Discover Something New With The Updated Portfolio Finder


When I was younger, I really enjoyed visiting my local used record store.  There was always something cool about walking into a sea of thousands of amazing albums I had never heard before and looking for something new and enjoyable.  Sometimes you’d hit it big and sometimes you’d run across something really weird, bit it was always a fun experience.

But strangely enough, I very rarely walked out with a purchased album.  Sure there was more great music there than I would ever be able to listen to in my lifetime, but in a way it ended up causing more problems than it solved.  You see, I’d have to take the time to listen to all of those albums in the store to know which ones were truly my taste, and frankly that was a lot of effort.  So I’d usually ultimately go on a friend’s recommendation rather than truly explore for myself.

People used to wonder back then how a relatively expensive music download service would ever take off when there were cheaper local options like my used record store.  But to me the most revolutionary new feature was not the “purchase” button, but the “search” box coupled with previews.  With an entire catalog available at the click of a button, good music was easier than ever to discover.  In my opinion breaking that barrier between the massive sea of music options and the ease of finding the right music for you was the key in driving the entire industry forward.  It’s about connecting people to artists.

I’ve applied a lot of that experience to Portfolio Charts, and it’s probably why the single tool I’ve spent the most time on is the Portfolio Finder.  If the Portfolios section is about showcasing the most popular albums, the Portfolio Finder is the app that lets you dig through the ocean of undiscovered talent for something truly original.  It’s been an ongoing project, and today I’m happy to announce the next iteration that should make it easier than ever to discover a portfolio idea to meet your personal investing goals.

An Illustrated Guide To Retirement Spending Strategies

Charts, Retirement

In all my years of working, I have yet to run across someone who didn’t appreciate getting a raise or become really agitated with the prospect of taking a salary cut.  Justified or not, the way that income level sets personal expectations seems to be ingrained in each of us from a young working age.  And after thinking that way for perhaps decades, it should come as no surprise that such a mindset doesn’t necessarily immediately evaporate the day we retire.  If you have a choice, do you really like the idea of leaving retirement income on the table?

So when studying the ins and outs of retirement finance, one little detail tends to really nag at the minds of certain optimization-oriented people — the assumption about the retirement spending method.  

How to Reconstruct a Stock Index from Scratch

Advanced, Charts, Theory

Regular readers will know that I often mention a desire to accumulate good data to add to the collection here.  Reliable old stock market history is notoriously difficult to come by, and the sources that do exist are either very limited in the indexes they track, heavily copyrighted, or insanely expensive and targeted to financial institutions.  So everyday investors like you and me have very few resources available and we do the best with what we can find.

After looking far and wide, I eventually came to the realization that finding good long-term returns data for individual indices that predates modern index fund equivalents with no strings attached just isn’t going to happen.  But being a naturally resourceful person, I wondered if that wasn’t a roadblock but an opportunity.  What can I personally do to fill the glaring hole in historical market data?

Some Portfolios Are More Trustworthy Than Others


Interviewing contractors to work on your home is an interesting exercise in managing expectations.  Purchasing a product where you know exactly what you’re getting ahead of time is a lot different than purchasing a service where the end result can never be fully appreciated until the work is complete.  Who you choose to do the work thus becomes the most important step, but it’s also the trickiest to navigate.

The salesmen dress in their finest clothes and are on their absolute best behavior, and they all claim to have a glowing track record and seem to be very capable.  You know intuitively that not all companies can be above average and that some crews are measurably better than others, but looking at their finely curated portfolios of their absolute best work it’s sometimes hard to tell the truly talented craftsmen from the ones who only talk about their few successes.

Without the benefit of a crystal ball to see all the surprise issues they’ll have to navigate on your project and how they will react, the best one can generally do is study the history of the company and check their references.  By gauging how consistently they delivered what they promised and exceeded customer expectations over time, one can learn something about their character and gain enough confidence to hand over your hard-earned money to a company with a trustworthy reputation.

There’s a similar issue in investing, although the stakes are even higher.  

A New Tool for Matching Goals to Timeframes

Charts, Goals, Theory

One of the things I’ve always found interesting about engineering — whether it’s making a new product or creating new spreadsheets — is that it’s a continuous learning process.  One new design may address an old question but raise a new one, and the search for new insights continues.  Sometimes working on a tool requires new methods that are interesting in their own right, and developing them can lead to new ideas you weren’t even looking for.

The Portfolio Finder Just Got A Little Smarter


Every time I post a new tool here I’m not always sure what to expect.  Some resonate with people immediately, and others take a little time to refine.  That said, the response I’ve received for the Portfolio Finder has exceeded my wildest expectations!  Thanks to everyone who has taken time to send me feedback.  Each comment, both positive and constructively critical, helps me to make the tools more helpful and easy to use.

A common theme on this site is that single averages lie, and I focus a lot on looking at the big picture to avoid the pitfall of cherry picking data.  So it comes as absolutely no surprise that the most common request I’ve received lately is to provide a variable start date for the Portfolio Finder.  

The Ultimate Portfolio Guide for All Types of Investors

The Ultimate Portfolio Guide for All Types of Investors


What does the historically best portfolio with the ideal balance of risk and return look like?

Ask that same question to different people and you’re likely to get not only different answers but also completely different paths to get there.  Your investment-savvy sibling might look up the long-term average returns for a few assets or funds and pick the best one.  A financial adviser might steer you towards the most popular portfolios that attracted the most clients.  A mathematician might use averages, standard deviations, and covariances to calculate the very precise theoretical ideal percentage of a given set of assets.  And an economist might lecture on valuations and economic conditions and put you to sleep before you even get to the answer.

Different people have different perspectives, and that’s part of what makes investing such an interesting topic.  With the massive number of portfolio variations available, finding the unique needle for every investor in the haystack of potential options seems like an impossible task.  It’s no wonder that the answer differs so wildly based on who you ask.

So what approach might an engineer take?


 Forget the needle.  Let’s study the haystack.


A Laymans Guide to Returns Uncertainty

A Layman’s Guide to Returns Uncertainty

Charts, Psychology

Watching your account balances when markets are volatile is really tough.  Some people like to attribute that uneasy feeling to an undesirable excess of emotion, and believe they simply need to keep a cool head and think rationally.  While that’s certainly a valid point, in my experience even the most stoic investing robot has a major blind spot when it comes to investing psychology.  It’s not a character flaw, but simply human nature.

Intelligent, well-educated investors will look at a variety of investing options and make a selection at least in part based on long-term empirical measures like the average return.  These smart investors are naturally wired to evaluate the world around them with their five senses and act with reason and numbers.  Now these are both admirable behaviors, but there’s already a logical conflict brewing under the surface in the last two sentences that gets exposed with a wildcard many aren’t truly prepared for — uncertainty.

In my experience, when an asset allocation seems on the brink of disaster right now, the problem is most often not with your portfolio but with your perception of what an average return or a standard deviation really means.  Human brains are just not naturally wired for uncertainty, and sometimes very rational people struggle with it the most.