An update on software for managing portfolios

I had written a couple of posts ago about BetterInvesting's Portfolio Manager. I also looked at PowerInvestor for stock selection. In principle, these software packages are great ideas. But PowerInvestor is woefully out of date. Many companies and ETFs are not in their database. My emails to them have without exception gone unanswered. I recently called and asked for a refund. They didn't even ask why I was canceling my subscription. This is not a well run machine.

BetterInvesting offers what they advertise. Though it is a bit confusing to figure out precisely what they're advertising. For $8/mo, you get access to their web site. The Portfolio Manager software is another $129. This turns out to be a fair bit of money. True, compared with what I'm investing, the sum is small. But I came away feeling dissatisfied. The web site looks pretty, but is poorly organized. Most of the site seemed dedicated to other add-on products I could get with my basic membership. Very little by contrast seemed devoted to me making the best of my membership. Their support has been quite responsive.

So why am I spending so much time and effort here? I've got a relatively large sum of money to invest, and I want to get appropriate diversification in my portfolio. Appropriate relative to my preferences and needs. I can't, looking at my list of investments, figure out how I'm presently diversified. That's it. I don't need help picking stocks, because I'm right now not picking individual stocks. More on that in another post.

I googled again, and this time I found Fund Manager. The developers (developer?) have been very responsive. They provide a framework that I can use to measure my diversification. The downside is that I have to enter all the characteristics of my investments. This arguably is not really a downside, it is something I should know.

I've also found that Yahoo Finance is a lousy place to get information about ETFs. I've had better luck with MSN Money. I find it hard to admit that Microsoft has something better than Yahoo or Google, but there you have it.

Economy vs the Market

I'm a lousy blogger. I think about a lot that I don't put down. Thoughts that would likely improve with reflection, and be enriched through dissemination.

I've been looking at the market soaring for the past few months, and am amazed. How can this behavior be justified with inflation running high, and the housing market crumbling? I know I'm far from the first to note this apparent disconnect. I'm worse than a novice, I think I know something where in all likelihood I know very little. But on with the substance of my thoughts.

There's something rotten in the economy, and now is starting to appear in the markets. I always wondered what happened to all those sub-prime loans, how it was possible that the major banks and institutions seemed to be immune to their crashing. From the many news reports I'd read it was clear that significant portions of the country were in fact adversely affected.

Then there were CDO's. There's no point in my going on and on about this, what I know is minuscule, and there's nothing more I can add to the noise already out there on this matter. I'll instead focus on something a bit different: how I personally feel about the matter.

I've only been investing, and thinking about investing, for an year. When I had started, the market was in a down phase. Now it has been growing for several months, practically without a break. Stocks have gotten to a level that feel unsustainable. This is despite higher inflation and a potentially huge subprime mess. And I do have a bit of fear about how all will turn out if the bubble pops.

I'm saying if here. But in my mind I've actually convinced myself that it is just a matter of time, when, not if. (Does that make me a bear?) My intellect tells me that this is all pointless, of course the market is going to come down some time. It won't after all just keep going up. My fear is that I might be putting my money into a rising market.

I did find a reasonable way to deal with my fear though. Dollar cost averaging to the rescue. I'm really looking forward to seeing how all this unfolds. Positive or negative, I'm sure it will be all good.

Software for managing portfolios

I've spent a bit of time the last few days trying to find software for managing a portfolio, and selecting new investments. This has become practically necessary as the size of my portfolio grows. There are many on-line resources for this task, but I find them generally lacking. And given that there's a lot of real money at stake here, spending a bit to get good software is quite appropriate.

For tracking my portfolio, I wanted something that would be able to report on my investment diversification, and do so without my having to supply all the information about the investment. This seems like a simple enough requirement, but there are few consumer programs that do this. Finding a suitable data source is I think the most challenging part. Quantix Software writes Portfolio Manager for BetterInvesting, which seems to fit the bill quite well. The the UI is a bit clunky. More seriously, it uses BetterInvesting as a data source. They cannot address issues with the data themselves. And the data is missing details about many ETF's in which I've invested.

For stock selection, I'm going with PowerInvestor. Unfortunately they don't have a demo. But the software's focus (its heart) is in the right place. And I found a review on epinions that I found very satisfying.

I'd be very interested in getting other recommendations.

ETF correlations with the US stock market

Found this rather nice article discussing the US stock market correlation with different international ETFs. I don't know how long it will be up there, so I'm copying some of the key data:

So are you part of the cosmopolitan class?

This is the first time I have heard of the term cosmopolitan class. I find the notion intuitively appealing, that there is a distinction between those whose economic well-being is tied to the locale, and those that have skills that can travel. My bet though is that on average the former will tend to outnumber the latter. I would count myself as a member of the latter, though I find the former a bit more appealing. Might just be my sentimental side.

Excellent article on income disparity

I never liked the tax cuts passed by the Republican legislators and Bush. I just stumbled on a blog post (which itself summarizes an article by Krugman in the Rolling Stones) that gives credence to my gut feelings. Does the US have the will to fix this gradually deteriorating situation?

Picking stocks in a bull market

How do you pick stocks in a bull market that you think are going to do well over time? I have set up a couple of screens that brought up a couple of stocks: CHK and WERN. CHK, Chesapeake Energy Company, seems like a good buy, with a P/E of less than 7. It seems to have good prospects: excellent sales, consistent growth over several years, but I couldn't shake the feeling that something was wrong. More searching turned up something I didn't like: large long term debt, to the point that CHK is apparently issuing stock to pay down the debt. Its financial position seems unsound, so I'm not taking on this stock.

WERN on the other hand seems to have an excellent track record. Steady (though not growing) revenue, a good fleet of trucks, no debt. It has been on my radar for some time now, and its stock price as not budged. On the other hand, JBHT has seen a substantial rise in the last few years. Strangely, the stock price graph looks remarkably similar to the graph of its long term debt. The same is true of WERN. So, as a long term investment, where should I put my money? For now I've picked WERN. Now let's see if this proves to be a good value stock.

A new house

I'm wondering about a new house. I don't know what I can afford, what I can get without breaking my budget. The housing market has apparently flattened out, but is that all that's going to happen here in SF? It doesn't make sense to me, how the housing market's prices could possibly be sustainable. Houses are out of reach of most people, even families with two incomes. The rate of increase of housing prices is much higher than the general rate of inflation. Where does that leave someone who's purchasing their first place? I have half a mind to sell my current place, swallow the capital gains tax, and rent a place rather than buy. I have a bad feeling about the housing market.

But then I look at the historical trend. It's interesting that home prices have only come down slightly once in the last 25 years. The income-to-price ratio shows a more interesting trend. The fall and stabilization of home prices corresponded to a significant drop in income-to-price ratio. That ratio has only recently started reaching a historical high. When I had bought my place, the price for my particular place had plateaued, and had remained that way for nearly two years. Then it climbed sharply. Right now I hope that's the kind of adjustment we're facing. Having house prices stagnate for a little while will be good.