Solutions for Individual Investors
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Making a case FOR Mutual Funds

You have probably come to Portfolio123 because you have read that Mutual Funds typically under-perform market indices. Or you heard how small differences in compound interest make a significant impact at retirement.

All true (see the graph on the right). But we're not going to urge you to bypass funds and throw your lot in with us. Quite the contrary. While on average they perform 2% less than the stock market, that is to be expected. They can never outperform because they ARE the market. Throw in the management fee (they do provide a service after all), transaction costs, and other inefficiencies, the 2% under performance is logical. Nonetheless, thanks to compounding returns and long time horizon, they can provide adequate retirement.

Investment discipline is another challenge. Many individuals that decide to manage their own accounts will jump in the market at a cyclical high, the time when everybody is excited about stocks. Often, they soon experience a large loss, perhaps 20% or so, and sell everything only to see the market recover — without them. After a few bad experiences they retreat back to mutual funds having lost substantial portions of their wealth.

So let's face it: Mutual funds (and ETFs), by being a hands-free operation with inflation beating returns, are the right service for a lot of investors.

. . . but YOU can accomplish more

We don't think managing your own account and outperforming the market is all that hard. Warren Buffet famously said: "Give me $1 Million and I'll guarantee you 50% in one year". He was referring to the idea that for small accounts all investment possibilities are open. That's a huge advantage over mutual funds because:

  • If great opportunities are to be found among large well-known companies, you can invest in them and profit accordingly, and make a difference in your account. In this regard, you and the funds are in the same boat, and that's fine. But . . .
  • If great opportunities are to be found among smaller, agile and faster growing companies you can likewise invest in them and again profit accordingly and again make a difference in your account. This is where you and mutual funds part ways. They have so much money to invest, that they simply can't take meaningful positions in smaller attractive companies.

So there you have it. Your ability to take part in small stocks or larger stocks whenever they are in favor is a tremendous advantage. You do not need to be Warren Buffet to beat the market, just do this:

  1. You need a strategy. We offer many pre-built ones, or you can create your own.
  2. Eliminate the fear of losing. This won't be easy but you will get there with time and support, speaking of which . . .
  3. Have a support system. With our active community and experienced support you will be in good company.

Below you will find our pre-built strategy solutions specifically targeted to individual investors.
Designer Models

Model portfolios are built by our own analysts, and by experienced (and successful) Portfolio123 users. Located in the Designer Models section you will find a variety of strategies available for free, or for a monthly fee (paid to the author).

Key Features:
  • Benefit from years of experience of the author
  • Once a model is launched no changes are allowed to the strategy
  • Out-of-sample performance is clearly defined
  • No long-term commitments for premium models
  • All models must conform to a rigorous set of rules to prevent manipulation of simulated results
  • Receive emails when changes occur
  • Best of all . . . All of our Designer Models were created on Portfolio123!
Famous Screening Strategies

Built on the rules, writings and philosophies of famous investors like Buffett, Greenblatt, and Graham, we have created screens to show you what they might be thinking right now.

You can also combine ranking with screening to build the exact portfolio size you need. For example you may want to follow stocks that pass a Graham strategy, but only buy the top 10 stocks based on a momentum score.
Live Portfolios
Take a strategy and launch it "live" as a Portfolio. Your portfolio is updated every day, and changes to the holdings are emailed automatically. Simply pick the strategy you want to follow and the starting capital and you will get a list of stocks to buy and the number of shares. When it's time to rebalance you will be so notified and told what to sell and what replacement stocks to buy. Performance data will be tracked as well as a record of all transactions.

Good Idea: Activate TRADE for a 1-click operation.
TRADE
Portfolio123's TRADE feature allows you to send orders to your Interactive Brokers (IB) account. TRADE greatly simplifies the process of rebalancing your portfolios by eliminating the emotional, error prone, and time-consuming process of entering orders.

TRADE is also useful as a stand-alone tool to enter trades. With features like
  • one-click to send multiple orders,
  • easy order scheduling,
  • and order aggregation,
we think you will place all your orders from TRADE, not just the ones from your strategies.

To learn more about TRADE and how to activate it, please see our TRADE Overview.
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