Covestor and CVIM Blog

Weekly Member Interview: Patrick Jo Smith

This weeks interview is with Covestor member and rising star Patrick Jo Smith. Patrick has a background in finance, now working as a venture capitalist in Colorado, and spends ten to fifteen hours a week actively managing his portfolio.

Patrick has a dual investing approach, about half of his investments based on fundamentals and the other half on swing or momentum trades. For his momentum trades he follows short term technical indicators, attributing much of his success in the recent volatile markets to the latter approach.

In his interview Patrick provides more detail about his investing style, in particular the technical indicators he uses for his momentum trades. He also talks about the rationale for his current position in Frontier Oil, providing a valuable outline of the types of fundamentals he looks for.

Patrick has outperformed his chosen benchmark, the S&P 500, for all of the six months since he joined Covestor. He was out of the markets for a while and his recent performance in Frontier has reversed this trend but he is still ranked seventeenth on the site by Annualized Sharpe Ratio. You can find his interview with The Wall Street Transcript on the right hand side of his fact sheet.

Data Team Post: Updated Alpha and Beta

We have updated the Alpha and Beta calculations today so thought we would take the opportunity to explain more about these measures and how we calculate them. One of our members had spotted a technical bug in the calculation, which you can find displayed on each members fact sheet. Simply described Alpha and Beta are used to help anticipate the future performance of a chosen portfolio.

Beta is a risk measure.  It essentially quantifies the sensitivity of the portfolio’s returns to the underlying benchmark. The value is therefore expected to be a predictor of the portfolio’s returns relative to the market, a value less than 1 implying lower volatility and greater than one implying greater risk.

Mathematically, beta is the slope of the least squares regression of the fund’s returns vs the index returns. This is the calculation we use:

Alpha is a measure of relative return. It is a metric of out/underperfomance relative to ones benchmark. The formula measures the difference between the return generated by the portfolio and that generated by the index, taking into account the beta (i.e. the risk the portfolio manager has taken to achieve this return). A positive alpha means that the portfolio has outperformed the chosen benchmark, where a negative alpha implies the portfolio has underperformed.

Mathematically, alpha is the intercept of the least squares regression of the portfolio’s returns versus the benchmark returns. We use the following formula:

If you have any questions, or views on how we can improve the performance calculations overall we would love to hear from you

Weekly Member Interview: Paul Casimir

After a short break, the interview series with The Wall Street Transcript is back. This week's interview is with Covestor member Paul Casimir, aka Yaktipper. Paul is an Internet programmer living in Wisconsin, who also blogs his investment activity on his own site Yakblog.

Paul picked up his passion for investing from his grandmother and has been investing on his own account since college. He describes himself as a short term investor who likes to look for companies with extraordinary stories, buying into the market fear or selling into the irrational exuberance.

In his Interview Paul talks about some of the stocks he is currently looking at and the influence that fellow member Tim Sykes has had on his recent activity.

Paul is currently ranked sixth on the site by Annualized Sharpe Ratio. You can find his interview, next to his impressive performance chart, on the top right hand side of his fact sheet.

 

Twitter Your Trades

A new feature went live on Covestor this morning, allowing you to send live trade notifications directly to your Twitter feed. When you execute a trade with your broker you can now keep your followers on Twitter up to date, per the other members following you on Covestor.

To use this feature go to your account settings and you will see the option for Twitter alerts. Enter your Twitter Username and Password and we will automatically send details of the the action (i.e. bought or sold), the stock and the price to your twitter feed, along with a URL to bring your followers back to your rationale for the trade (if you have entered one). We will have further features for twitter users shortly so keep an eye out here.