cost?",[15,6789,6790],{},"Since the yield on cost is calculated by dividing annual dividend income by the average cost, it doesn't take into account the time an investor has held the stock. Therefore, it can vary significantly and may not have a universally defined 'good' yield on cost. However, it is typically expected that the yield on cost will increase over time to reflect the company's growth and its ability to raise dividends over time",[32,6792,1516],{"id":1515},[15,6794,6795],{},"In conclusion, the yield on cost can be a valuable metric for dividend investors to evaluate the performance of their investments, especially when taking a long-term view. It provides insights into how the income generated from an initial investment has evolved over time. However, it's essential to remember that this metric has limited usefulness when it comes to making forward-looking investment decisions where current and annualized performance metrics such as dividend yield might be more useful.",[32,6797,1523],{"id":1522},[15,6799,1526,6800,1529,6802,1534],{},[519,6801,522],{"href":521},[519,6803,1533],{"href":1532},[15,6805,1537,6806,1542,6808,1547],{},[519,6807,1541],{"href":2816},[519,6809,1546],{"href":1545},{"title":528,"searchDepth":529,"depth":529,"links":6811},[6812,6813,6814,6815,6816,6817,6818],{"id":6742,"depth":532,"text":6743},{"id":6749,"depth":532,"text":6750},{"id":6768,"depth":532,"text":6769},{"id":6779,"depth":532,"text":6780},{"id":6786,"depth":532,"text":6787},{"id":1515,"depth":532,"text":1516},{"id":1522,"depth":532,"text":1523},"The yield on cost aims to capture the yield from stocks in relation to their cost basis. This metric allows investors to see the dividend return on their initial investment in a stock.",{},"/blog/yield-on-cost","2023-10-15",{"title":6722,"description":6819},"blog/yield-on-cost","UiH9hfGsUDHiwpZs88OJ951DkMk4vxaceG-o3FjsLKc",1775835723569]