The following information is provided to assist you in
understanding the basics of
Professor Profit's Portfolio
In these FAQs, we cover . . .
What
is Professor Profit’s Portfolio?
Why
is Real-time Modeling Important?
How
are the Results of Professor Profit’s Portfolio Measured?
What
are Current Holdings?
How
and where are Current Holdings measured?
How
can we view the activity of a currently held position?
What
are Closed Positions?
How
and where are Closed Positions measured?
How
can we view the activity of a formerly held Position?
Where can we learn more about
creating our own universe and portfolio?
Bingo -- Front Row!!!
What
is Professor Profit’s Portfolio?
Answer: Professor Profit’s Portfolio is a
real-time model portfolio designed with the specific purpose of demonstrating
the risk reduction methods enumerated throughout this web site -- Professor
Profit’s Paradigm.
Why is Real-time Modeling
Important?
Answer: Only through real-time modeling can we get
an honest and true feel for how effective
(or ineffective) a stock market methodology performs. If we had
selected stock issues out of history to demonstrate the methodology, a reader
would never really know whether we had cherry-picked stocks which support the
methodology by examining the outcomes prior to publishing. By demonstrating
with a real-time model, the reader gets to see the decisions as they are made
– right or wrong – without the benefit of knowing how each stock is going
to perform – just like in real-world investing.
How
are the Results of Professor Profit’s Portfolio Measured?
Answer: Ultimately, the success of any stock
trading methodology is measured by Gains (or Losses), Return on Investment (ROI),
and Annualized Rate of Return. We
differentiate returns by segmenting into two specific categories: Current
Holdings and Closed Positions.
What are Current
Holdings?
Answer: Current Holdings consists of open
positions. These are stocks for which we executed a Buy but we have not yet
Sold any or all of the entire position and stocks for which we executed a
Short (or Short-Sell) but we have not yet Covered any or all of the entire
position.
How
and where are Current Holdings measured?
Answer: Current Holdings are displayed in the
Current Holdings table on the Professor Profit’s Portfolio page and are
measured by percentage Gain or Loss.
The Current Holdings table is updated and published each
Sunday, after we have gone through the four weekly steps and contains the
following columns:
Symbol – The stock ticker symbol that serves
to identify the traded company’s stock at the stock exchange.
Position – Identifies whether we executed a
Buy, in which case we expect the price of the stock to rise in order to make
a profit (i.e., a Long position) or we executed a Short, in which case we
expect the price of the stock to fall in order to make a profit (i.e., Short
position).
Basis – This is the price of the stock on the
Sunday it entered the portfolio (i.e., the day it became a new position). If
the stock is a Short Position, it is the price used to execute the
Short-Sell. If the stock is a Long Position, it is the price used to execute
the Buy. Commissions are excluded.
Last – Represents the closing price of the
stock as of the most recent Friday (or last trading day of the week) prior
to publishing.
% Gain – Our key performance measure for each
position held as well as the aggregate Portfolio of Current Holdings.
Represents our Total Return on each position (price gains, plus or minus
dividends) divided by our Basis in the stock. Considerations for broker
commissions and/or margin interest are excluded.
How
can we view the activity of a currently held position?
Answer: The Symbol in the Current Holdings
table is a link to the stock's position page. The position page includes an Action History graph,
the
Configuration graph which triggered the entry to the portfolio, and
explanations of stop trigger point movements and position closing
transactions.
What are Closed
Positions?
Answer: Closed Positions are former holdings. These are stocks which were previously
held as open positions but we have Sold or Covered a portion or all of the
entire position.
How
and where are Closed Positions measured?
Answer: Former holdings are displayed in the Closed
Positions table on the Professor Profit’s Portfolio page and are
measured by percentage ROI (Return on Investment).
The Closed
Positions table is updated and published each
Sunday, after we have gone through the four weekly steps and contains the
following columns:
Symbol – The stock ticker symbol that serves
to identify the traded company’s stock at the stock exchange.
Position – Identifies whether we had executed a
Buy and Sell, in which case we expected the price of the stock to rise in order to make
a profit (i.e., a Long position) or we had executed a Short-Sell and Cover, in which case we
expected the price of the stock to fall in order to make a profit (i.e., Short
position).
Portion of Original Position – When we exit a
Current or Open Position due to a Sell-Stop or Cover-Stop violation, we
frequently are exiting only a portion of our original position. This
percentage tells the reader what portion of the original position has been
closed. If less than 100%, it means the balance is still current or open so
such a stock should appear on the Current Positions table as well.
Return on Investment – Our key performance
measure for each closed position as well as the aggregate of all
Closed Positions. Represents our Total Return on each position (price gains, plus
or minus dividends) divided by the cost of the stock (i.e., cost of the
stock for a former Long position is the stock's Buy price – cost of the
stock for a former Short position is the stock’s Cover price).
Considerations for broker commissions and/or margin interest are excluded.
How
can we view the activity of a formerly held Position?
Answer: The Symbol column of the Closed
Positions table contains a link to the page for that former position. The former
position page includes an Action History graph as well as the Configuration
graph which triggered the entry to the portfolio, the exit Configuration
graph (if applicable), and explanations of activities during the holding
period.
Where can we learn more about
creating our own universe and portfolio?
Answer:
There is much to learn. Become further enlightened at Learn
More.
That concludes Professor Profit's
Portfolio FAQs
Next:
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Professor Profit's Portfolio
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