Portfolio Management for
KISS 101

Portfolio management is the DO phase of the investing process. Once you decide WHAT your strategy requires and HOW you are going to implement it, it is time to make it happen.

What is Stock Portfolio Management

In the broadest sense, portfolio management is the overall management of your assets to meet your financial goals.

At the strategy level, it is the implementation of your investing strategy according to the rules specified in the strategy. KISS 101 is used to illustrate the DO step of the investing process.

With a defined strategy in place, all you need is an online broker and some available cash to make it happen.

NOTE:

If you are new to managing your own strategies, a single strategy is NOT the place to invest a lot of money.

Before investing a significant chunk of money, it is generally a good idea to forward test your strategy. Not only to check the performance, but to determine if you can manage the rules as specified. There are 3 free or very low cost options:

  1. Paper trade (free)
  2. Folio Investing (low cost)
  3. Motif (low cost)

For me, paper trading just doesn't work.  Before long, I lose interest and do not follow-up. Therefore, I just waste the time.

FolioInvesting.com - The management tool of choice

Folio Investing allows you to forward test a strategy and get a feel for the effort to manage as well as a feel for the performance - not just good performance, but poor performance. All without significant risk.

And because each strategy implementation is a unique folio, the performance can be easily ascertained - not with assumptions, but with real money (although very small amounts).

For example, the KISS 101 strategy implementations documented here are managed in separate folios at Folio Investing. A folio was funded with US $100 for each of the stock screening tools described in the HOW section of the investing process. In addition, a folio was created to track the Sector Surfer implementation of comparable ETFs.

KISS 101 Folios

As mentioned above, three separate folios were created at Folio Investing and funded with US $100 on August 1, 2017 to illustrate portfolio management. A fourth folio was created and funded with US $100 on August 23rd to track the Sector Surfer implementation.

If nothing else, checking the folio results should convince you that the tools you choose to implement your strategy have some effect on the outcome.  These folios are not identical.

MorningStar Folio

The 5 highest yielding defensive sector stocks in the MorningStar moats were selected. The initial screen identified the following 5 companies:

  • British American Tobacco (BTI)
  • General Mills (GIS)
  • Kellogg (K)
  • Kimberly Clark (KMB)
  • Procter & Gamble (PG)

The initial target weight for each was set to 20% for equal weighting.

To date, there have been no changes either due to quarterly ranking or due to health checks.  The folio was re-balanced on November 1 to equal weighting.

The following is the performance chart through Jan 5, 2018.

KISS 101 Performance using Morningstar criteria

Portfolio123 Folio

Choosing the highest yielding stocks in the S&P 500 found in the Staples sector (Compustat definition of staples) identified the following companies:

  • Altria (MO)
  • General Mills (GIS)
  • Kellogg (K)
  • Kimberly Clark (KMB)
  • Philip Morris (PM)

These 5 were equally weighted in the initial folio and at the re-balance on November 1, 2017.

There have been no changes either due to health checks.

The following is the performance chart through Jan 5, 2018.

KISS 101 Performance using Portfolio123 criteria

StockRover Folio

The initial screen identified the following 5 companies:

  • Altria (MO)
  • General Mills (GIS)
  • Kimberly Clark (KMB)
  • Philip Morris (PM)
  • Target (TGT)

The initial target weight for each stock was 20% - equal weighting. The folio was re-balanced November 1st.

To date, there have been no changes either due to quarterly ranking or due to health checks.

The following is the performance chart through Jan 5, 2018.

KISS 101 Performance using StockRover criteria

Sector Surfer Folio

Sector Surfer uses a proprietary algorithm to select a single ETF (or mutual fund) from a list of up to 12 ETFs or funds. So while you don't want all your eggs in 1 basket (in fact, 1 egg, 1 basket), it does offer a form of strategy diversification.

ETFs, representing the sectors considered in the construction of KISS 101, were placed in a list for a strategy and the strategy folio was constructed on August 23, 2018. Sector Surfer sends an email when a trade is identified.

The trade history of the initial date of the selected ETF is as follows:

  •  23 Aug 2017: XLU - SPDR Utilities Sector
  •  25 Sep 2017: XLV - SPDR Healthcare Sector
  •  07 Nov 2017: XHE - SPDR S&P Health Care Equipment
  •  11 Dec 2017: XLY - SPDR Consumer Discretionary Sector
KISS 101 Performance using Sector Surfer criteria

KISS101 Portfolio Management Summary

The above folios illustrate the actual performance of the same strategy implemented using different tools. The variations in the results are probably amplified due to the limited number of positions required by the strategy.

All that remains in the investing process for KISS 101, is the review.

  1. 101 Home
  2. Process
  3. Do It

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January 2018