Tuesday, January 10, 2006

Frequently Asked Questions

Q: Why does the world need another investment blog?

A: There are certainly many investment blogs/websites out there. They generally fall into two categories: 1) those that are essentially a day trader’s journal with buy/sell information and some technical analysis thrown in; 2) those that give an asset allocation model with mutual fund/ETF recommendations. Furthermore, there are personal financial blogs that track the blogger’s net worth down to the penny, and then there are economics blogs with news and commentaries on the latest sector/country/ global trends.

This blog is intended to be a mixture of all the above. In terms of investment style, roughly half of the portfolio is actively managed by me or my wife. The other half is under an asset allocation plan – meaning there isn’t much trading and the holding period is intended to be long. Because of the limited investment choices in our 401k’s, there are still actively managed mutual funds in this half.

I employ a top-down approach in discerning promising sectors from macroeconomic trends and use technical analysis to pick individual issues as well as entry/exit points. I’m not a day trader, but I’m not a buy-and-holder either. For stocks/funds in the actively managed accounts, my normal holding period is several months to years.

So there you have it, my middle way of investing.

2. Q: Is this your actual portfolio?

A: Yes, it is.

3. Q: Why are you doing this?

A: The simple answer is that I was already doing extensive research and analysis for our own portfolio. So I figured, why not put that work to some good use?

Of course, I also believe that my approach is of value. If I can help some people along the way, all the better.

4. Q: What are your professional credentials?

A: None, if you’re asking about any finance/investment related credentials. I'm a student at this, as most of us are. I share my successes and failures truthfully and they are not intended as investment advice. Readers are always urged to do their own home work.

Trust but verify.

5. Q: What do you (and your wife) do in life?/ How much do you make?/ What’s your net worth?

A: My wife and I are in our early thirties, well educated. We are both gainfully employed. We don’t yet have any children. Currently we don’t own a home although we plan to purchase one within the next two years. I have elected to calculate the gain/loss data net of contributions as our cash flow situation may create a false impression of how well the investments are doing.

It’s difficult to strike a balance between privacy and the need to disclose information. The names of our employers are deliberately hidden for this reason. I’m using our actual portfolio because it’s meaningless to fabricate new ones, but that’s as far as I’m willing to reveal about ourselves.

6. Q: Which online broker do you recommend?

A: I’m using both Ameritrade and Scottrade and happy with both. More serious traders should look at Tradestation or InteractiveBrokers.

7. Q: What do you think of X (stock or fund symbol)?

A: I’ll take a look and if I find it interesting I’ll write about it in the blog, but please understand I can’t answer all such questions.