Category Archives: General

How I use Google Sheets to track my portfolio

Regular readers of my blog have probably noticed that I use Google Sheets for almost everything. I use it to track the live net asset values of various companies, I built my valuation models in Google Sheets and everything is tied together in a master portfolio sheet (some if its functionality you can glimpse from my performance review posts) . A few years ago I wrote a short tutorial that explained how you can add realtime price information in Google Sheets for stocks that aren’t support by the standaard =GoogleFinance() function.

What I’ll be focusing on today is how you can pull data from multiple documents to create one sheet with a nice overview of everything. To make this easy it’s smart to standardize your documents a bit. What I do is that when I value a company there is always a sheet called “Thesis” that has a few standardized items at fixes positions, like this:

The price target links to a valuation model in a different sheet (but in the same document), the price (in this case) comes from the =GoogleFinance() function and the last update cell is useful to keep track if I have updated my valuation recently. As you can see here I should probably take a little bit of time soon to update my Pardee Resources valuation. If you make it a habit of doing this for everything your research you can make a nice portfolio sheet that tracks realtime how much upside every position has remaining. Part of my portfolio sheet looks like this:

For obvious reasons I have hidden the number of shares I own, and the value of every position, but you can see how I have an price target for every position that is updated automatically based on the latest price. To pull data from a different document in the sheet we can use the =ImportRange() command. It requires two arguments, one is the url of the sheet where you want to pull the data from, and the second one is the reference to the cell you want to pull the data from. So it would look something like this:


After entering this function in a cell you initially get an error message. Hover with the mouse cursor above the error message, and you will see that a small pop-up that asks if you want to give your sheet access to the other sheet. Do this, and the data will appear :).

Combined with the option to get realtime prices (as discussed in my old tutorial) you have an incredible toolset to make a fancy spreadsheet.  Not only will this give a quick overview of which positions are perhaps becoming more or less attractive, it’s also easy to build a watchlist like this (I have done this as well). Everything that you researched, but didn’t buy can be put in that list together with positions that you have sold in the past.

One limitation to keep in mind is that Google isn’t happy if one sheet requires to much calls to outside sources, and by making one sheet dependent on tons of other sheets the number of calls can explode quickly. So you will have to try to not invoke to many =ImportHTML() and =ImportXML() functions in all the combined sheets in order not to break things.


Author is long the stuff in the sheet

Five year blogging anniversary!

Exactly five years ago I started this blog, an eternity in the blogging world. I follow dozens and dozens of value investing blogs, but most of them disappear just as fast as they appear. I guess everybody has different goals and expectations when they start a blog. My main goal of starting a blog was to become a better investor. I thought that writing down why I make buy/sell decisions would force me to act more rational because I know that my reasons will be scrutinized by my readers. Writing something down while knowing that people will read it is useful in itself, but getting actual feedback is also quite valuable. I have changed my mind more than once on an investment thanks to readers knowing more than me.

A bit more unexpected is that I found the blog also a great tool to generate new ideas. A lot of the ideas that have been published on this blog have originated from like-minded readers that wanted my input on a certain idea, or were just happy to give a good idea as a sign of appreciation. So keep those idea’s coming, and I’ll continue blogging for another five years!


The crap you get when you buy a retail investment product

To take advantage of a small signup bonus at the Dutch insurance company “Nationale-Nederlanden” I applied for an account that would let them invest a bit of money for me. Based on a couple of questions they assign you to a model portfolio, and for doing this they charge a management fee of 1.0%. They assigned me to the “neutral 2” profile, that is pretty conservative with an allocation of 40% equities and 60% bonds. Since I don’t intent to keep this account strictly longer than necessary for the signup bonus, I don’t really care how they invest the money. Nevertheless, I was sort of surprised how crappy the portfolio is that you get:

NN portfolioAs you can see they put my money in a bunch of random mutual funds that add another layer of expenses. In the case of my profile these funds add 0.66% in expenses, so you pay 1.66% annually (more if you don’t meet certain minima). Of course, they managed to tuck in some of their own funds in this list and then it’s just a crappy mix of overlapping funds. There are for example two global bond funds (and there is a third one with inflation protection) and also three European corporate bond funds. And that’s just the tip of the iceberg… Investing like I do isn’t an option for everybody, but this is without a doubt a terrible deal for anyone. Just buy some cheap ETFs! It’s really sad how the big financial institutions are mainly in the business of selling the biggest crap they can get away with. I can’t really complain, because I’m just in it for a small bonus, but imagine someone who’s putting his life savings in this…


I have invested a whopping 50 euro’s in this crap, and already lost 3.89 euro…

How hard (or easy) is it to outperform?

It’s not supposed to be easy. Anyone who finds it easy is stupid.
Charlie Munger

I started writing a post about how the recent market volatility provides a good moment to reflect on your skills as an investor, but I realized that the more interesting topic – that is somewhat related – is how easy or hard it is to outperform the market. I think this is really the most important question that every investor faces since the answer has huge implications on what kind of strategy you should follow. While this is a very fundamental question I don’t think there has ever been a good definitive answer. Are markets almost perfectly efficient and is your best bet an index fund? Do you need 150+ IQ points and read 500 pages/day to have a shot at out performance? Can you have an edge with an average or below average intelligence, but with a contrarian mindset and enough time? Can you be successful if you are really smart, but when you lack the “magic” psychological profile?

What kind of people should consider what kind of strategy?

Usually, this is a question that isn’t even asked when people ask for investment advice. Ask for investment advice on and everybody is going to advise a portfolio of low-cost index funds. Ask the question somewhere else and they probably recommend their own strategy; which could be buying owner operators, compounders, cheap value stocks, magic formula stocks, swing trading, forex trading, and whatever else exists.

Some of these strategies are probably not a good idea even if you are a genius and have a massive amount of free time (hint: forex trading) while other strategies could be executed by anybody with little effort. But being able to differentiate between a good and a bad strategy is also a skill. Some people might stumble on when they start out as an investor and go for some value strategy while other might stumble on a forex trading site and go that route. If your process for choosing a certain strategy is flawed the possible alpha of that strategy is not really your alpha. And if you are really smart and could generate alpha, but go for a passive indexing approach because that strategy sounded more convincing it’s also proof that investing is hard (unless of course it’s a conscious decision but you, for example, go for indexing because you have a lack of time or interest in investing) .

When I started investing I wasn’t at all convinced about my ability to beat the market, but I knew that there was a large amount of evidence that retail investors underperformed their benchmarks by large amounts by structurally buying high and selling low. I figured if they are able to underperform by such a wide margin I should be able to do well by just trying to do the opposite. That’s easier said than done, but on a day like “black Monday” I thought that the correct course of action was pretty obvious: buy stuff when you see ridiculous trading activity. I bought, for example, some Retail Holdings – because that is a stock that I know – at ~$16 because someone was selling at any price and no-one was buying. In some ETF’s there were even bigger opportunities, but I was too late to that party.

There is actually some research that suggests that intelligent investors are better at buying low and selling high. It doesn’t really sound like a surprising result, but it’s not easy to research since your broker usually doesn’t know your IQ. But in Finland nearly every male of draft age is IQ tested, making an interesting paper possible. Especially this graph that shows when people in the 1995-2002 period were buying tech stocks is pretty neat:

Buying/selling in tech stocks during bubble by IQ group

So I think if you are reasonable smart (maybe 120+ IQ?) and have enough time to research strategies and stocks active investment is perhaps worth a shot. I don’t really think that having the right mindset is extremely important because I think that is largely created by having the right knowledge (for example knowing that selling in a panic is almost the worst thing you can do). But I wouldn’t be surprised if many people think differently, and I also wouldn’t be surprised if I’m wrong about this. Anyway, enough rambling. To sum it up; I think that what people should do really depends on their intelligence, education, available time, their personality and probably other factors that I’m missing. There is no strategy that is a good fit for everybody. Indexing isn’t the right strategy for everybody, nor is value investing.

You have to be brutally honest with yourself about what is the right strategy is for you.

Are fundamental weighted indices better?

While browsing around on the web today I encountered an article from early 2009 that argued that most/many claims that are made in favor of fundamentally weighted indices are flawed. Before continuing reading this post, I would suggest reading the article. It’s just three pages in a large font, and I don’t want to repeat the complete argument :).

Intuitively the argument for fundamentally weighted indices is compelling. If the market is not efficient then stocks that are overvalued have a bigger market cap than they should have and stocks that are undervalued have a smaller market cap than they should have. If you now buy this market you must by definition underperform compared to the case where every security is fairly valued, right? Or perhaps wrong? Can you argue with the example below?

Consider a two-company world. Company A has a fair value of $10 billion with a market value of $9 billion, and Company B has a fair value of $5 billion with a market value of $6 billion. If we have a $150,000 market-capweighted portfolio, it will have $90,000 in Company A, the undervalued company, and $60,000 in Company B, the overvalued company. It will not have most of its money in companies that are above fair value—it will have most of its money in the company that is below fair value.

He is absolutely right that you have more money in the undervalued company in this example than in the overvalued company! But what is important to note that the undervalued company is less undervalued than the overvalued company is overvalued. The result is that the total market value of both companies remains equal and, as a result, both market efficiencies offset each other. If you would buy the complete market it would cost you $15 billion in both cases and in both cases you get company A and company B. Doesn’t matter if you overpay $1 billion for company B and underpay $1 billion for company A. The net result is exactly the same!

So when we add as a constraint that if the market as a whole is fairly valued the conclusion that the author draws is inescapable: there is no hidden performance drag by buying a market cap weighted portfolio. If you don’t overpay for the market as a whole it doesn’t matter that for some individual securities you overpay and underpay for others.

But this is of course only true if the market as a whole is correctly valued. Whether or not this is true depends on how market inefficiencies manifest themselves. Let’s take a look at a market with two companies, but to make things even simpler both companies have a $10 billion fair value. Let’s say that on a single day there is a 50/50 probability that a company drifts 1% away from fair value, either up or down. After one day the market is expected to look as following:

Fair value Move Market cap
Company A $10 billion +1% $10.1 billion
Company B $10 billion -1% $9.9 billion
 Total $20 billion $20 billion

So it seems like everything is still well for the argument that market inefficiencies – represented by random movements away from fair value – don’t make a market cap weighted portfolio inferior compared to buying the stocks at intrinsic value. If you would buy the whole market you still get the same two companies at the same price!

While this model appears to be reasonable there is one major flaw, and that is the fact that these returns introduce a bias when we start compounding across multiple periods. A plus 1% return followed by a minus 1% returns doesn’t net out to zero. If we would alternate a long series of +1% returns and -1% returns the market cap of both companies would converge to zero. That wouldn’t make sense! To remove the bias from the expected returns we need to combine random movements of plus 1% with minus 0.9901%:

  • $10.0 billion * 1.01 = $10.1 billion
  • $10.1 billion * 0.990099 = $10.0 billion

What we are basically saying that market prices are log-normally distributed around fair value. The log-normal distribution is asymmetrical, as it should be because asset prices can’t go below zero. I think that by now you can guess what the impact will be if we redo our table:

Fair value Move Market cap
Company A $10 billion +1.00% $10.1 billion
Company B $10 billion -0.9901% $9.90099 billion
 Total $20 billion $20.00099 billion

Because of the small difference in the up- and down move we lose the result that the market as a whole remains fairly valued, and as a result, a market-cap weighted approach will be at a disadvantage compared to a fundamentally weighted approach. Buying these two companies at fair value is better than buying them at their combined market cap.

Is this a reasonable result? Small-caps stocks are known to outperform large-cap stocks. The traditional academic view is that the difference in performance is the result of differences in risk between small and large stocks, and to some extent that is probably true. But a part of the performance differential could also be caused by the fact that undervalued companies have a smaller market cap than overvalued companies when they have an identical intrinsic value.

So, to summarize: I think that the intuitive idea that a fundamentally weighted index should outperform a market cap weighted index is actually correct. Whether or not it works in practice depends on how inefficient the market is compared to the added trading costs that will be incurred by a fundamental weighting.