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Getting your portfolio audited?

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Radix3d
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Getting your portfolio audited?  Reply with quote  

So how would you go about getting your investment portfolio audited? I've beaten the SP500 by a substantial amount for years and for employment purposes I'd like to be able to prove it. Any suggestions?
Post Thu May 02, 2013 11:14 pm
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coaster
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You can prove it by building your own audit trail; you have all the documentation (I hope): broker statements. You could hire an accountant, I suppose, but good luck finding one who knows what you want. And I think I do because my current programming project is building a portfolio manager. It's for my own use, but who knows? Runs in a web browser, so it's not platform-dependent; data in MySQL and PHP server-side engine. I used to do this in Excel using a multitude of VBA macros.

I think for your own use, you need to document your portfolio performance with a portfolio journal. This would be a record date by date of all your assets held on each date, closing market price for that date, and net portfolio value. Net portfolio value is the sum of all the asset values plus cash. Performance is derived from the portfolio value versus the invested capital. Individual holding performance is asset value versus cost basis for that asset. You'll need price history for everything you've ever owned. And you can't get free history for delisted stocks anywhere, so you might as well bite the bullet and subscribe to a data service.

To build your portfolio journal, you need to document your transaction history. This would be a ledger of transactions by date with all buys, sales, proceeds, dividends, interest, deposits, withdrawals, and any other broker debits and credits, such as foreign tax paid, margin interest, option premiums, etc.

You can do this by hand in Excel and print out the results (with your documentation as proof). It's going to take you the next year of every minute of your spare time. So, since it's up to you to assemble and input the data anyway, you might consider googling for "portfolio manager software". There are some availalble on the market. None work on a Mac or do everything I want, which is why I'm building my own. But this should be faster than building your own in spreadsheets, and I would suggest not skimping on the price you're willing to pay. Here's an article (one of many):

http://www.aaii.com/computerizedinvesting/article/the-top-portfolio-management-software

~Tim~
Post Fri May 03, 2013 3:25 am
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blixet
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Two separate issues. Documenting one's performance and attributing out-performance relative to a particular benchmark to skill.

I'd think many broadly diversified, global portfolios beat the S&P 500 over the last dozen years. What that says to me is that the S&P 500 is a poor benchmark which is not reflective of the portfolios' actual allocation or style.

Not to imply anything about this specific situation as I know nothing of the particulars, but unless the investment style has been exclusively large-cap U.S. stocks, I'd be unconvinced and little skeptical.

Personally, I use a composite global benchmark weighted to both my model and my actual allocations for comparison purposes. And even then with a dozen years of data, I don't trust that it is significant evidence of the triumph of skill over luck (despite what I'd like to believe) . Laughing

Information is more valuable sold than used – Fischer Black
Post Sun May 05, 2013 1:58 pm
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coaster
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quote:
Originally posted by blixet

...Two separate issues...

...the S&P 500 is a poor benchmark ...

...don't trust that it is significant evidence of the triumph of skill over luck ...



Great post!! Comments with points hitting the targets right dead center.

Can't say that I've seen your points summed better anywhere in ages. Agreed 100%.

Yet: performance is all we have to go by. As in everything else; past performance is no predictor of future success. But if there's nothing else, I'll take it. Smile

~Tim~
Post Sun May 05, 2013 4:07 pm
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Garson
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"When I applied for studying in England, there were some most major parts of the portfolio: 
1) grades at university (during the bachelor program); 
2) scientific work (different articles and participating in webinars or Weeks of Science and so on);
3) life outside the university. That was about volunteer programs and other events. As I got it, you show here yourself as a personality. By that time I had already participated in three volunteer programs with https://volunteercentrecounty.org/ and this was the great advantage of my portfolio! Now I am still a volunteer when I have time for this and I enjoy it!
So, maybe trying to be a volunteer could be good advice not only to make your life more exciting but also to make your portfolio better!"
Post Sun Oct 25, 2020 9:57 pm
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