You need to take a long hard look at your portfolio using this tool. We did…

Strangely enough, the compliance team is also on the bandwagon. It uses a version of the same tool to monitor the editors’ recommendations. And build track records.

The compliance team use it for a reason. It provides information that your brokerage account won’t. About the nature and level of risk in a portfolio. And of a stock.

So what does this tool actually do? Why did it cause a stir in the office?

Is it related to crashing stockmarkets? Is it a new set of recommendations? A new newsletter?

As far as I know, it’s like nothing we’ve ever published. In fact, we don’t technically publish it.

The tool is a place for you to plug in information about your portfolio and/or any single stock you’re considering. What comes out the other end is crucial information that you may never have used before. Some of our editors hadn’t. But it’s information that should be crucial to your decision-making process.

You see, stocks are volatile. Some more than others. And some are volatile when others are not.

How do you adjust for all this? It’s hard enough to even find that information.

Well, if you don’t consider the questions, a single move in the stockmarket could dish out pain an order of magnitude greater than necessary. Or you might completely miss out on a stockmarket boom because you own the “wrong” types of stocks.

By checking what our editors were checking about their own portfolios two weeks ago, you can avoid that. Or you can adjust your risk deliberately.

Like I said, it works both ways, but it’s information you need to make the right decision.

Access to the new tool has highlighted one of the interesting divisions between the editors. Some of us are newsletter editors with track records of picking stocks for subscribers. Others are fund managers with experience of having to manage a balanced portfolio.

These are wildly different things, leading to different philosophies.

A resources stock newsletter isn’t concerned with cross correlation of commodity-exposed companies, for example. Its portfolio will be full of resource stocks, so the cross correlation will be high no matter what.

But a fund manager has to make sure they’re not overexposed to stocks from any particular sector. Just in case Russia and OPEC fail to come to an agreement, sinking the oil price by 31% and slamming stocks 8%…

And so you’ll notice a difference in the portfolios of newsletter editor types and fund manager types amongst our editorial team. The fund managers add a column – how much of each investment to buy.

They know that success isn’t just determined by what you buy, but how much of it you own.

Of course, your portfolio is unlikely to match any one newsletter perfectly. It certainly shouldn’t match Exponential Energy Fortunes, for example. Because that has a narrow remit – energy stocks.

It’s your responsibility to figure out how our recommendations would fit into what you already own – how your portfolio is put together. But how? It’s obviously something we can’t do for you… is it?

Well, the tool we’ll unveil this afternoon aims to do just that. You input your holdings and then you can evaluate what a new purchase or sale would mean for that portfolio.

And you can figure out how much of the investment to buy based on the desired effect.

The key being that you now have access to the information that experienced fund managers carefully watch to ensure their portfolio isn’t biased in any particular way. Unless it’s on purpose, of course.

The new tool has also added a twist to competition between editors. Some of our newsletters are high risk, such as Sam Volkering’s Crypto Profits Extreme. One minute he’s shooting out the lights, the next there’s a crypto crash.

The new tool tells you how much risk a portfolio has, so you can adjust performance by this risk. If a risky portfolio is outperforming because it is more risky, then we can point that out. And measure it.

Until next time,

Nick Hubble
Editor, Southbank Investment Research

Category: Commodities

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