Model Portfolios
This website was started during June 2001 by the Mutual Fund Special Interest Group (SIG), now known as the Financial Planning SIG. Its explicit purpose was to give anyone who claimed to be outperforming an index an opportunity to show the world exactly what they were doing. Whenever anyone claims they are outperforming an index, I invite them to post a model portfolio, but only if I believe they have a strategy worth pursuing.
Since June 2001, not one investor responded to my offer to post a model portfolio on this site. That fact affirms a revealing and entertaining story. Many investors are eager to tell you how successful they are, but I have found that unless they are willing to share their strategy (or at least a model of their portfolio), their outperformance is likely to exist only in their imagination. In my opinion, that is true of professional as well as amateur investors.
Once again, anyone with a compelling strategy is invited to post a model portfolio on this website. If you are successful, then I will tell you everything I know about the financial newsletter business. I have found that a financial newsletter can be fun, and sometimes even profitable. Market timers and stock pickers are all equally welcome.
Model Portfolio Rules
1. Changes may be made to the portfolio no more than once per week.
Changes must be made after 4:00
PM on Friday and before 4:00 PM on Saturday. Changes will be posted on
this website before 4:00 PM on Sunday.
2. Purchase & Sale prices will be based on the following Monday's average
HI-LO price.
3. Market Timers may not hold stock i.e., they must trade one index.
4. Stock Pickers must be fully invested at all times.
5. An appropriate index must be identified.
6. Portfolios must be started after the markets close on the final
trading day of the quarter.
Other Reasons to Post Model Portfolios
An essential part of an intelligent investment process is the critical examination of an investment strategy and its implementation.
The Financial Planning SIG frequently has roundtable discussions during which individuals explain their strategies and portfolios. It is simply not possible to fully understand a strategy and/or a portfolio if no record exists. If the strategy or the portfolio is not completely understood, and if no record exists, then they cannot be critically examined.
Furthermore, the atmosphere of the Financial Planning SIG is social, rather than critical, so it is highly unlikely for anyone to critically evaluate anything that has simply been verbally described. For example, I have heard an individual speak proudly, on many separate occasions, of a personal portfolio that essentially consisted of a single stock. Not one person critically evaluated this portfolio, even though it violated almost every investing rule any prudent investor should follow.