41

User Tips / Transfer Security

« Last post by Forum Administrator on March 19, 2019, 08:21:44 AM »

The Transfer a Security to Another Portfolio choice is used to transfer either a portion of a security holding or an entire position to another portfolio being tracked in Investment Account Manager.  It can also be used to deliver holdings out of Investment Account Manager (i.e. to a charity).  This feature provides the ability to assign the original cost basis to the transferred security, or to enter a market price of your choice to use for the adjusted (stepped up) basis for the transferred shares.  The basis rules are dictated by the I.R.S.
 
From the Edit Menu, select Transfer a Security to Another Portfolio.  Shown in the Transfer a Security form are all securities currently owned in the open portfolio, listing the total quantity and the current market value.  Select the security you wish to transfer out of the 'donor' portfolio.  Then, in the lower portion of this form, select the 'destination' portfolio for receipt of the transferred shares.  If you are transferring the security to a portfolio not being tracked within Investment Account Manager, (i.e. to a charity, or other outside account), select the check box 'Transfer out of Investment Account Manager'.

Once the transferred security and the destination portfolio (or the choice Out Of Investment Account Manager) have been selected, you can complete the necessary information for the transfer activity.  Investment Account Manager's transfer feature allows you to assign what values to use for the cost basis of shares transferred.  Select the proper radial button to assign original cost basis and basis date for transferred shares, or to assign current market values as cost basis and transfer date for basis information (for inherited shares, gifts to charity, required distributions from non-taxable accounts).  In most cases, the IRS requires the original cost basis and basis date be used for shares transferred. Check with a tax advisor or appropriate IRS publications as necessary.

42

User Tips / Watch Lists

« Last post by Forum Administrator on March 08, 2019, 11:20:43 AM »

User Tip: Watch lists to Improve Decision Making with Investment Account Manager 3 Individual
 
Using 'watch lists' help investors better manage their portfolios by providing alternative investment ideas to use when building or modifying existing portfolios.  A 'watch list' is a grouping of securities in a portfolio that have something in common.  For instance, you might have a watch list for your IRA portfolio, another for your taxable portfolio.  Watch lists can also be effectively grouped by types of securities: i.e., by sector such as Energy stocks, by factor such as Growth stocks, etc.  Investment Account Manager allows for an unlimited number of watch list portfolios that you can maintain with alternative investment ideas.
 
Creating a watch list portfolio in IAM is easy.  Select the Tool Bar | Portfolio Setup Wizard | enter a name | and use the radio button to  'Use quick setup form to manually enter positions'.  Typically, the current date, a quantity of '1' and the current share price is used for populating your watch list.  This will allow you to easily track the performance of the security since its inclusion to the watch list.  Once you've finished the quick setup, you'll have your newly created 'watch list' portfolio available for tracking within IAM3 Individual!

Watch lists also offer very effective “what-if” testing.  For example, users can gauge diversification and allocation impact of additions to an existing portfolio before actually purchasing new securities. This can be easily accomplished by combining a  'watch list' with any existing portfolio(s) on any of the IAM3 reports (using the “Portfolio to include” option on the report setup form).

We encourage you to experiment with watch lists to improve your portfolio management process.  If you have any additional questions on using watch lists in IAM3 Individual, please contact our technical support team: techsupport@investmentaccountmanager.com

43

User Tips / Price Alerts

« Last post by Forum Administrator on March 08, 2019, 11:10:27 AM »

User Tip: Using Price Alerts in IAMv3

The Price Alert feature found in Investment Account Manager (Asset Library Menu | Price Alerts) will allow you to enter target prices for the securities you currently own or are tracking within a watch list.  As part of the automatic price updating feature, you'll be automatically notified once a target price has been reached for one or more issues. Those securities that have exceeded their high alert limit will be shown in green; those securities that have fallen below their low alert limit will be shown in red.  Simply click on the tab labeled 'Security Search' to locate the portfolio(s) that hold the selected issue with the price alert.

The strategy behind your price alerts depends on your objective. You can use Investment Account Manager's price alerts to set your potential high price and potential low price ranges for your securities, in effect setting up your price zone. In this case, you might consider selling a security if the market price reaches the high target, and buying a security if the market price reaches the low target. 

Another strategy might be to set all price alerts at a given percentage value above or below the current market prices. This approach works well if you would like to see which of your securities reach their targets before others, while also helping you manage gains and losses. For example, users can quickly set all price alerts using a range- i.e., 5% above and 10% below each security's current market price.

The price alerts feature in IAM3 Individual is a useful tool to better help you better manage your current holdings, as well as your watch-list candidates.  We encourage you to use this feature, and if you have any questions, please contact our technical support team: techsupport@investmentaccountmanager.com

44

Frequently Asked Questions / Re: How do I add a money market fund (settlement fund) after a portfolio is made?

« Last post by Peter Willms on February 25, 2019, 10:30:14 AM »

When adding a money market balance to a portfolio that has already been added to IAM, select the Transactions Menu | Add, edit, delete transactions.  This will show the transactions ledger.

Enter the information for the initial deposit (use a reconciled amount that ties back to your portfolio balances).

Be certain that you have classified the mmf as a cash/mmf asset type  - this can be checked in the Asset Library | Current Asset Library.

to use the mmf as the offset for other portfolio activity, be sure that is is selected (checked) at the bottom of the transactions ledger.

45

Frequently Asked Questions / How do I add a money market fund (settlement fund) after a portfolio is made?

« Last post by rlheest@gmail.com on February 19, 2019, 11:20:24 AM »

I have created a portfolio and chose to add the money market fund later.  However, I can not find any way to do this.  If I simply make a purchase of a money market fund it does not add a running balance to the display of purchases and does not reflect that the fund is treated as a settlement fund.  How do I add this, or is it necessary to start over in defining a portfolio.

46

Talking Stocks, Funds and ETFs / Barbell Investing

« Last post by Peter Willms on February 07, 2019, 10:43:11 AM »

What is meant by Barbell Investment Strategy?

Barbell Investment Strategy: This portfolio investment approach involves investing most of your investment portfolio (85-90%) in extremely safe securities (i.e., short-term government bonds) and the remainder (10-15%) in risky long-term investments. The barbell provides low safe return on one side, risky high return on the other.

Nassim Taleb, author of the 2007 bestselling book The Black Swan, which focuses on extremely rare and unpredictable events, argues that Barbell investing is a very conservative approach that protects investors from black swan events that would dramatically negatively impact portfolio returns. Using the barbell strategy, the maximum loss for the investor would be the risky side of the barbell.

This approach was originally used when constructing bond portfolios - very short term securities and a range of longer term securities. The short-term side is exposed to very little interest rate and default risk, while the long-term side is more volatile. For a stock portfolio, the conservative side would hold very liquid large cap stocks on the safe side, and on the aggressive side, smaller speculative stocks.

If you have utilized a barbell approach, please share your comments with other readers.

Thank you.

47

Talking Stocks, Funds and ETFs / Closed-end funds

« Last post by Forum Administrator on February 06, 2019, 08:45:48 AM »

What is a closed end investment company?

A closed end investment company, i.e., closed-end fund,  is formed when someone sells shares in the company to investors, but instead of using those funds to produce widgets, the funds are used to buy shares of other public companies. These funds get their closed-end name from the fact that they usually do not issue additional shares for sale, nor do they typically purchase their own shares.

Investopedia™ defines closed-end funds as follows:

“A closed-end fund is organized as a publicly traded investment company by the Securities and Exchange Commission (SEC). Like a mutual fund, a closed-end fund is a pooled investment fund with a manager overseeing the portfolio; it raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.”

A closed-end fund can trade at a value that is either greater or less than its net asset value.  Net Asset Value (NAV) equals the excess per share value of the fund’s assets over its liabilities.  Typically, closed ends fund trade rarely trade at their NAV due to due to market demand and supply forces, which is influenced by management track record, operational costs, etc.

If you invest in closed-end funds, please share your experience with visitors to this forum.

Thank you.

48

Options / Understanding Options

« Last post by Forum Administrator on February 05, 2019, 01:32:42 PM »

Understanding Options

The following definitions must be understood by traders of American Style equity stock options.

An option contract is a forward agreement giving the holder a future right, not an obligation, to conduct a transaction involving an underlying asset at a specific price at a future date.

Buyer (holder) of option: holds the right to decide whether the option is executed.

• The buyer of call option: gives the holder right to buy (call away) an asset at a predetermined price on or before a predetermined date.
  
• The buyer of a put option: gives the holder right to sell (put to) an asset at a predetermined price on or before a predetermined date.
  

Seller (writer) of the option: bound by an obligation to the terms of the option agreement.

• The seller of a call option: must deliver the underlying security at the predetermined price.
  
• The seller of a put option: must purchase the underlying security at the predetermined price.
  

Assignment: the activation of the right to buy or sell the underlying security.

Exercise: the receipt of an exercise notice by an option seller that obligates the writer to fulfill the terms of the option agreement.

Option exercise (strike) price:  the predetermined price the buyer of call option is will to purchase the underlying security, or the buyer of a put to sells the underlying security at the strike price.  If the call is exercised, the seller of a call will deliver the underlying security at the strike price, and the seller of a put is required to buy the security at the strike price.

Option expiration date: The date at which the options ability to be executed terminates, which most commonly occur on the Saturday following the third Friday of each month. Weekly cycles also trade, but at less volume.

Option premium:  The price of the option.

In-the-money-option: 
   Call option – the underlying stock price is greater than the option strike price.
   Put option – the underlying stock price is less than the option strike price.

Out-of-the-money:
   Call option – the underlying stock price is below the option strike price.
   Put option – the underlying stock is above the option strike price.

At- the-money:
   Call or put option – the underlying stock price is equal to the option strike price.

Intrinsic value: this represents the options in-the-money value. Options that are out-of-the-money or at-the-money do not have any intrinsic value.

Time value premium: the part of the option price that is not intrinsic.

Investment Account Manager will help monitor option positions by tracking performance and tax consequences of option trading. 

To learn more about option trading strategies, please visit:   the CBOE for educational materials including online classes. http://www.cboe.com/education/getting-started

49

Talking Stocks, Funds and ETFs / Causes for Fluctuating Stock Prices

« Last post by Peter Willms on January 17, 2019, 08:12:07 AM »

Stock prices rise and fall for a myriad of reasons.  Understanding a number of the possible causes for price fluctuations will help investors make better portfolio management decisions.

Market prices are simply the result of the supply and demand for shares by investors.  When buyers are demanding more shares than are available at a specific market price, then the prices rise to a point where sellers can be found.  Likewise, when sellers are abundant, prices will fall until buyers are engaged.

Market price gyrations can usually be explained by one or more factors which affect the demand for and supply of stock for sale at any moment in time. The list that follows explains several influencers:

Industry Specifics – All stocks can be grouped by industry sector (meaning they operate within the same part of the economy), i.e., consumer discretionary, consumer staples, energy, financial, healthcare, industrials, information technology, materials, telecommunication services, and utilities.  Macroeconomic industry changes will affect stock prices within the industry sector both positively and negatively.

New Regulations - Governments make decisions and pass regulations that can affect business – for instance financial and telecommunication companies often find themselves within the government’s cross hairs.  Increased regulation can have a large negative impact on stock price by making it more difficult and expensive to operate.

World Events – Wars, terror attacks, boycotts, embargoes, natural disasters, changes in economic policy and changing currency values all impact short-term equity prices.

Business Conditions - Changes in management, new product announcements and discoveries, changes in market share, pending mergers or acquisitions, collaborations, change in competition, layoffs, data breaches, scandals, all affect  stock prices - both positively and negatively.

Broker Research Reports - Newly released publications regarding a company, usually have an impact on stock price, sometimes in a major way, depending on the source and reliability. Even though conflicts of interest must be disclosed by regulation, investors frequently do not pay close enough attention the closeness of  the relationship may be between the author and the underlying firm, when estimating the longevity of the price movement.

Reported Earnings per Share - Probably having the biggest impact on short-term equity prices, earnings surprises, can cause quick price changes.  These stock price movements have become even more pronounced in recent years, due to the larger influence of automated trading.  Earning per share trends are the primary determinant in long-term share prices.

Dividend Changes - Sudden unexpected changes in dividend policy will cause stock prices to rise and fall.  Investors need to be aware of how stocks act around the ex-dividend date: i.e.,  opening market prices are adjusted to reflect the to be dividend.

Buybacks or Dilutions– Buybacks lessen the supply of stock available to purchases.  With fewer shares outstanding, several key financial ratios will also improve.  Conversely, by increasing the number of shares available to raise cash at the company level, all previously outstanding shares are diluted, making them less valuable (splitting the pie more ways).

Mergers, Acquisitions and other Reorganizations - Corporations are in the business of creating value for their shareholders.  One method to do so is to merge with, or acquire another.  Through increased efficiency, integrating operations, optimizing managements and product combinations, significant value can be created, thus affecting stock values.

Interest rates and Inflation Trends – Changes in interest rates cause changes in stock prices- sometimes rising rates are a positive catalyst, other times a negative. An example of rising rates being a positive for prices would be the example that increasing inflation causes rates to rise, but companies can increase their earnings by increasing prices.  On the other hand, if rates rise too quickly and companies cannot keep up raise prices quickly enough, then company earnings will suffer and stock prices will fall.  Additionally, raising interest rates increase the cost of doing business, at the same time that consumers may be less willing or able, to spend on goods and services, putting downward pressure on share prices.

Investment Taxation Policy – changes in tax policy have a change in the long-term value of securities. Increases or decreases in the after tax value of investment income, change the prices of securities. On a shorter-term basis, tax decision making can also affect stock prices.  An example of this can be found in year-end tax loss harvesting further depressing stocks that have under-performed the overall market.

As stated above, stock prices fluctuate for a myriad of reasons.  Understanding the possible causes for price fluctuations will help investors make better portfolio management decisions.

50

General Discussion / Using Investment Account Manager while making buy/sell decisions

« Last post by Peter Willms on January 15, 2019, 02:10:55 PM »

Investors are frequently confronted with making buy and sell decisions.  Not only is the universe of undervalued and overvalued securities constantly changing, investors have different time horizons to consider when making investment decisions. So while day traders may be satisfied with a small percentage change in value, longer term investors usually are not overly concerned with small price movements. This article is written from the perspective of a long term investor.

So what factors should be evaluated when making buy/sell decisions?  Here are a several important considerations:

1) A specific security has become over or undervalued relative to the market, or the risk of a specific security has changed meaningfully.

2) A specific industry has become over or undervalued relative to the market.

3) A specific asset class has become too large or small based on portfolio targets (re-balancing) based on recent performance.

4) A specific security sector has become too large or small based on portfolio targets (re-balancing) based on recent performance.

5) A portfolio has become to concentrated due to a change in a specific securities holding size:

6) The after-tax proceeds can be better deployed in a different security.

Investment Account Manager will help investors keep their emotions in check when making important buy and sell decisions by analyzing and quantifying the above questions, providing confidence through knowledge.

1)   A specific security has become over or undervalued relative to the market, or the risk of a specific security has changed meaningfully:

IAM provides both fundamental and technical analysis tools used to evaluate individual a security’s risk and return potential. From a fundamental analysis perspective, ratio analysis made famous by Peter Lynch and Benjamin Graham are provided. IAM also provides security betas which measure a security’s volatility.  Additionally, Investment Account Manager also provides access to the internet’s many technical analysis tools, especially through Yahoo!, Google, and QuoteMedia.  When considered collectively, these help investors make informed decisions.

2)   A specific industry has become over or undervalued relative to the market:

Just as individual securities become over and undervalued so due industry sectors. This occurs usually for one of two reasons – a macroeconomic change that unduly affects a single industry, and or the phenomenon of group think. Investment Account Manger again utilizes both fundamental and technical analysis to spot the misalignment.  IAM also provides access to the world of financial information from within the program with simple clicks of the mouse. 

3)   A specific asset class has become too large or small based on portfolio targets (re-balancing) based on recent performance:

Investment Account Manager’s asset allocation tools are indeed a powerful ally to thoughtful investors. When setting up portfolios, users identify a portfolio’s target allocation between cash, stock, bonds, and other investments.  These are further broken down between large, medium and small cap, as well as between foreign and domestic.  Users can then review several reports that analyze the actual allocations vs. the target allocations.  And since IAM allows on the fly combinations of individual portfolios (IRAs, taxable, college fund, etc) overall asset allocation can be easily understood. With this information in hand, uncomplicated and objective re-balancing can be executed.

4)   A specific security sector has become too large or small based on portfolio targets (re-balancing) based on recent performance:

As mentioned in answer 2 above, frequently industry sectors held within a portfolio can become over or under weighted.  Investment Account Manager allows users to set sectors targets, just as in setting asset type targets, for each individual portfolio.  As market values change within the portfolios, one of IAM’s several sector analysis reports can quickly and thoroughly spot variances between target sector percentage sizes and actual percentages. Additionally, the importance of a collective understanding of how portfolios overlap by sector is accomplished with combination reporting.

5)   A portfolio has become to concentrated due to a change in a specific securities holding size:

Since individual securities performance can vary widely, it is not uncommon for an individual holding to become too large causing too much concentration in a portfolio:  as the adage goes, don’t hold all your eggs in one basket.  Investment Account Manager’s reports show each security’s percentage of overall portfolio to identify these circumstances.

6)   The after-tax proceeds can be better deployed in a different security:

In taxable accounts, taxes can take a meaningful amount of investment profit. If an investor utilizes the tax law to minimize the tax bite, after tax profits will increase.  Investment Account Manager excels in this area.

IAM tracks and maintains each individual purchase lot along with its purchase date and purchase amount.  Having this information at hand before making sell decisions is very useful as it allows sellers to match gains with losses, when available.  Between IAM’s Security Basis Report which delineates each lot, and the ability to apply sales using FIFO, LIFO, Maximum Gain, Minimum Gain, or Specific ID, investors can inform the selling broker which lots to use in specific sale applications.

Investment Account Manager has been designed by professional money manager to provide investors with the tools needed to be better investors.