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How to Create a Portfolio Just for You



Suvak

Richard Suvak, MSF, CFA

Portfolio Simulation

I imagine creating a portfolio for a non-professional to be much like a defense preparing to meet Tom Brady.  It’s not a level playing field.  He has too many weapons at his disposal.  He has offensive linemen willing to sacrifice their body for his.  He has running backs willing to plow head-first into brick walls.  He has receivers willing, and most notably able, to catch anything thrown in their general direction.  He has Bill Belichick overseeing every play, every substitution and every movement as he masterminds moves 10 plays against the opposition.  And significantly, Tom has notoriously spent decades studying and preparing for every snap.  NFL defenses have lost before they walk on the field.  They just don’t know it yet.

In the world of finance, institutional investors have a similar advantage.  They have terabytes of data to test every possible scenario.  They have custom built software to analyze the pros and cons of every solution.  They have teams of analysts to look at every conceivable angle.  They have marketing teams to highlight every achievement and sweep every failure under the rug.  They have marquee names to convey experience and trust.

On the other hand, individual investors have Yahoo Finance, Google Finance and their favorite investor blog from which to gather mostly stale information.  You’ve lost.  You just don’t know it yet.

However, there is hope.  In an effort to change the slope of the playing field, even if only by fractions, Eunoia Financial offers the enclosed portfolio simulation workbook.  As you stare at your latest financial statement in an effort to glean whether or not you’ve made the right investment decisions, you can now refer to the enclosed for help.

What would have happened had you invested more in equities?  What would have happened had you invested more in Emerging Market fixed income instruments?  How much cash could I have left uninvested and still achieve my goals?  These answers, along with many others, can be answered.  In addition, one can compare performance of the common equity and fixed income benchmarks along with a balanced benchmark (S&P 500, Barclay’s US Aggregate and Eunoia Custom respectively).  Return, volatility and other statistics are calculated and graphically depicted to give you an idea of the impact different investment decisions would have had on your portfolio.

Of course, there is some Eunoia Financial secret sauce which is not divulged – namely the underlying composition and weighting scheme of the otherwise common ETF instruments underlying each asset and sub-asset class.  Despite this though, we have provided enough detail to get you on your way to building a well-thought-out portfolio.

The only thing you have to decide… will tomorrow be like yesterday?

 

Eunoia Public Simulation.xlsx