Ask Mike:
If the ETF portfolio is beating the other portfolios, why is it not the biggest portfolio?

Question:

Hi Mike,

Two questions for you. First, I am confused about the performance figures shown on your site for the ETF portfolio. In one area, the Turner Trends Portfolio, the comparison chart shows the ETF has a total return value of $64,663, which is far less than the value of the other portfolios. Yet on your home page, it shows the EFT portfolio as having the best average annual return of the three portfolios. If the EFT has the best average annual return, why is its value so much lower? Is there a way you could provide a side by side comparison of the performance of the three portfolios using the same time frame?

My second question is about the portfolio tool. I am running a two year old Dell XP and I do not have Excel. Apparently I can download a copy from Microsoft for several hundred dollars. Since the Portfolio Tool is such an important aspect of your service, can you suggest any way I can obtain Excel for my computer in order to fully take advantage of my trial subscription without it having it cost so much?

I am very interested in subscribing as your protocol fits my requirements so well.

Thanks in advance,

Richard

Mike's Response:

Hi Richard,

The reason for the different performance charts is to provide a total view of each portfolio from a year-to-date, annualized and lifetime perspective. It is all the same data just viewed from the different timelines.

As for the differences in total current value of the portfolios...

• In the case of the Market Trend, that portfolio started out with a $100,000 investment basis with a start date of 01/02/2002.
• The ETF Total Return started out with a $50,000 investment basis with a start date of 05/01/05.
• And, the Stock and Option Portfolio started out with a $100,000 investment basis, with a start date of 06/01/06.

The current value of each portfolio includes the profits, dividends and interest accumulated over the life of each portfolio.

You are correct that the ETF Total Return is currently showing the best performance of the 3 portfolios, but the reason that it is not the largest value portfolio is that it is only about 18 months old and started out with half the total amount of the other two portfolios.

As for the different charts...

• On the homepage, in the left-hand column, we show the annualized return of all 3 portfolios. In this view, each portfolio's return is calculated by taking the total lifetime return and dividing it by the number of years the portfolio has been in existence.

  In this process, the first step in the calculation is to get all 3 portfolios into an even number of years.

  So, let's assume that the date of the chart is October 20,for example. In this case, the Stock and Option Portfolio is only 4 months and 3 weeks old. To compare average annual return, we have to get the Stock and Option Portfolio into a minimum of a 12 month cycle so we merely use a ratio of the return it has generated in 4 months and 3 weeks to 12 months, assuming the return is at the same rate for the balance of a 12-month year.

  Likewise, we do the same calculation for the other 2 portfolios by taking the return for the current year and extrapolating the same rate of return to get the portfolio to an even number of years.

  The Market Trend is extrapolated to 5 years, since it is about 4 years and 10 months old. The ETF Total Return is extrapolated to 2 years, since it is about 1 year and 6 months old. And, the Stock and Option is extrapolated to 1 year, since it is less than a year old. Then, the total extrapolated returns are divided by the extrapolated life of each portfolio.

• If you go to the portfolio overview page on our website , you will see the net total return for each portfolio with no extrapolation. On this page, you can see the total return in comparison to the net total return of the S&P 500 for the exact time-frame as the age of the portfolio. And, since the 3 reports are close together, you can compare the portfolios to each other. Of course, since each has such a significantly different start date, it is impossible to compare true rates of return of one to the other. This is why we put the annualized returns on the homepage, so that you can compare relative returns of one portfolio to another based on an average annual return.
• Next, if you go to each portfolio page (Click here to see the ETF Total Return Portfolio overview page, for example), and scroll down to the bottom of the page. You will see a side-by-side comparison of each portfolio's returns. The table shows you current year-to-date (Note: This is a calendar year-to-date, except in the case of the Stock and Option Portfolio, since it is less than a year old. In this portfolio's case, for this year only, it is life-to-date.), Trailing 12 months, and Annualized. This is all in one table for easy comparison of one portfolio to the other.

So, in summary, we show you total lifetime return in comparison to the benchmark S&P 500. We show you average annual return of each portfolio on a single chart for comparison, and we show you net performance for the current year in a single table that allows comparison of one portfolio to the other.

All of these views of performance are correct, even though they are different. It all has to do with the time-frame from which the return is calculated.

The reason we show the different views is each view is important and relavent for your own knowledge and for comparing our performance to other published returns. .

As for Excel... you do not have to own Windows Excel to view our Portfolio Tools. Just go to Microsoft's Excel page and download their free Excel Viewer.

Please let us know if we can be of any further assistance. I hope to see you become a subscriber!

Best regards,

Mike