Ask Mike:
Why the difference between the Portfolio Tool and the model portfolio table?

Question:

Hi Mike,

I found what looks to be discrepancies between the amounts reflected on the ETF Total Return Portfolio Tool and the model portfolio.

Specifically, this has to do with the EWZ trade. Although it is a new recommendation, it is not listed in bold print. Also, the limit price is different between the two tables.

Also, I notice that, in some cases, your listed limit price is below the Friday closing price. In others, it is above the Friday closing price. So, how am I to interpret this?

So, I guess I am asking two questions: 1) Why are the numbers different on the Portfolio Tool than on the model portfolio table? And, 2) How am I supposed to enter a buy order when your limit order is below the Friday close, as opposed to when it is above the Friday close?

Thanks,

Ben

Mike's Response:

Hi Ben,

Thanks for the questions. First, let me explain the difference between the Portfolio Tool and the model portfolio table of current positions...

The Portfolio Tool is designed to help subscribers determine how many shares they need to match me on a trade-for-trade basis, by just putting in the 'Investment Amount' that they want to use in their own portfolio.

This tool (which is just an Excel worksheet) is also used to determine the percentage distribution of each position in the portfolio.

In addition, we list our limit order price for new positions and we also display the current stop loss setting.

When this worksheet is first published before the market opens each week, new positions are highlighted in yellow and the 'Price Per Share' is our limit order.

After our limit orders are filled, the yellow highlight goes away and instead of the Price Per Share showing our limit order, it will show our 'as filled' share price.

Each time there is a change during the week, either in a stop loss setting, or when we are filled on a limit order, we update the Portfolio Tool, accordingly. When we update the Portfolio Tool, we add the heading text, 'INTRA-WEEK UPDATE... as of: mm/dd/yyyy at hh:mm Central Time', so you will know the last time we updated the tool. If the heading does not have the 'INTRA-WEEK...' text, then it has not been changed from the original as posted over the weekend.

However, the model portfolio table is ONLY update each weekend. So, at the beginning of each week, the Portfolio Tool and the model portfolio table have the same limit order prices and stop loss settings. They will never have the exact same number of shares, since the Portfolio Tool is designed to be a theoretical number of shares based on a user-defined Investment Basis. Whereas, the model portfolio table reflects the actual shares carried in the model portfolio.

Subscribers can refer to the model portfolio table anytime during the week and see exactly where this portfolio was at the beginning of the current week. The planned trades are listed and the limit order prices are listed. The model portfolio is static and changes only one time per week.

The Portfolio Tool, on the other hand, is updated and changed to 'as is' numbers for changes in stop loss settings and 'as filled' for our price per share amounts.

When we send out a stop loss bulletin or a limit order change bulletin, you should always refer to the Portfolio Tool for confirmation of these numbers not the model portfolio table.

Now... with regard to your question on limit orders...

When you set a limit order on a stock, you should get that price or lower whichever is available when the order is executed.

Therefore, if the Friday close on a stock was $30.00 and my limit order was $31.00, and the stock opened Monday morning at $29.00, you should get the $29.00 price, even if your limit order was $31.00. If, on the other hand, my limit order was $29.00, and the stock opened Monday morning at $30.00, you would not get filled until and unless the stock's price falls to $29.00 before the end of the week.

My limit orders are GTC (Good 'til Closed) through the end of trading on Friday of each week.

I hope this clears up the confusion between our Portfolio Tools and the model portfolio table of positions on the website.

Thank you for your questions.

Regards,

Mike