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Making Buying and Selling Decisions with IAM

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.

IAM3 Individual 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.  IAM3 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 3 Individual utilizes both fundamental and technical analysis to spot these misalignments.  IAM3 also provides access to the world of financial information from within the program for investors to easily keep up-to-date on important investing metrics.

3) A specific asset class has become too large or small based on portfolio targets (rebalancing) 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 IAM3 Individual allows for easy combinations of individual portfolios (IRAs, taxable, college fund, etc.), overall asset allocation can be easily understood.  With this information in hand, uncomplicated and objective rebalancing can be executed.

4) A specific security sector has become too large or small based on portfolio targets (rebalancing) 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 3 individual  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 security 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 3 Individual 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 matcher gains with losses when available.  Between IAM’s Security Basis Report, which delineates each unique security 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.

In summary, Investment Account Manager 3 individual 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.  We’re confident you’ll find Investment Account Manager 3 Individual comprehensive portfolio management software tool that will help you to better manage your investment portfolios.