What’s your investment portfolio’s performance? Do you know? Just 57% of U.S. adults are “financially literate,” according to a study from Standard & Poor’s titled the “2015 Global Financial Literacy Survey.” Another study by a large insurance company found that people are more frightened by planning their finances than dying. What’s wrong?
Part of the problem is structural: Fewer than half of all U.S. states require high school students to enroll in a personal finance course.
(Audio) Portfolio Report Card on a $4 Million Account for T.R.
The other problem is psychological: People are fearful when it comes to saving and investing money.
Once a person has overcome these obstacles and gotten started with their investment plan, how can they know if their investment portfolio is making progress?
The Case for Benchmarking The concept of “benchmarking” boils down to measuring the performance of your investments against relevant yardsticks. “Relevant” is key, because measuring performance against irrelevant yardsticks will inevitably lead to irrelevant results.
For example, racing a collie against a field of greyhounds could lead observers to incorrectly assume collies are slow. On the other hand, racing each dog against its corresponding breed will result in a more accurate view of canine speed. If your collie is able to easily outrun a field of competing collies, you have a fast dog. And if he/she can’t outrun a pack of greyhounds, it’s mainly because he/she isn’t a greyhound.
Beyond choosing relevant yardsticks, the exercise of measuring investment performance should become a consistent routine for all investors. Why? Because failing to periodically measure your portfolio’s performance, either by choice or by ignorance, leads to a distorted view of satisfactory results. Moreover, just because you’re comfortable with portfolio’s results doesn’t necessarily make the results satisfactory.
Level 1 Analysis Benchmarking your investment performance is a layered process. Layer 1 is what I refer to as the “big picture” because it examines your portfolio’s investment performance against relevant passive yardsticks using an asset weighted approach. Let’s look at an example:
Portfolio ABC
30% U.S. stocks
10% International developed stocks
40% U.S. bonds
10% Global real estate
10% Money market (cash)
Comparing the performance results of a portfolio with exposure to different asset classes (like our example of Portfolio ABC shown above) against the S&P 500 (NYSEARCA:VOO) is a common mistake. In this example, the vast majority of Portfolio ABC (70%) has non-U.S. equity exposure, which makes an all U.S. equity benchmark like the S&P 500 an irrelevant yardstick for all but Portfolio ABC’s 30% U.S. equity exposure (NYSEARCA:IWB).
Properly measured, the other assets like bonds (NYSEARCA:BOND) and real estate (NYSEARCA:ICF) should have their performance compared to relevant passive benchmarks over the exact same time frame. And together, the asset weighted returns for the passive benchmarks will explain whether portfolio’s performance has been satisfactory or unsatisfactory. Simply put, outperformance over identical time frames is good whereas underperformance isn’t.
Level 2 Analysis Analyzing investment performance at level 2 is less “big picture” versus level 1. Why? Because level 2 analysis focuses on the performance examination of individual securities versus their respective peer group. Put another way, level 1 analysis is comparable to using a telescope whereas level 2 is comparable to using a microscope.
Below we use level 2 analysis by comparing the performance of Wal-Mart Stores (NYSE:WMT) against its peer industry group, consumer staples (NYSEARCA:XLP). Over the past 10-years, Wal-Mart has gained almost +103% against a +173.10% gain for the Consumer Staples Sector SPDR ETF. In other words, Wal-Mart has badly underperformed its peer group by a whopping +70% over the past 10-years!
Had we failed to use level 2 analysis on Wal-Mart by simply accepting the fact that its stock has gained +102.97%, we could’ve been easily misled to conclude that Wal-Mart’s 10-year equity performance has been wine and roses. However, our level 2 analysis explicitly shows that Wal-Mart’s 10-year performance record has been substandard compared to its peers.
Because virtually all individual stocks will have a corresponding peer sector group, comparing the performance of a company’s equity performance isn’t just easier, but mandatory for all serious and truthful stockholders.
Summary The proper way to determine satisfactory investment performance is to use relevant benchmarks over identical time frames. Level 1 analysis examines the portfolio’s asset weighted performance against passive yardsticks, whereas level 2 analysis focuses on the performance of individual securities.
Level 2 analysis can also be applied to mutual fund holdings, however, the fund’s underlying asset exposures vs. its peer group classification are far more important for correct analysis. This is a similar approach I use with the Portfolio Report Card grading system that I invented.
It’s crucial to remember that investment performance is directly impacted by your portfolio’s cost, risk, diversification, and taxes. And while performance measurement is an ultra important step, focusing exclusively on historical performance results and nothing else will tell you most of the story, but not all of it.
What is the best crypto wallet: a hardware wallet, a software wallet, or a mobile wallet?
In the early stages of learning how to use Bitcoin, the security question arises: how to ensure your coins remain in your possession? Only by generating and storing keys in a way that can be verified can you be certain. It is impossible to be sure no one else has a copy of your keys unless you know they were created properly and stored offline.
Hardware wallets create your keys offline using a random number generator, so they cannot be logged. Additionally, the keys are kept permanently offline, so they cannot be accidentally shared on a network.
In software wallets and mobile wallets, random number generators are often built into the device the wallet is installed on. Since they use inputs like the current time to calculate randomness, they are difficult to verify and generally not secure. Even if your device generates randomness in a secure manner, host the resulting keys on a networked device, and an attacker can extract, view, or intercept them at any time.
It is transparent to verify that open-source hardware wallets create and store randomness securely, and that your keys are kept offline while being protected from threats like phishing. It is different in the case of open-source Bitcoin wallet though.
In addition to protecting against other vulnerabilities, hardware wallets resolve new attacks both progressively and reactively among security researchers. Supporting bug bounty programs ensures that all types of security issues are regularly checked.
What is the best crypto wallet_ a hardware wallet, a software wallet, or a mobile wallet_
Stay more secure everywhere
Hardware wallets have set a new standard for universal cybersecurity, as we discussed above. According to speculators, the future of the internet – dubbed Web3 – will rely on cryptographically secure keys backed up physically. In the cryptosphere, as well as in everyday business, e-commerce, and social media, hardware wallets are essential.
Your assets and identity are both protected offline when you use a hardware wallet for authentication, so there is no counterparty risk.
As a result of forgetting passwords and changing authenticator devices, security has long relied on third parties. Using the open recovery seed standard, users can backup their accounts safely without relying on a third party and recover accounts from any compatible device. Using Shamir backup, the recovery seed is split into multiple equal parts for stronger security.
Keeping in mind that not just crypto can be targeted is important. Similarly, your data can be leaked, resulting in phishing attacks, hostage situations, or compromised devices arriving by mail.
It has become easier and more affordable for everyone to have verifiable security thanks to hardware wallets.
The base layer of crypto security is hardware wallets
By bridging the digital and physical worlds, hardware wallets create digital keys offline and keep them safe. Crypto assets can be controlled with the keys in many ways, such as two-factor authentication, digital signatures, or two-factor authentication.
With open standards, you can ensure the same level of security across any app you use. As a result, dozens of hardware wallet manufacturers have appeared around the world, accelerating the adoption of crypto security and ensuring standards are maintained to ensure your coins remain yours regardless of wallet.
Monero Price starts the Selloff, BitcoinCash and Cardano struggle
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Monero Price starts the Selloff, BitcoinCash and Cardano struggle
Monero Price (XMR) tumbled at a double-digit rate today and is likely to continue to fall somewhat , extending its declining trend for a third day straight after hitting a two-month high earlier in the week.
The broader selloff in cryptocurrencies impacted XMR price; the fresh wave of downside volatility in digital currencies was pinged by regulators and the surprise drop in trading volume.
Before the latest crypto market crash, Monero price gained substantial momentum in the last couple of weeks.
it even climbed to the 10th spot in its market capitalization.
n the middle of this month( if launched on time) a spin off or fork of the monero coin called MoneroV will be launched , people that have monero coins can get 10 moneroV coins for every monero coin. this is always good for the market and Monero went on a small rise. this is now behind us and the prices settled before this announcement was made returning more to its original value.
But for traders and brokers these were a few interesting days where people that saw the market the correct way made good profits
Still Trader’s sentiments overall turned bearish
the main reasons for this are:
crypto exchanges registration with SEC
The U.S. SEC has informed all the domestic cryptocurrency exchanges to get the registration certificate or wait for a crackdown on them.
a crackdown on Japanese exchanges
Japanese authorities are now closely watching digital currencies to protect crypto traders from adverse events, such as Coincheck hack – which resulted in the loss of $500 million worth of coins.
declining trading volume
Lower trading volume is a major factor behind the broader selloff in digital currencies, while the decline of 80% in Google searches indicates the waning popularity of cryptocurrencies.
harsh comments from European regulators.
Regulators started taking actions against cryptocurrencies exchanges to evade illegal activities and price manipulation techniques.
this affects the markets as the hype has settled down.
this affects other currencies in a similar manner as Cardano (ADA), which is the eighth largest cryptocurrency based on market capitalization, plunged more than 6% today to the lowest level since mid-December.
Its market capitalization stands around $5.9 billion, slightly higher from Stellar’s (XLM) capitalization of $5.8 billion.
And Bitcoin Cash (BCH) traded in the range of $1200 in the last of couple week before falling to $1000 level today.
it could be assumed that this will continue to go down till another hype cathes the markets. cryptocurrencies have become already something that is less sexy and more mainstream ,this is good for its development but for those that only invest not so much.
still as a trader you see a volatile market where enough fluctuations happen mostly based on news to make some good trades. good luck
Supreme Court Sides With Bits of Gold in Bank Dispute
Supreme Court Sides With Bitcoin Broker “Bits of Gold” in Israeli Bank Dispute
Upon appeal, the Israeli Supreme Court has rejected the closure of Bits of Gold’s banking facilities at Leumi bank, Tel Aviv.
The Israeli cryptocurrency brokerage’s appeal followed a previous ruling against it that has now been set aside by the higher court.
As Israel and many other countries struggle with the accelerated phenomenon of virtual currencies, Leumi Bank recently made the news for being a particularly blunt in its rejection of Bitcoin.
We should of course not be surprised with the banks attitude towards bitcoin or any other cryptocurrency for that matter. keep in mind that the banks become more and more obsolete because of them.
They will keep on loosing money which now they make with ridiculous commissions of work that is fully automated. so they will try to see how they are able to make the operation and acquiring cryptos as hard as possible knowing that they will never be able to stop them.
There is widespread anticipation that the upcoming G20 Summit in March 2018 will produce a global, moderate framework for a regulatory approach. Set against that are persistent hostile stances the world over from banks, asset managers and even governments towards cryptocurrencies.
Now that the countries understand there is money to be made with Taxation in cryptocurrencies they might want to make sure that the banks stay within their lane.
Apart from the Israeli revenue service opting to tax cryptocurrency assets as “properties” and other more positive developments dating back to mid-2017, Israel remains a strange mix of genteel acceptance alongside wildly opposing voices.
There is thus Hope But no decision
Bits of Gold has fought a David and Goliath battle since their banker decided it wanted to steer clear of all cryptocurrency-related business.
On record as recently telling another bitcoin-related trader that they simply don’t want the business, Leumi Bank’s hard-line stance is accumulating bad press. The second-largest bank in Israel appears as discriminatory when analyzing virtual currency traders and other digital coin businesses.
During 2017, a customer made a bank transfer to the Kraken exchange site for buying bitcoin worth $1000. The bank identified the request, halted it, and started investigating.
The elated CEO of Bits of Gold, Youval Rouach said that “The court’s decision enables us to focus on the growth of the Israeli cryptocurrency community.”
The February 26 Supreme Court ruling granted Bits of Gold a temporary injunction against their account closure pending further scrutiny by the bank and other parties. The presiding bench declared that the company had “acted transparently and did not violate any provision of law.”
Calling the bank’s concerns “speculative” and turning an unsympathetic ear to the plaintiff, the ruling does, however, allow for the bank to still close the account on any small technical detail that defies legislation. As a record of a public spat around cryptocurrency’s right to be recognized in many ways, the ruling is seen as a victory for the local cryptocurrency community.
One Small Step Forward
Although not as absolute as nations like China that has opted for draconian bans, Israel is a front line for digital coins’ right not just to exist, but also become assets in the true sense of the word. The Supreme Court noted in its written ruling that Bits of Gold had not made itself guilty of the violation of any standing laws since opening its doors for business.
The Bits of Gold v. Leumi Bank case might become something of a test case once the bank applies its mind in scrutinizing the company’s accounts against the backdrop of existing legislation. The outcome will also be informed by sentiment post the G20 Summit due in March as well as other global regulatory trends.
Now that the countries understand there is money to be made with Taxation in cryptocurrencies they might want to make sure that the banks stay within their lane.