Forum Topics Managing Your Portfolio Weightings
Strawman
5 years ago

Appreciate your thoughts guys. Duly noted. I'm confident we can find a way that pleases the majority. As I said, it's a ways off for now, but we WILL definitely refine the current system. In the meantime, please continue to add thoughts on this thread as it helps us gauge member preferences.

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Strawman
5 years ago

One idea we had was to give greater weighting to recommendations from members with higher badges and /or scorecard performance. So rankings and therefore Strawman index less influenced from new and underperforming contributors. Thoughts?

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Bear77
5 years ago

No - I don't think new members with less content should be automatically considered to have recommendations that are worth less than those who have been using the site for longer, or who have posted more content. Everybody has to start somewhere. I think we all need to be given a set pool of capital - $100K or $1m for instance - and then we each can decide how to invest that capital, including individual stock position sizing. The argument will be made that we can choose position sizing now by having a company on our scorecard more than once, but that doesn't work well, especially as all positions are diluted by every new position that is added to the scorecard, and every new position is automatically assumed to be an incrementally smaller position than every previous position - by the way the performance is calculated now. I agree that over time there will be little incentive to add new content or to add new scorecard positions because of the dilutionary effect of adding new positions to an existing scorecard. If we use the set pool of capital method, once fully allocated, we would be forced to sell something before buying something, just like in real life. That means that we would be wary of just adding companies to our scorecard without some serious conviction. We would end up with our best ideas, not everything we vaguely like or everything that looks undervalued at any given point in time. Scorecard performance would simply be based on the market value of the portfolio at any point in time compared to the starting capital. There would have to be a cash component, but I'm happy if no interest is calculated on that cash, i.e. it earns nothing (for the sake of simplicity). I also think we need to include all of the major ETFs and the main LICs. It doesn't make much sense that they are not included. I know why they aren't (data provider limitations), but it doesn't work too well, especially when you CAN add WGB and WMI to a scorecard, but not AFI or ARG. Many successful investors have a core of ETFs and/or LICs around which they have a number of direct stock picks in their SMSFs or other real-life portfolios. I am one of those. Others choose to ONLY invest in ETFs and/or LICs and rarely invest directly in companies. All of these investing methods are equally valid, and you can have a lively debate around one ETF vs another, and especially around different LICs and their various positives and negatives, which would make this site an even richer place to visit and to contribute to. I encourage you to aim higher Strawman! Especially if you are planning to move to a small-fee-per-year (or per month) model. The closer to real-life this is, in terms of our scorecards, which are really "fantasy portfolios", the more valuable the results of each scorecard are to other users (and to the scorecard owner). At the moment, there are a small number of people near the top of the performance list with only one or two positions. They could still have achieved those results under a set pool of capital model, but only if they'd chosen to invest 100% of their capital or 50% of their capital in each company. Some would do that. Most would not. The current system, in my view, does not give anywhere near a true indication of the results that people would have received if they were investing their own money, or if they had a set pool of capital from which to invest.

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AUROPAL
5 years ago

I too like the current system for it's simplicity. But I do recognise the flaws in that it assumes you are putting as much money into a risky spec stock as you are into a more "blue chip" one, which most likely isn't the case.

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Strawman
5 years ago

Thanks guys. Will continue to think this one through. We have some other projects we need to address first, but will circle back on this ASAP

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