When you lose money, you actually lose more than just money, you lose emotional capital which is much more damaging and harder to recover from.

Monitoring & Risk Management

It takes a few minutes a day to monitor your stocks and portfolio, and it’s worthwhile to do.

Price and Volume for any instrument is fairly easy to track and this is what should be monitored, at least for your key positions. Market prices incorporate current and forward-looking information and any material moves relative to the market or historical averages are useful triggers to investigate further.

Additionally, your portfolio P&L should also be monitored daily. However, daily monitoring should not equate to day trading and does not need to be stressful. There is nothing wrong with evaluating your portfolio once a day, and as long the movements are within your expected range, no need to do anything different.

Also it is fairly easy to keep tabs on how the company is performing via the news and company press releases. The key to investment success is to articulate why you bought the stock or the ETF in the first place. These reasons could be your view on the top line growth of the company, competitive advantage, profitability, intellectual property, insider buying, valuation or sector related views.

Most of these factors can be articulated and monitored on a daily, weekly, monthly and quarterly basis.

Features Table

All investments come with risks (even your bank deposits).

Justify your investments, big or small

Evaluate your investments so that you can reduce, add, or substitute

The key purpose of monitoring your investments is to reduce your downside risk first and then potentially increase your upside. Even for long-term investors, if your initial assumptions and expectations were incorrect, you need to reevaluate if you still want to hold, add, or reduce your investment exposure. If you believe you own a great stock, do not sell, but if prices move materially, you must do some further investigation. It is nearly impossible to predict the perfect time to buy or sell any security. On the other hand, if you own a security that has become significantly overvalued, you may consider reducing your position or even selling your entire position.

How often you rebalance is going to depend on several factors such as your personal preferences and tax considerations. Are you chasing returns or are you risk averse? If you rebalance, will you get taxed at the long-term capital gains rate or the short-term rate? Are you getting closer to retirement and need to move away from equities and into fixed income? Typically rebalancing once a year is enough but sometimes you can go even longer without rebalancing. It is prudent to consider rebalancing your portfolio at least once a month.

  1. Price & Volume: Regardless of your investment strategy, it is wise to monitor your portfolio daily. Unless you are highly diversified, no one should trust individual stocks unconditionally. Even the strongest companies such as Amazon, Apple, Google, Facebook, JP Morgan, are exposed to various risks that may impact daily prices. These price fluctuations could be temporary or permanent. If these fluctuations are temporary, you may consider adding to the position. Alternatively in the case of fundamental changes, you may reduce or eliminate the positions. If you do not monitor your portfolio, you will most likely miss these investment opportunities that improve your performance. Look at these unexpected changes: If there is a drastic rise/fall in the price of any of your holding stock, then you need to investigate the reason behind it. In the case you do not have the time to monitor your positions daily, you can also set triggers to Buy, Sell, Stop Loss, and Realize Gains within your brokerage account. Please be thoughtful about setting these triggers, since triggers set randomly may have unintended consequences.
  2. News: Company specific news, including posts in Social Media, can impact stock prices. Although it is difficult to separate fact from fiction, it is better to be informed than not. Most companies will also send out press releases regarding any important news about the business. You can subscribe to these updates on the investor relations’ section of their corporate website.
  3. Quarterly and Annual Reports: It is important to briefly check the quarterly and annual results of the companies you own, especially your Core Holdings. Management summary provides useful information on the previous quarter and may also provide insights into some forward-looking outlook. Please keep in mind that quarterly financials have limitations and it is wise not to overreact to positive or negative indicators reflected on the quarterly reports. Annual reports provide a better insight into company performance including comparison to previous years.
  4. Institutional Buying/Selling & shareholding patterns: Company specific news, including posts in Social Media, can impact stock prices. Although it is difficult to separate fact from fiction, it is better to be informed than not. Most companies will also send out press releases regarding any important news about the business. You can subscribe to these updates on the investor relations’ section of their corporate website.
  5. Short interest: Short interest can provide certain useful insights into the direction of the stock. A large increase or decrease in a stock's short could be particularly indicative of sentiment. For example, when the short interest for a stock rises above 30 percent, it may be a sign that sentiment is negative on a company. Such a large shift, at a minimum, requires further research.

It’s easier than ever to track your investments using various free tools

Ignorance is not bliss when it comes to investing. You will pay for your ignorance.

Rebalance the fund

In order for your original weightings to stay aligned with your optimal allocation strategy every year, monitoring your investments is something that should be done on a regular basis. Are there any funds you hold that are lagging the industries they are supposed to track? Maybe it is time to get rid of them. During your research you may find other funds which are better suited for your investment goals. When choosing a fund, do not look at short-term performance. Instead look at the long-term track record of the fund. One or 2 bad years does not make a fund bad. Remember to remove emotion when evaluating your portfolio. Don’t hold on to an underperforming sector just because you like it. Sometimes it makes more sense to put money in other better performing sectors. Do not hold on to a loser for too long. Make sure to take some things into consideration when selling parts of your portfolio. Sell as a part of your investment plan and as part of a strategy that meets your needs.

Develop a Rebalancing & Risk Management Plan

When you start investing, it is always good to have a risk management plan. Investors tend to have some biases. It is common for investors to believe that just because an investment has done well in the past that it will do so in the future. It is also common to believe that just because an investment has done badly in the past that it will continue to do so in the future. This is why portfolio rebalancing is important. It makes your portfolio less risky. During booming markets, equities do well and bonds and other fixed income instruments tend to lag. However, during down markets, bonds and fixed income instruments tend to outperform equities. Rebalancing will minimize your risks so that you do not take heavy losses.

How to come up with portfolio weights that are suitable for you ?

Generally it is good to have diversified positions and not concentrating on a few names. However, it is a bit more complicated than that. You could potentially have five or six positions that are fairly diversified due to lack of correlation across the securities. You must also remember that due to extreme market stresses, most risk assets are correlated and it is always better to add some securities that are inversely correlated with economic cycles meaning instruments or ETFs that appreciate when the market goes down.

Zsenia provides you with various powerful tools (summarized below) to evaluate the risks of your portfolio including portfolio simulator and portfolio back testing functions. Based upon the results, you can change your portfolio composition as well as weights that suit your return and risk profile.

  1. The fastest way to validate the risk of your portfolio is to select Key Ratio Tab directly from the portfolio quote function. Under key ratios you can add other funds, benchmarks and also your timeline and review various key statistics such as Alpha, Beta, Return, Volatility as well as detailed risk analytics.
  2. Portfolio Simulator function is a very powerful tool to that forecasts over the next 12 months. Portfolio simulator function puts you in charge and you can input expected return volatility and correlation assumptions. The portfolio simulator provides you detailed results of potential risk of loss in your portfolio as demonstrated above.
  3. Portfolio Backtesting function is also a useful tool to review your performance optically as well as detail year-by-year performance. Portfolio back testing outputs are similar to the portfolio optimization function discussed in the next section.

As mentioned earlier, based upon the results, you can change your portfolio composition at anytime and re-evaluate your portfolio risks, until you are comfortable with the initial or current weights of the stocks and ETFs in your portfolio. In investing, understanding your portfolio risk is as important as returns. This is because if you understand the risks of your portfolio, you will avoid panic selling during market volatility and stick to your investment strategy that include accepting a certain level of volatility in order to achieve your desired return over your long term investment horizon. However, if at anytime the risk of your portfolio falls outside of your initial stress scenarios, you must revalue your specific situation and take actions as you deem appropriate.

When rebalancing, you can always consider the original weights of stocks and ETFs that make up your portfolio. Rebalancing your portfolio is prudent and will help you maintain your original asset-allocation strategy. Essentially, rebalancing will help you stick to your investing plan regardless of market performance. Generally, you can always evaluate if any industries or sectors changed by a significant percentage. You may want to allocate more or less depending on whether or not that portion of your portfolio has gone up or down. If any portfolio investment has appreciated significantly, instead of selling, you can always add new funds to other asset classes in order to reduce your tax liabilities due to selling at a gain.

Set Portfolio Weights

Select 'Key Ratio' from Quote & Complete Inputs

Select Simulator from Menu and set Stress assumptions

Simulation Forecasts using
Stress Assumptions

Simulation Forecasts using
Historical Assumptions (Default)

Backtesting Summary - Detailed Portfolio

Backtesting Summary – Return Distribution

Zsenia Portfolio Optimization

Zsenia includes both Static (Mean-Variance) as well as Dynamic (Conditional Var Approach) portfolio optimization functions.

Simply put, Static Optimization determines static weights of stocks and ETFs in your portfolio that generate the highest return/risk ratio based upon historical performance. This is useful as one of the indicators that you can use to determine your portfolio weights. You must remember this is a backward looking analysis and may not hold true in the future, however, it is still good to evaluate the past.

Dynamic Optimization also determines the dynamic weights of stocks and ETFs in your portfolio that generate the highest return/risk ratio based upon historical performance. This is also a useful tool since you can determine your rebalancing schedule and lookback assumptions for Portfolio Optimization. It is also important to realize that this also one of the indicators that you can use to determine your portfolio weights.

Dynamic Optimization assumptions include minimum and maximum weights of stocks and ETFs, Lookback days, Rebalancing frequency, CVAR level, Target Returns, Start and Finish Date as well as fees.

Optimization output provides the following detailed analysis.

Dynamic Portfolio Optimization

Dynamic Portfolio Optimizer (Analysis)

Zsenia Watchlist

Zsenia Watchlist is free for all users and you can easily keep track of stocks and ETFs. There 2 ways to create your watchlist and stay up to date on stock and ETF performance and also easily review related News.

  1. On the dashboard, click the star icon on the top right
  2. You can select portfolio and then select watchlist from the dropdown.
  3. To add to your watchlist, go to quote and click the star icon.
  4. Watchlist allows you to easily do more research through Quote, Research and News.
  5. To access Quote and Research, swipe right on any ticker and tap on the selected icon.
  6. To access news, tap the icon on the top right from Watchlist.

Create Watchlist from Dashboard or Portfolio

Add to your Watchlist from Quote screen

Swipe Write to access Quote and Research

Zsenia Simple & Complex Alerts

Zsenia allows you to monitor stocks, risks and price movements through the use of simple or complex alerts. These are great for monitoring your portfolio. You can set alerts that indicate movements that are up, down or both. So if you are concerned about volatility, you can set an alert to know if the S&P has moved up or down more than 3% in a day. If you want to know if a stock has an unusual increase or decrease in volume, you can set an alert so that you know if a stock has traded more or less than usual on a certain day.

Zsenia also allows users to set alerts for your portfolio so you can monitor your performance intraday or daily.

Complex alerts allows you to combine several alerts including individual stocks, ETFs and your Portfolios. If you have a portfolio consisting of 8-12 stocks, you can set individual alerts for each stock and then combine it to get one alert when all of your alert triggers are hit. So you can set an alert like the one below

  • SPY going down more than 3%
  • NFLX going down more than 10%
  • MSFT going down more than 4%
  • TSLA going down more than 15%
  • SPY volume increasing more than 5%
  • My Portfolio decreases more than 3%

This is especially useful if you are concerned about rebalancing your portfolio or if you are preparing for a recession. It is always good to monitor your portfolio and monitoring a portfolio can be the difference between losing a lot of money and preserving the capital you have. Getting a portfolio alert when certain conditions are met for your portfolio will allow you to become a better investor. Simple and complex alerts allows you to get the alerts you need when you need them. You can set an alert on any individual ticker or portfolio. In the future, Zsenia will allow you to set alerts on economic indicators and other useful market timing indicators.

Also you can stay always up-to-date via e-mail with Zsenia alerts as well.

Add alert directly from Dashboard
(Select the Bell)

Select the Bell to add alert from Quote (Stocks or Portfolios)

Select Price
Volume Levels

Select (+) to Add
Basic Alerts

Combine Basic Alerts for
Complex Alerts

With Zsenia, there are several ways to set Alerts

  1. On the dashboard, click the bell icon on the top right.
  2. You can select any ticker and portfolio from quote and click the bell icon in the top right area.
  3. Go to My Account and then head to notifications and click the gear icon on the top right.
  4. From your Watchlist (go to portfolio and it will appear in the drop down), swipe right on one of the existing tickers, and select the pencil icon

How to Monitor Markets & Economic Indicators

Zsenia makes it easy to monitor markets on the go. Select Markets and uncover all the key indicators with only a few clicks.

Along with monitoring the performance of your portfolio, you should be well aware of certain risks associated with your investments and markets.

Market Risk

Market risk includes risk factors that are associated with interest rates, exchange rates, stock pricings, and commodity prices. These risks are sourced from the relation between supply and demand dynamics in different markets. For example, the uncertainty in the value of a foreign currency such as the euro to an American investor is due to dynamic changes in supply and demand for the euro in the currency market.

Liquidity Risk

Liquidity risk is the risk of an asset that cannot be sold promptly without a significant discount due to the market’s inability to find a counterparty to complete the transaction. The U.S. equity market is considered liquid. However, the level of liquidity varies significantly across different stocks. In general, large cap stocks enjoy much better liquidity than small cap stocks. Small cap stocks carry much more liquidity risk than large cap stocks.

Sovereign and political risks

Sovereign risk is a type of risk when the borrower is a government. Default on these loans depends on both the willingness to pay and the ability to pay. Governments may not have the willingness to pay, possibly resulting in a default, which generates sovereign risk. Political risk is the risk associated with changes in the political environment that may impact various markets.

Credit Risk

Credit risk includes default risk, but it also incorporates uncertainties in the credit quality changes of a firm. It is associated with one party’s failure to make a promised payment to another party. Credit risk is of particular importance for any company with debt, especially non-investment grade companies. Spike in default rates has serious impact on individual stocks and the entire market.

Regulatory Risk

Regulatory risk is the uncertainty associated with a transaction due to potential change in regulations. Governments across different countries, impose trading rules to transaction in financial markets. The rules may change over time. New rules may be added. Existing rules may be modified or removed. All these changes create regulatory risk. Regulatory risk varies significantly over time and across different countries.

TAX Risk

Tax risk is the uncertainty associated with tax laws. Tax laws can be extremely complex, and are often time varying. Sometimes, tax laws are subject to interpretation, and can be inconsistent and confusing. The risk associated with the change of tax laws is tax risk and it could have a direct impact on your portfolio and markets.