13 Questions That Will Boost Your Investment Portfolio

When times are good in the stock market, how do you know if you are maximizing your investment portfolio value?

Below I will ask you 13 different questions about how you and your portfolio are laid out. The whole purpose is to challenge your thinking and expose you to possibly different investment strategies.

  1. How much cash on hand do you have? When the market is on a tear, having too much cash on hand (or cash available to be traded) can limit your investment returns. The best way to look at this is in a percentage manor. If the market is in a downtrend, you may want to have 50% or less of your portfolio invested in the stock market, leaving you with 50% or more in cash. Some investors will go 100% cash if the markets turn sour, and some investors like being 99.9% invested when the market is good. So take a look at your portfolio and figure out your % cash is and ask yourself, “should I be more invested?”
  2. Are you over invested in mutual funds? A mutual fund load is a big scam, and you shouldn’t be paying one. Also, sometimes mutual fund fees can get a bit too high to really give true value. If you have have too many mutual funds in your portfolio you may be limiting your success potential. Perhaps you think stocks are too risky or don’t know enough to get involved which is fine. Exchange Traded Funds for example offer a easy way to play different markets. A good place to find great mutual funds is my list of the 25 top mutual funds.
  3. Do you have exposure internationally? This is a more opinionated question, because every investor is different. When the US stock market is hot does it really matter if you have international exposure? Maybe or maybe not, but just looking at your portfolio and seeing where you are vested may help you find an easy tweak or two to really give yourself an upper hand.
  4. Do you utilize ETFs? Now more than ever etfs are hotter than hot. Off the top of my head you have the gold etf, south korea etf, which have both been great successes. Even owning the QQQQ or SPY which tracks the Nasdaq 100 and S & P 500 (respectively) can be nice holds long term. Brazil has been hot, China has been hotter then hot, heck just read my list of the Top 25 ETFs that every investor should know about and see for yourself. Unlike mutual funds, ETFs are expense free and can make a great addition to any portfolio.
  5. Are you over diversified? Perhaps you have seen Jim Cramer’s “Am I Diversified?” game on CNBC’s Mad Money. Unlike Cramer I think you can be over diversified, and in fact owning too many stocks at once can eat would be profits away easily. William O’Neil the founder of CAN SLIM trading believes you should put more eggs in fewer baskets then less eggs in more baskets. Why? Because if your biggest position only makes up 5% of your portfolio and even say doubles unexpectedly, you still aren’t making much headway in your overall portfolio. Minimizing your portfolio diversification works, and it is a matter of managing it with a stop loss and cutting your losses. Do you own 5 stocks or 50 right now? Could you sell some stocks that are not up to par?
  6. Are you outperforming the S&P 500 so far this year? Comparing to the S & P 500 market index is very simple way to judge your investment success and actually is THE way to do it for institutional investors (mutual funds, hedge funds, etc.). You always want to look at your performance on a percentage basis, not a whole value basis because making $5,000 in a $5 million dollar portfolio (1%) isn’t nearly as great as making $5,000 in a $5,000 portfolio (100%). Go to any free investment site and pull up a chart of the S & P 500. Take today’s close less the closing price of December 31st of last year, then divide by the same December 31st closing price. This will give you the current to date return of that index for the year, which you then simply compare to your own portfolio. If the market is up your portfolio should be too.
  7. Is your broker providing you with what you need to succeed? I recently covered 12 ways to compare your online stock broker and suggest reading that and also checking out my list of the best stock brokers to see if you could be in trading under a superior roof. Your broker should supply everything from the tools to the free real time quotes to the flat-fee trades. Is your broker ranked for superior customer support? Now is better a time then ever to consider changing your online broker.
  8. Do you know what direction the market is heading? I wrote in the past on analyzing the overall market for dummies, and having even a general grasp of what direction the market is heading can be a great asset. When it comes to maximizing your portfolio value you want to know what direction the market is going because 3 out of 4 stocks tend to follow the overall market trends. How you do this is by looking at one of major indices such as the S & P 500 or the NASDAQ Composite. I listed 5 places to get free stock charts, so check out the market and check out your portfolio would ya?
  9. Are you cutting losses and letting runners run? A fantastic way to maximize your portfolio value is to get rid of those stocks in the red and replace them with stocks that are heading up. The easiest way to cut your losses is with the use of a stop loss order, which should always be a maximum of 5 – 8% below your purchase price. The smart investor always uses a profit vs loss ratio to support their success. If you let your big runners run and cut your losses short I guarantee you will make money, and lots of it, in your investment portfolio.
  10. How much time are you putting into research? Could you be spending even 5 more minutes a day reading through free investment sites that could be providing you with great insight? A easy way to maximize your portfolio value is to kick your stock market education up a notch. Perhaps adopting a productive financial morning routine may be the way to give yourself the edge you need.
  11. Are you trading on your own or having someone trade for you? This is very simple and straight forward, if you have someone managing your nest egg for you and they aren’t beating out the S & P 500 then it is time you take control of your own portfolio. There is absolutely no reason why your buddy Joe can’t match or beat out the overall market. Want to know how easy it is to match the overall market performance? Simply buy the QQQQ or the SPY and boom, instant portfolio success. The sad part is that even Joe your fund manager can’t even figure that out.
  12. Do you have an investment goal for this year? I am a big believer and promoter of setting goals which can be seen from my recent interview with ZenHabits. Setting yourself goals for the four quarters of the year and the year itself is a great way to maximize your portfolio worth. Why? Because if you aren’t reaching your goals you are going to be analyzing and working harder to get your portfolio where it should be. This, of course is the whole point of the article :twisted:.
  13. Are you happy with your investment strategy? I have covered 7 strategies for online stock trading, and perhaps yours needs a change up. I see a lot of newer traders try to utilize strategies such as day trading and find out very quickly how tough it actually is. I’ve also listed 10 great ways to learn stock trading as a new investor, and the focus is all on expanding your knowledge base in different fashions. Bottom line here is how effective is your investment strategy? If you spent some more time could you actually be doing better right now?

The purpose of these questions are to get you thinking. Being an independent investor myself I always find it difficult to cover all the angles of what I can be doing better. I hope the list provides you with atleast one way to boost your investment portfolio, and as a result become a better investor. What questions would you add onto this list?

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  1. says

    This question can probably fit in under some of those categories, but…

    Have you developed a support

    be it actual investors or sites/forums that you can trust when you need help

  2. says

    #5 is interesting to me because I feel like a swing/position trading account should be traded with just a handful of stocks where each stock risks 10 or 20% of the entire value of the account. Whereas a day trading account should see a smaller percentage risk from any one trade(less than 1%).
    Diversification is a recipe for mediocrity for a swing trading account and the breath of life for a day trading account.

  3. says

    #5 is the most interesting on the list in my opinion and probably the most controversial as well. Diversifying is a good way to provide a safety net to your portfolio, and it is helpful in most cases. I do agree that having a more concentrated portfolio with a heavier weighting in your top stocks makes more sense though as far as maximizing profits.

  4. says

    I support a 3 to 1 profit versus loss ratio. So, if I have a stock that is up 20 -25% then I will consider selling depending on where the stock is in its move and how long I’ve held it for.

  5. says

    Ok, so you don’t necessarily look at chart patterns and sell based on that? When I technically trade, I look at double tops, or bearish engulfing candles with high volume, or simply if it’s over extended from it’s moving average.

  6. says

    Technicals weigh my decision heavily, I absolutely love engulfments either way they come, huge support of accumulation distribution combined with the 50 day moving average. Borat can’t help himself, “very nice”.
    All my buy and sell decisions start with technicals, are guided by a p vs l ratio, assessed again by technicals, then sold when technicals and my p vs l ratio are in check.

  7. says

    #6 is something I’ve wondered about when judging my own portfolio. Right now I’m up about 17% for the year so I’m well above the S&P 500, but the Dow and Nasdaq are pretty close to my own performance. I always figured the S&P 500 was a better representation of the overall market than the Dow though.

  8. says

    :idea: :!: :idea: :!: :grin: :grin: :grin:

    After a weird/bad day in the markets I’m so glad I found this page. Love the concise comprehensive hashing out of the info here…. Thank you so much for addressing some things I think I better understand on a day like today :) .

    I’ve bookmarked this site and I hope to soak up as much as I can around here. I’ll subscribe to the feed and register at the forums for sure, yet I’ll rarely if ever post :/ . Just being honest!

    Thanks again Blaine!