What is your favorite portfolio analysis tool?

Posted by: Lauren Young on October 4, 2007

A reader, who shall be named Dollarwise Dan, sent me an email this week asking for the best way to get a snapshot of his portfolio. He actually works at a BIG brokerage firm, but the company has no portfolio analysis tools. Instead, they are pushing him toward a full-service broker. (No surprise there.) “It would take some effort to enter all of my holdings into a system, but I’d be willing to do it for the right tool,” Dollarwise Dan says.

His laundry list of requirements include a program that can track at least 30 ticker symbols for mutual funds and equities, as well as a snapshot of allocations broken into categories. He’s looking for risk analysis, and, if possible, taxable-income analysis. Finally, he’d like a program (preferably online) that can analyze his taxable, as well as tax-deferred, holdings.

My first thought is for him to try this with Morningstar’s portfolio analysis tools, but that doesn’t offer everything he is looking for.

Suggestions?

Reader Comments

MNK

October 7, 2007 6:21 PM

How about Quicken's online portfolio tool?
http://www.quicken.com/investments/portfolio/

Jack Krupansky

October 8, 2007 11:35 AM

Perhaps you could query Mr. Dan as to what his personal requirements are for "risk analysis."

I'm guessing that he may be seeking a tool for risk management as well.

OTOH, Mr. Dan may have his own plans for managing and mitigating risk and maybe he simply seeks automated identification of risks.

Given the huge writedowns that many of the biggest and best Wall Street firms have incurred in recent months, all of who had very sophisticated "risk management" systems in place, I'd be curious what cheap or free risk management tools are available to us individual investors that will be so much batter than what Wall Street has. Or, maybe it is not so much a matter of what a tool does, but how you use the tool.

Even more interesting is the question of how we can tell whether a risk management tool (or even a simpler risk analysis tool) can be relied upon when we really need it.

Then there is that truly annoying question: What is your tolerance for risk? As if any of us really has a clue.

Key underlying question: To what extent is risk analysis based on "past performance"?

Key companion question: To what extent is risk analysis based on accuracy of forecasts of economic and business outcomes in the medium and longer-term future?

I would definitely like to see more on risk, risk analysis, and risk management, but hopefully in terms that can be reliably used as a rock-solid bedrock foundation for portfolio allocation.

One intriguing "option" for measuring risk is to look at the cost of buying modestly in-the-money six-month put options to completely hedge stock portfolio loss and then comparing the net gain for an "expected" stock appreciation versus riskless six-month T-bills. After all, we are supposed to be looking at "risk-adjusted returns", right? That is what the porfolio tool should be telling us, the cost of adjusting our expected retturn for the market assessment of risk. In theory, the put option streategy would reduce your "risk" to zero, or you could adjust your degree of coverage to balance your comfort requirement versus your tolerance for risk. If this sounds too good to be true, first take a look at the sticker price for those put options. But at least you have a hard, market-based assessment of risk (and companion risk management strategy), rather than some pie-in-the-sky risk analysis "score."

-- Jack Krupansky

Gisela Weinland

October 10, 2007 12:33 PM

I suggest he look into VectorVest. I am new to the program and still learning, but it is worth every penny! A trial costs $9.95 and is good for 5 weeks.

Amy Wilson

November 22, 2007 12:42 PM

http://www.mutualdecision.com/mutual_fund/asset_allocator is a fine one. It gives recommended percentages for categories such as bonds, large cap, small cap, international stock and cash. This was very helpful, but I would still like to find a tool which will analyze stocks and mutual funds by their industry type.

DollarWise Dan

December 14, 2007 5:10 PM

What I'm after is something that can look at my holdings- in funds, equities, ETFs- and break down what i'm invested in for me, because it's tough to get a view across my accounts. Roughly it breaks into IRA accts and non-IRA accts, but I'd like to see my holdings broken by geography (domestic/international/country) [it doesn't have to tell me emerging market or not]; I'd like to know big/med/small cap; I'd like to see sector breakdown- Tech/Finance, etc; The more the better to let me know how I'm diversified.

rhodomontade

February 21, 2008 11:17 PM

Morningstar.com has a pretty good tool, it will do a portfolio x-ray that will break down by sector, geography, asset class, lg cap vs. small cap, your portfolio vs. S&P or other averages in terms of expense ratios, yields, P/E and more. It's a good tool and I like it.

Bless

July 29, 2008 6:02 AM

what are the different types of marketing portfolio analysis tools?

Anurag

September 13, 2008 4:34 PM

www.macroaxis.com has nice tools for portfolio analysis. It can analyze portfolio on risk/return ratio and even plot portfolio on efficient frontier. It uses Modern portfolio theory to analyze and optimize investment portfolio and also it is free to use.

Laurence Toney

November 24, 2008 12:51 AM

Cake Financial has a nice set of tools targeted at investors with stocks, mutual funds and ETFs. The latest product is called Investor Quick Check and provides an assessment of portfolio risk in less than 5 minutes.

It is available at ->

www.cakefinancial.com/investor-quickcheck

Alan Young

June 17, 2009 9:06 PM

Investment professionals are taught, and tell their clients, that their portfolios should be diversified (though “properly diversified”, or “well-diversified” are probably better descriptions).

Unfortunately, only a small percentage of these investment professionals, and a small percentage of investors in general, have any understanding what diversification truly is, and even fewer know how to achieve it or measure it.

There is a nice portfolio analysis tool located at http://www.portfolio-correlation-pro.com available for free download. It helps you look at the level of diversification on your portfolio.

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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