Put Your Portfolio on Autopilot and Enjoy the Ride

Beginner, Psychology

I’m a big fan of asset allocation. Rather than slaving over daily market news to chase fleeting profits and avoid unpredictable losses, smart investors can create an intelligently constructed portfolio that grows and protects their hard-earned money with low stress and minimum effort. Like following a simple recipe to bake a cake from scratch, all you have to do is purchase a handful of low-cost ingredients, combine them in the right proportions, and let chemistry, heat, and time do all the work. Simple but sophisticated portfolio ideas designed by some of the best minds in the business can help you meet your important life goals while freeing you to focus your own energy on the things in life that truly matter. And with just a small amount of coaching, anyone can do it!

What’s not to like?

Well, to be honest there is one thing that has always sorta rubbed me the wrong way. It’s not a problem with the strategy itself, but an inherent communication issue dripping in bias that I believe subtly chases off a lot of people new to the concept. Asset allocation has a marketing problem, and it all comes down to terminology.

Continue reading →

Metal, Money, and the Measurable Value of Gold

Advanced

Buried in an otherwise mind-numbingly boring regulatory filing released recently was a seemingly innocuous line item that most people would not give a second thought. Sometime in the second quarter, Berkshire Hathaway invested a comparatively tiny 0.3% of their total portfolio into just a single new company. No big deal, right?

But it wasn’t just any company. After spending decades as perhaps the most respected and widely-cited critic of gold as an investment, Warren Buffett bought 21 million shares of Barrick Gold — one of the largest gold mining companies in the world. It was so out of character that the financial world immediately did a huge double-take. The headline from Bloomberg pretty much speaks for itself:

Berkshire Makes a Bet on Gold Market That Buffett Once Mocked

As one might expect, investors on both extremes of the gold-appreciating spectrum are furiously debating what this all means. Buffett’s closest gold-averse followers are circling the wagons and dealing with a lot of cognitive dissonance, while gold bugs are enjoying dishing out some playful jabs after years of being on the receiving end. Lost in the middle is a vast sea of normal investors watching the news and searching for actionable information.

This article is for that last group just wanting to know the truth about gold and what it can (and can’t) do for their own portfolios.

Continue reading →

A Beautiful Design Is More Than Just Skin Deep

Updates

While useful and accurate data is always my primary concern with Portfolio Charts, I spend way more time than you might realize creating the perfect visual design. Whether it’s selecting the ideal chart settings to make the data pop, finding just the right image to accompany a post, or iterating dozens or even hundreds of visual layouts to find the cleanest option, I’m always looking for ways to beautify each page.

One can certainly argue my design background contributes to my obsessiveness over each detail, but it runs a lot deeper than just wanting to create something easy on the eyes. I learned long ago that little visual choices really do matter. Like the bright aposematic colors that warn predators about the poison dart frog, eye-catching items often communicate very important information. So a truly beautiful design is way more than just skin deep.

Continue reading →

Join the Celebration and Support the Cause

Updates

It seems like only yesterday that I was first dipping my toes into the crowded waters of the financial blogosphere with no idea how to swim. But time really does fly, and Portfolio Charts just turned five years old! The site has grown leaps and bounds over the years and it’s amazing to see how far it has come. It’s truly a labor of love, and the intertwined journeys of personal education and creatively-shared knowledge have been tremendously rewarding for me and hopefully informative for you as well.

To celebrate the big day I thought it might be appropriate to briefly talk about the origins of Portfolio Charts, share how you can help guide the future, and initiate a fun challenge to mark the occasion.

Continue reading →

Welcome to the Big Bounce

Portfolios, Psychology

I don’t know about you, but the last few months have been some of the wildest and most newsworthy I can remember. From a global pandemic and ongoing social unrest on one end to an incredibly inspiring SpaceX launch and emerging hope for a better world on the other, the roller-coaster of emotions has been all over the map. It’s unpredictable, intense, and at times utterly exhausting.

And the markets have clearly mirrored that crazy ride. It seems like only yesterday that I was writing an article cataloging one of the single worst months to invest on record, but the market has since roared back far faster than even the most optimistic investors expected. That encouraging development seems to have changed investing mindsets a bit, spurring a curious reader to pose an interesting forward-looking question:

What are the portfolios that tend to do better after a crisis?

While I don’t have a functioning crystal ball, I do have a ton of historical data at my fingertips. So let’s dig in and see what we can learn about portfolio recoveries.

Continue reading →

How to Prepare for Portfolio Moving Day

Beginner

While I know lots of people who enjoy watching house hunting shows, browsing real estate listings, and imagining life in a new home, I have yet to meet a single person who doesn’t loathe the process of moving. From finalizing the deal on the new place, unloading the old one, packing all of your stuff, arranging the move, and coordinating the timing of every step all while continuing to work your day job, moving can be really stressful. It’s enough to drive many people to reevaluate whether it’s all worth it and just be happy where they are.

Transitioning to a new portfolio can often be equally tricky. Sure, the actual move is just a matter of clicking a few buttons on a computer screen rather than loading your entire life into a truck. But that’s just one step in a long and detailed process. Figuring out the best way to move your money while minimizing taxes and dealing with the uncertainty surrounding future market returns makes moving portfolios a complicated and emotionally-charged endeavor. What if you mess up? What if your new portfolio loses money the moment you buy in?

When in doubt, doing nothing really isn’t such a bad choice. But staying the course isn’t always the wisest decision when that course was set years ago before you really knew what you were doing. It’s ok to change plans when you grow as a person and learn new information, and there’s no reason to let fear and uncertainty get in the way. So no matter whether you’re finally pulling cash out of storage or considering a strategic portfolio change, let’s talk about how to plan a thoughtful financial transition.

Continue reading →

Fixes, Updates, and Special Thanks

Updates

The technology gods really threw me a curveball this week. Microsoft rolled out a stealth update of their online Excel tools with what I’ll politely call a bunch of new “quirks”, and many of the site calculators that worked fine for years suddenly were unable to do even the simplest tasks like display numbers correctly. I admittedly push spreadsheets to their graphical limits and have always navigated little bugs the best that I can. But this one was beyond simple formatting issues and quick fixes.

One of the things I’ve learned over the years, however, is not to get too hung up on things you can’t control. So instead of dwelling on what clearly doesn’t work right now, I decided to take this as an opportunity to focus on what I’m good at and step up my visualization game. The end result is a bunch of revamped charts that both work like a charm and should hopefully be even easier to use and understand.

Continue reading →

A Faith Not Tested Cannot Be Trusted

Beginner, Psychology

In July of this year NASA is planning to launch the next mission in their ongoing series of journeys to Mars. Named Perseverance, the robotic explorer is built on the successful design of the Curiosity rover that has been wandering the Red Planet since 2012. A machine capable of long-term exploration of another planet is a true engineering marvel, but controlling it remotely is not even the hard part. After decades of practice, even the requirements of launching devices out of the pull of Earth’s gravity are pretty well-known. But do you know what is still a real challenge even for the best rocket scientists?

Sticking the landing.

Continue reading →

Asset Allocation in the Most Painful Month

Portfolios, Psychology

As the entire world locks down in reaction to the ongoing coronavirus pandemic, our number one concern as a group is mutual solidarity in saving lives. But the ultimate impact of the tiny COVID-19 virus extends so far beyond the immediate health toll. The disruption to our global economy required to prevent its spread is having profound, deep-scarring effects on the everyday lives we take for granted. Entire industries are closing their doors, countless people are losing their jobs, and any short-term treatment for the disease may simply be a prelude to a much longer financial road to recovery.

So as we shelter in place taking care of our families and waiting for the worst to pass, it’s natural to count not only our stock of food in the pantry but also our collection of stocks in the market. No matter how you invest, I wager it isn’t pretty. It’s not just you. There’s no hiding from the turmoil, and we’re all feeling the pain.

The resulting anxiety prompts normally self-confident investors to suddenly get very curious about how others are doing in the same situation. I get it. So let’s talk real numbers and put the current financial crisis in perspective for different types of portfolios.

Continue reading →

The Bear Market Survival Kit for Nervous Investors

Psychology

Unless you’ve been living under a financial rock, you’ve probably heard about the recent stock market turmoil. You know what I’m talking about. That big unexpected thing that nobody saw coming spooked the market into a freefall. The news is full of gloom and doom. The usual safe-haven assets aren’t behaving as you might expect. Normally level-headed people are freaking about about their investments. And you’re sitting there wondering if the financial world really is finally coming to an end.

Even without naming the crisis, I imagine this situation sounds familiar. In fact, despite the false sense of invincibility that blissfully ignorant investors can easily build up during periods of market growth, this kind of thing happens all the time. Portfolio Charts is dedicated to studying that history beyond the pretty long-term averages. From the meager short-term drawdowns to the wildest pandemonium when stocks are truly off their meds, the data is all here in its raw visual glory.

But contrary to the media personalities that live for selling juicy drama, pious lectures, and petty schadenfreude, my goal isn’t to peddle in fear. I’ve been there and understand your concerns, and I simply want to share the knowledge and philosophy that helped me overcome my own investing insecurities.

So on this day where you may be questioning your own decisions and anxious for what the future holds, allow me to offer a little wisdom learned the hard way. Think of this short list of articles as my bear market survival kit, as they are a small window into the mindset and approach that helped me gain the confidence I needed to make money, sleep well, and live a happy life in any market condition.

Continue reading →