The Power To Perform: mhj3.com Managing Investing Judgment Since 1989

Investor's WorkStation Premise

Investor's WorkStation

Investor's WorkStation is intended to help investment advisors define, manage, and process their personal investing game plan, their personal investing rule book that defines, 'Who you are, what you represent, how you conduct your business, that details what you will and will not do — what, when, why, how, and what if.'

Investor's WorkStation is the link between investors, investment advisors, and portfolio accounting software — 'A client communication, connection, and performance tool' — to help investment advisors build and protect investor's capital by creating and processing structurally sound and competitive investment portfolios as investor investment profiles, the current market conditions, the market outlook, and relative investment values change:

  • Investment advisors, stockbrokers, investment analysts, investment research firms, and individual investors who manage their own capital are always closer to random investment selection than they think they are, than they are willing to admit.
    • Whether doing one's investment selection due diligence or whether selecting investments at random, the results from both investment selection methodologies — careful investment selection and random investment selection — will be about the same most of the time; both generating good and bad investment selections and both yielding similar investment selection performance distributions; some up and some down; most a little, some quite a bit, and a few a lot; the problems, of course, being not knowing in advance what each investment will do; what direction, when, how far, and for how long.
  • Investments selected at random and governed by just basic/the minimum user defined Portfolio Management Disciplines, Rules, and Procedures — can't get in trouble — will outperform carefully selected investments generally ungoverned — adrift, results more by chance than by design.
  • Carefully selected and weighted investments — individual bonds and equities and/or mutual funds — placed in structurally sound and competitive investment portfolios as determined and governed by both user defined investment selection and management disciplines, rules, and procedures and user defined portfolio management disciplines, rules, and procedures will outperform most market indexes almost all of the time.
  • To the extent that one has a 'sense of the markets' and to the degree that investment timing can be improved, investing performance will improve exponentially.

mhj3

Like most investment advisors, when I was in the earlier stages of investment advising, I knew what investors needed to do, I was compelling as to why investors needed to do what I recommended they should do, and I was much better than most in convincing them to take action; however, after the initial transactions were executed, I was more unclear than not about the ongoing investment and portfolio management processes of specifically and actually how to get the job done in changing market conditions over time; the processes of converting conversation into performance — more adrift than in control, undisciplined rather than disciplined, and results more by chance than by design.

Take a moment and follow my thought process:

  • I know, as anyone who advises and invests knows:
    • Regardless of the source for investment ideas, the performance distribution from all sources will be about the same; some ideas up and some down; most a little, a few quite a bit, and one or two a lot.
    • Economic opinion and market forecasting will range from terrible, to close, to a few lucky calls.
    • All investment advisors and investors make both 'right' and 'wrong' investment selection and investment timing decisions—true from Buffett and Soros to you and to me—because being both 'investment right' and 'investment wrong' are built into the financial markets.
  • Also, If I were required to select investments at random rather than going through the normal investment selection 'vetting' steps that we all take, my very first step would be to define, apply, and enforce some portfolio management disciplines, rules, and procedures to help me separate the good from the bad, the weak from the strong, and the well timed from the poorly timed.
    • I would design portfolio management software to help me process my portfolio management disciplines, rules, and procedures.
  • Now change the rules and allow me, as we all can and do, to analyze, sort, and select investments by whatever means I choose.
    • Should I stop applying my portfolio management disciplines, rules, and procedures?
      • Clearly not; portfolio management disciplines, rules, and procedures can only help me to improve performance.
  • The point being that most of us (advisors and investors) depend too much on investment selection to perform and not enough on the ongoing processes of portfolio management which govern the dynamics of change for each and all of the underlying investment portfolio investments.
  • The centerpiece of one's investment advising and investing performance skills must be to build and to protect investors' investment capital by creating, managing, and modifying structurally sound and competitive investment portfolios that match appropriately selected and weighted investment sectors and suitable underlying investments with different investor investment profiles; different investing time horizons, risk tolerances and income/capital growth objectives.
    • Portfolio management disciplines, rules, and procedures are the investing performance edge that we all need and which most of us do not have or use when creating and modifying investment portfolios.

I needed to be able to create and modify investment portfolios in an instant as investor investment profiles, the current market conditions, relative investment values, and the market outlook change:

  • Add modifiable user defined Investment Sectors, underlying user defined Investment Categories, and an Investment Quality schedule.
  • Add modifiable investments — individual bonds and equities, mutual funds, money managers, and user defined — to the Master Database.
  • Create a modifiable user defined Allocation Matrix(s) Template; different selections, combinations, and weightings of Investment Sectors at up to 25 different matrix intercepts reflecting different investor investment profiles; risk tolerances and income/capital growth objectives.
  • Create an Advisor Database(s) — Model Portfolio Template(s) — composed of any number, combination, and weighting of investments classified first by Investment Sectors (as defined by the Investment Sectors used in the creation of the Allocation Table Matrix to be linked to the Advisor Database) and then by Investment Categories.
  • Create 'starting with cash only' Investor Portfolios by selecting the appropriate Allocation Table Matrix intercept, by entering total cash and cash reserve, and by clicking on Apply Capital to create unique, allocated investment portfolios consistent with different investor investment profiles in an instant.
    • Complete with all reports that detail the what, when, why, how, and what ifs of the portfolio decision making and action taking processes.
      • Portfolio Standing Worksheet, Allocation Recap, and Buy, Sell, Hold reports to mention a few of 50 reports.
  • Create Blended and Allocated Investor Portfolios — investor's existing investments and cash, if any — to the extent and when desired with a user created and selected Advisor Database (Model Portfolio Template) and linked Allocation Table Matrix Template at the appropriate matrix intercept.
    • Investor's existing investments @ Blend:
      • Delete to sell 100% of a position and have proceeds applied to allocation.
      • Leave alone to hold 100% of a position and have Investor's WorkStation recalculate and apply the correct amount of capital to the Investment Sector in which the investment is to be 100% held.
      • Weight to allocate the investment within the correct Investment Sector with Investor's WorkStation correctly calculating the dollar amount of the investment to be held — the same, more, or less — to create a new blended and allocated investment portfolio in an instant.
  • Modify individual, selected, or global investment portfolios — Rebalance investment portfolios and Reallocate investment portfolios and/or replace selected investments as investor investment profiles, the current market conditions, the market outlook, or relative investment values change in an instant to create new, modified investment portfolios.
    • Rebalance to maintain the initial structural integrity of investment portfolios by resetting Investment Sectors and underlying Investments to their original weightings.
      • Insures the most efficient accumulation of investments that are to be held as capital is continuously redistributed as investment prices oscillate/crisscross over time.
        • Sell some of an investment(s) that is 'overpriced' and therefore overweighted for the moment to buy more of an investment(s) that is 'underpriced' and therefore underweighted for the moment.
          • Done with a single mouse click.
    • Reallocate to keep investment portfolios competitive by setting investment portfolios to modified and or new selections and combinations of Investment Sectors and/or underlying Investments.
      • Done with a single mouse click.
  • Set Investment Sector and Investment Price alerts.

An extreme hypothetical; just to make the point:

  • I have decided that I want my clients to sell 60% of their IBM and use the proceeds to buy MSFT, to sell 100% of their EK and allocate the proceeds to other investments as weighted in your selected and linked Advisor Database (modifiable Model Portfolio Template by user defined Investment Sectors and underlying Investment Categories composed of any number and combination of underlying weighted investments), to reduce cash in all portfolios by 25% and to allocate that cash to the linked Advisor Database (Model Portfolio), to increase the weighting of Large Cap. Equities in all portfolios that use that investment sector, to eliminate Utilities altogether in all portfolios that hold them (as I feel they are overpriced in general and that the sector will underperform others in the future) to add, weight, and apply the appropriate amount of capital to two added user defined Investment Sectors -Mid. Cap. and Small Cap. Equities- and selected, underlying investments as weighted, to sell all stocks in Large Cap. Equities that are in the Investment Category titled Computer Peripherals, to change the selections and weightings of some underlying investments In REITs and Large Cap. Equities, and, finally, to Rebalance original investments not affected by this operation back to their initial investment weightings.

  • I also want all affected portfolios to reflect these changes, to have updated portfolios, to have a report showing buys, sells, and holds by portfolio and a total, to retrieve a report summarizing and accounting for the % changes by investment sectors for each portfolio, to create a trade export to execute trades, and to import executed trades to update all portfolio positions and costs.

To make the changes:

  • Modify the associated Allocation Table Matrix; this will take about five minutes, max.
  • Modify linked Advisor Database (Model Portfolio Template) used to create the portfolios in question; a minute or two at most.
  • Click on Reallocate; an instant.
  • Export the Trade Export; a millisecond.
  • Print reports.
  • Import executed trades to update portfolios; in seconds.
  • Print reports.

In general, it can be said that if you can think it, Investor's WorkStation can do it.

A learning curve, sure; but, take the time, and you will never look back.