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TMFHelical (98.72)

How to track my Portfolio

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December 27, 2006 – Comments (0)

Since CAPS is a stock picking 'game' that weighs performance vs. the S&P500, that is how the performance of my portfolio will be measured. But is this correct? I would say that for the game and scoring purposes the answer is yes, but for me not really. Since I am and intend to stay sector specific, I incorporated an internal metric into the portfolio itself, specifically PBE.

PBE is a Powershares ETF that tracks 'biotechnology' [Note: in reality I currently own AVZ, the parent company of Powershares]. It is set up to be a 'fundamental' index i.e. one that weights its selections on some combination of corporate fundamentals like sales, dividends, or whathaveyou. Personally, I like fundamental indexing, but think it is simply a bit of silliness when applied within a sector (where it is unproven). Expenses and tax efficiency are expected to be worse in a fundamental index than a traditional market cap weighted one. I would go a step further and say that when looking at sectors, active management i.e. a mutual fund with a manager who has a proven track record and low costs may be the preferred strategy.

Currently my portfolio is in the dumps, but PBE is under performing the S&P as well, so I guess I shouldn't be so surprised.

I will comment more on Biotech and Health Care ETFs at a later time.

Ralph

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