Ok, I had another Journal that I was using before, but since my goals and strategies have changed, I've decided to start a new thread. Let me first start off by saying and warning that some of this may *look like* investing and I hope that members here won't immediately discount it because it's not "pure" trading. Instead, this will be "active" portfolio management. ...I have a number of goals here...I want to first evolve my own strategies to outline and keep track of my own portfolio techniques. I also want to hopefully demonstrate that active portfolio management can be highly effective and give superior returns. These strategies will evolve throughout the time of this thread. I will initially be using fundamental analysis in making decisions. I will start out with a few portfolios. I will manage each portfolio specified separately. There may be some cross-over in some of the portfolios. If there is, I will hold enough of the security to hold in both portfolios separately. I will outline key statistics on a weekly basis to gauge the effectiveness of the portfolios. Like I said, please don't discount the strategies because they may look like "buy and hold". They really won't be that simple. Some securities may be held for long periods of time, but the overall strategies will be active management and returns that risk-adjusted outperform the market as a whole. Will I succeed? I don't know. But my goal will to be minimize risk and evolve the best risk-adjusted returns possible.
My first 2 portfolios will be strictly based on fundamentals. They will be very simple in their strategies. Buy undervalued stocks and sell overvalued stocks. Each portfolio is not fully invested yet, so the weights won't add to 100%. Portfolio A: A pure long portfolio. CHRS *** Average cost: $6.47 *** Weight: 8.33% *** Current price: $5.53 *** Current Unrealized Gain of Portfolio: -1.2% ALK *** Average cost: $24.52 *** Weight: 8.33% *** Current price: $25.33 *** Current Unrealized Gain of Portfolio: .28% AYI *** Average cost: $36.57 *** Weight: 8.33% *** Current price: $39.49 *** Current Unrealized Gain of Portfolio: .67% ISYS *** Average cost: $22.49 *** Weight: 8.33% *** Current price: $24.93 *** Current Unrealized Gain of Portfolio: .90% Total Unrealized P/L: .65% Portfolio B: Market Neutral Hedged Portfolio. Longs: Same Long positions as above Shorts: MAC *** Average cost: $76.35 *** Weight: 8.33% *** Current price: $77.65 *** Current Unrealized Gain of Portfolio: -.14 Total Unrealized P/L: .51% Next week I'll start highlighting other statistics: Standard Deviation, Sharpe Ratio...etc.
How is this market neutral? You can't possible be beta-hedged unless MAC has very very high beta compared to the other names.
That's only one short position of the many I plan to have. The portfolio isn't complete yet as I haven't found the ideal securities to satisfy the requirements. I'm "building" the portfolio and it will probably take a couple of weeks or longer to fully vest it. Give it time.
I'd actually also like to add that yes...right now the "market neutral" portfolio is not neutral. Basically it's because I started building the long portfolio first, but I wanted to reuse those same securities in the neutral portfolio. So in the "purest" sense, it won't be neutral until I've balanced it.
The neutral market portfolio is now balanced for the time being. I will be adding more positions to it. I will also start testing a trading strategy that I've been developing using very small positions. I haven't convinced myself yet that trading will be profitable for me. I think the strategy that I will be using is the prime tradeoff between risk and reward. It's probability based. Here is the Market Neutral portfolio: CHRS *** Average cost: $6.47 *** Weight: 8.33% ALK *** Average cost: $24.52 *** Weight: 8.33% AYI *** Average cost: $36.57 *** Weight: 8.33% ISYS *** Average cost: $22.49 *** Weight: 8.33% Shorts: MAC *** Average cost: $76.35 *** Weight: 8.33% GOL *** Average cost: $25.54 *** Weight 8.33% PLXT *** Average cost: $9.66 *** Weight 8.33% ACIW *** Average cost: $23.26 *** Weight 8.33%
Some new positions in long portfolio: Added CTHR $2.35 PFE $24.49 SCR $13.55 SFN $8.17 CHRS $5.55 ALK $24.52 AYI $36.57 ISYS $22.49 JMBA $4.74