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Creating a Portfolio through Financial Research

Investments
Introduction

In the U.S. alone, there are approximately 8,000 mutual funds, 8,000 hedge funds, 4,000

funds of funds, plus numerous other types of investment accounts. Regarding mutual funds,

there are approximately 8,500 publicly traded companies in the U.S., many of which are not

widely traded due to company size or their presence in the OTC market. To develop my own

actively managed “fund”, there are numerous facets of investing and portfolio management that

must be researched. This paper will review the development and management of an investment

fund, covering investment research, portfolio construction, portfolio management, trading

strategies and portfolio performance after the three-week period.

Investment Research

To determine what I would want in my portfolio, I needed to conduct research into the

different asset classes that comprise investment portfolios, such as equities, fixed income, real

estate, commodities, etc., as well as industry and sector investment classes.

Asset Classes

Before you develop an investment portfolio, you have to determine what kind of assets

that you want in it. The average American is familiar with the “stock” market through the wide

adoption of 401k retirement plan accounts and self-managed individual retirement accounts. The

primary asset classes that investors deal in are equities, fixed income, real estate, commodities,

etc.

Equities. Equities is another name for stock, which is more commonly used by the non-

investing public. Equity represents ownership of some portion of an asset. It is tied directly to

the assets of a company or venture. While the average return on equities is higher than that of

bonds, they are much more volatile, which explains why there are nearly as many equity mutual

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funds as there are quality publicly traded companies. People and companies that invest in equity

are usually looking to capital appreciation for profit and dividends for income.

Fixed Income. Investments in fixed income instruments are not designed to provide capital

appreciation (although opportunities occur). Bonds, certificates of deposit, money market funds

and investment trusts are the more common forms of fixed income investments. Bondholders

receive a fixed income payment based on the amount of money invested with a company and the

interest rate of the debt instrument, plus it has a higher claim on the assets of a company in the

event of liquidation or reorganization than shareholders have. The more common types of bonds

are U.S. Treasuries, municipal tax exempt, municipal revenue, mortgage-backed securities and

corporate. The higher the risk, the higher the return, in general.

Real Estate. When the stock markets are especially volatile or uncertain, many investors retreat

to U.S. Treasuries to preserve principal and for those who seek higher returns, they turn to real

estate, which is what occurred after the technology stock bubble burst in 2001. Real estate is

often held in partnerships. Other forms are in equity companies that specialize in real estate and

real estate investment trusts which produce income for investors.

Commodities. There are so many items that qualify as commodities. Some of the more common

commodities that are invested in are oil, natural gas, gold, silver, wheat and corn. The

investments are made directly and through derivative contracts called futures. This type of

investment is for the savvier investor and also includes a lot of volatility.

Assets can also be classified by the company characteristics, such as market

capitalization, lifecycle stage, valuation perception, income producing, etc.

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Investment Sectors

Investments can also be classified by the types of businesses conducted by various companies.

The common sector groups are utilities (communications, water, electrical natural gas), energy

(oil and natural gas services), financials (banks, insurance, investments, real estate), industrial

cyclicals (aerospace, building, equipment/machinery, chemicals, paper and packaging),

consumer durables (auto, housewares, conglomerates, rubber, shoes) , consumer staples (food,

cosmetics, grooming, tobacco), services (transportation, hotels, restaurant, business and personal

services), retail (apparel, department stores, food stores, miscellaneous shops), health

(pharmaceuticals, medical, drug companies), and technology (technology components,

information technology, electrical equipment, specialized machinery, precision instruments).

The sectors can then also be broken into industries. It would seem that most investment

managers that are involved in industry or sector funds have some specific industry expertise that

sends them in that direction.

Portfolio Construction

Before you can put a portfolio together, you have to set investment goals, risk tolerance,

and portfolio type. Next, you have to select your stocks and determine what indices are

comparable to your portfolio.

Determining Investment Goals – Time, Risk Tolerance, etc.

Currently, I am a single mother with a daughter who works for the federal government.

Realistically, I would need an investment portfolio to produce above average returns – 8% -

10%. To have the chance of producing that range of returns with diversification, I need to have a

higher tolerance for risk. Therefore, I would expect to invest in some stocks that have betas of

1.25 and above and closer to 1, if they pay dividends.

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Selecting a Portfolio Type

In my research, I decided that the best way for me to push for my return is to take an income-

equity approach. Overall, stocks that pay dividends produce higher returns in the long run. This

would also involve be a slightly speculative approach to managing the portfolio based on

behavioral finance, which will be discussed in more detail later in the paper. I basically plan on

having an initial portfolio that consists of roughly half high income producing stocks and growth

stocks. My portfolio will be created with $25,000 in capital and will use margin purchasing,

when I think it is advantageous.

Stock Screens and Initial Stock Selections

To select stocks for my portfolio, I reviewed MSN’s and Yahoo!Finance’s stock screens. I

decided to use MSN because it more user friendly than the Yahoo!Finance version, which needs

to open a separate Java-run window with nothing in it that you can’t close. I also didn’t find it

much more useful, although it looks better aesthetically. The screens run for income and growth

stocks are presented below (the screen results are provided in Appendix A).

Screen Field Yield Screen Growth Screen


Market Capitalization ≥ $1 billion ≥ $0.5 billion
Beta - ≥ 1.0
Yield ≥ 7% -
Share Price - ≥ $10
Expected 5-Year EPS Annual
- ≥ 10%
Growth
Avg. Analyst Recommendation - Buy

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The initial stocks selected are presented in the table below. The one exception to the stock

screens was the initial purchase of Avon stock because I am an Avon Sales Representative. The

stock was sold within a couple of days. The income stocks/funds were initially selected based on

their dividend yield. However, I reviewed each stock/fund in depth more to make sure that I was

comfortable with the selection. Therefore, the initial income selections do not represent the five

highest yields. The same approach was taken for growth stocks.

Income Growth Other


Chimera Investment Corporation China Life Insurance Company Avon Products, Inc.
(CIM) (LFC) (AVP)
Frontline Ltd. Ordinary Shares
Morningstar, Inc. (MORN)
(FRO)
Magyar Telekom Stepan Company Common
Telecommunication (MTA) Stock (SCL)
Systemax Inc. Common Stock
Pimco High Income Fund (PHK)
(SYX)
Provident Energy Trust Ordinary W.R. Grace & Company
(PVX) Common Stock (GRA)

Comparative Portfolio Benchmarks

To determine how well a portfolio performs, it needs to be compared against a similar

basket of assets. The RiskGrades reports in Appendix D compare my portfolio to the S&P 500

as a benchmark. While that may be an appropriate benchmark for overall performance against

one of the market indices (the Dow Jones Industrial Average and NASDAQ also being popular),

it is not an apples to apples comparison. To do that, I had to identify the kind of portfolio that I

had assembled. I first identified other equity-income funds and found that my portfolio was

closest to a Large Cap Value fund. Therefore, I compared my portfolio against two large cap

value asset class benchmarks – Russell 1000 Value Index and the MSCI Large Cap Value Index,

as well as the S&P 500.

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Portfolio Management

Typically, managers of actively managed funds make up to three primary management

decisions for investing – market timing, security selection and asset allocation. Market timing is

difficult (practitioners of technical analysis may disagree) because you are attempting to predict

the future price AND movement of stocks. For security selection, the overall record of active

managers is spotty and mixed, at best. There are some managers who consistently do above

average, such as Peter Lynch from Fidelity. However, the careful screening of mutual funds will

show that most perform subpar over long periods of time due to the risk-return relationship in

their investments. For my portfolio, the holdings will change based on the condition of the

companies in the portfolio and on short-term opportunities due to behavioral finance driven

investment opportunities.

Trading Strategies – Behavioral Finance

Behavioral finance is the growing theory that’s taking the considerable evidence that

casts a challenge against the concept of market efficiency. While the efficient market theory

looks for a rational mathematical model to explain fluctuations in asset prices behavioral finance

looks t psychology to explain asset valuation and why prices rise and fall (Ritter, Jay, 2003, p.

429).

Cognitive psychology is how people think, which supports that investors’ emotions and

biases affect stock prices and markets (Jones, Charles, 2010, p. 318). People make systematic

errors in the way that they think; some are overconfident, at times they put too much weight on

recent events happening (Jones, Charles, 2010, p.318). Per, Charles Jones, “Investors are

motivated by numerous “irrational” forces; other investors, recognizing these mistakes in

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judgment, may be able to make a profit” (2010, p.318). There are a number of biases that can

possibly affect an investor’s decision: loss aversion, overconfidence, framing, and herding effect.

The loss aversion “refers to the tendency that investors strongly prefer avoiding losses as

opposed to achieving an equivalent amount of gains” (Jones, Charles, 2010, p.319). Per Jones,

almost 50 percent investors are most likely to sell stocks when they should keep them rather than

getting rid of the useless stocks. Overconfidence is one of the biases that can affect an investors

ability that drives investors to make decisions that can detrimental to their investments.

Investors could potentially invest too little into diversification, because of tendency to invest too

much in one thing that is familiar to them or a stock that is receiving a lot of attention from other

investors. Investors tend to invest in local companies even though it may not be the best decision

for their particular portfolio.

The framing is the notion that how a concept is presented to individuals matters. For

example, some movie goers may prefer to save money to see a matinee movie that is earlier in

the day rather than going later in the evening that will cost them additional money to see that

exact movie. They will get more business if people are feeling that they are getting a discount at

off-peak times rather than paying additional money at peak periods. The herding effect, is

explained in our text as, “when money managers in proximity to each other, invest similarly,

which creates a self-reinforcing herding effect” (Jones, Charles, 2010, p. 319).

The brief introduction to behavioral finance has only touched on a few points. It is very

difficult to find trading strategies that reliably make money. This does not imply that financial

markets are efficient. Behavioral finance is not a separate discipline, but instead will

increasingly be part of mainstream finance for some.

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Selecting New Stocks

My use of behavioral finance concepts seeks superior return investment opportunities that

will rely upon publicly available news data. Examples of behavioral finance investment

opportunities include events such as the conviction of Martha Stewart on insider trading of IM

Clone or the conviction of the CEO of Tyco for tax evasion. Knee-jerk market reactions to news

create temporary opportunities for short-term superior gains.

BP is one of the stocks that were purchased under this approach. The stock had dropped

to $29 per share to rebound to $39 per share, plus the eventual reinstatement of dividends will

ultimately yield approximately 9% for investors who bought the stock during at its price before

the oil well explosion. Another stock bought under that approach was Hewlett-Packard. The

CEO had to resign due to falsifying expense reports to hide his relationship with a marketing

consultant. Other purchases included Exxon-Mobil, an ING investment fund, Apple, Ford, and a

Cohen and Steer’s investment fund.

Portfolio Performance

Reflecting its S&P Beta, the portfolio I created fared worse than the broader indices, but

not much worse. I believe the results would have been more favorable if the period were

significantly longer to reflect the benefit of dividends.

Total Daily Return

Calculating total returns is one way to figure out exactly how much money you’ve made

or lost on your investment. To calculate this figure, you have to determine how much money

you originally invested and then factor in other components such as, interest, dividends, and

appreciation or depreciation.

The average total daily return for the portfolio was -0.926%.

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Risk and Return

The riskiness of the portfolio was tracked each day, as well as its beta vis-à-vis the S&P

500 and its diversification benefit. As the portfolio was managed, the decisions made reduced

the risk and increased the diversity benefits. However, there were a couple of stock purchases

that caused the risk (by RiskGrades Score) to rise towards the end of the portfolio period. This

problem was alleviated by the end of the period, but the charts below will display how the

portfolio changed over time.

RiskGrade Score Over Time

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Diversification Benefit Over Time

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S&P Beta Over Time

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The portfolio had a mean daily return of -0.962%, a variance of 0.059% and a standard

deviation of 2.426%. This is significantly greater than the benchmarks or the S&P 500. The

detailed calculations are contained in Appendix C.

Benchmark Comparisons

My portfolio was described as an income-equity type of portfolio, comparable to Large

Cap Value funds. The chart below shows how my portfolio compared to the two asset class

benchmarks and the S&P 500.

Cumulative Wealth Index Benchmark


1.05
Cumulative Wealth Index

1.00
Net Portfolio Value
0.95
Russell 1000 Value
0.90 Index
MSCI Large Cap
0.85 Value Index
S&P 500
0.80
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Conclusion

Although the portfolio did not do well over the three-week period, it is designed to

generate income while hunting for growth opportunities. If the resulting portfolio on the last day

of tracking (August 13, 2010) had been the portfolio from the beginning, then the portfolio

would have been very similar to the benchmarks and the S&P 500. Understanding behavioral

finance concepts can allow investors to periodically seek superior returns without significantly

increasing the risk of their portfolios because emotional and biased framework responses to

market news are not necessarily indicative of fundamental issues with a company.

This is exemplified in the rebound of the BP stock after it stopped the oil well leak.

During the leak, no one used less oil and there were few, if any protests/boycotts of BP gas

stations. Its financial picture is sound, even with the $20 billion it will ultimately contribute to a

clean-up fund.

This research also highlighted to me how complex portfolio calculations become once

you go beyond the two-stock model. Most importantly, it has also led me to believe that there

are some investment managers who can “beat” the market, but that they are few and far between

because it is a difficult thing to do.

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Appendix A

Appendix A shows the results of the stock screens used to identify portfolio stocks.

Income Stock Screen


Symbol Company Market Cap Div/Yld Beta
PVD Administradora de Fondos de Pen 1.08B 11.60% 1.20
AWF Alliancebernstein Global High I 1.21B 8.50% 0.93
NLY Annaly Capital Management Inc C 10.01B 15.40% 0.38
AZN Astrazeneca PLC Common Stock 70.45B 7.00% 0.66
AV Aviva plc Unsponsored ADR (UK) 14.99B 8.00% 1.22
BFR BBVA Banco Frances S.A. Common 1.37B 8.70% 1.45
BPT BP Prudhoe Bay Royalty Trust Co 2.02B 9.00% 0.67
CSQ Calamos Strategic Total Return 1.27B 7.70% 1.29
CEL Cellcom Israel, Ltd. Ordinary S 2.65B 11.70% 0.60
CTL CenturyLink, Inc. Common Stock 10.68B 8.20% 0.72
CQP Cheniere Energy Partners, LP Ch 3.03B 9.10% 0.35
CIM Chimera Investment Corporation 2.96B 18.00% 1.39
CPNO Copano Energy, L.L.C. 1.86B 8.20% 0.84
EVV Eaton Vance Limited Duration In 1.87B 8.70% 0.70
ETP Energy Transfer Partners, L.P. 9.74B 7.00% 0.50
ERF Enerplus Resources Fund Common 4.06B 9.00% 1.17
FGP Ferrellgas Partners, L.P. Commo 1.67B 8.30% 0.71
FTR Frontier Communications Corpora 2.33B 13.60% 0.76
FRO Frontline Ltd. Ordinary Shares 2.58B 9.10% 1.27
HTS Hatteras Financial Corp Hattera 1.09B 14.90% 0.28
IGD ING Global Equity Dividend and 1.04B 11.20% 0.96
LGCY Legacy Reserves LP 1.02B 8.30% 1.04
LINE Linn Energy, LLC 4.43B 8.50% 0.58
MFA MFA Financial, Inc. 2.12B 10.20% 0.42
MTA Magyar Telekom Telecommunicatio 3.11B 10.70% 1.29
MWE MarkWest Energy Partners, LP Co 2.59B 7.10% 1.10
NGG National Grid Transco, PLC Nati 19.47B 9.30% 0.70
NRP Natural Resources Partners LP 1.86B 8.60% 0.66
NAT Nordic American Tanker Shipping 1.35B 8.50% 0.85
NS Nustar Energy L.P. Common Unit 3.68B 7.10% 0.26
PTNR Partner Communications Company 2.56B 10.30% 0.63
PGH Pengrowth Energy Trust Units 2.85B 8.30% 1.42
PVR Penn Virginia Resource Partners 1.24B 7.90% 0.71
PWE Penn West Energy Trust Ordinary 8.42B 8.50% 1.34
PTY Pimco Corporate Opportunity Fun 1.15B 8.00% 1.04
PHK Pimco High Income Fund Pimco Hi 1.50B 11.80% 1.41
PVX Provident Energy Trust Ordinary 1.80B 10.20% 1.47
NGLS Targa Resources Partners LP Com 1.84B 7.70% 1.32

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Growth Stock Screen
Symbol Company Retail Price Market Cap Beta 5 yr Growth
LFC China Life Insurance Company Li 66.83 126.41B 1.37 213.46%
HDB HDFC Bank Limited Common Stock 152.71 23.30B 1.88 20.22%
HLF Herbalife Ltd. Common Stock 50.10 3.00B 1.95 22.05%
KB KB Financial Group Inc 43.31 14.86B 2.29 18.63%
MORN Morningstar, Inc. 45.54 2.24B 1.30 23.76%
UEPS Net 1 UEPS Technologies, Inc. 14.19 643.92M 1.38 14.37%
SHG Shinhan Financial Group Co Ltd 82.58 19.58B 2.03 11.92%
SCL Stepan Company Common Stock 71.55 716.09M 1.44 28.59%
SYX Systemax Inc. Common Stock 16.47 603.91M 1.66 25.30%
GRA W.R. Grace & Company Common Stock 25.38 1.84B 2.69 35.11%

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Appendix B

Appendix B shows the trade transactions during the three week portfolio period.

Action
Execution Date Description Quantity Description Price Commission Reg Fees Total Cost
8/12/2010 14:53 Buy 300 IGD - ING GLOBAL EQUITY DIVIDEND AND $10.70 $9.95 $0.00 ($3,219.95)
PREMIUM OPPORTUNITY FUND
8/12/2010 14:44 Sell 100 FRO - FRONTLINE LTD $29.44 $9.95 $0.05 $2,934.00
8/12/2010 14:43 Sell 147 SYX - SYSTEMAX INC $13.17 $9.95 $0.04 $1,926.00
8/11/2010 12:26 Buy 300 F - FORD MOTOR COMPANY $12.50 $9.95 $0.00 ($3,759.95)
8/11/2010 12:26 Sell 30 LFC - CHINA LIFE INSURANCE COMPANY $64.93 $9.95 $0.04 $1,937.91
LIMITED
8/10/2010 10:11 Buy 100 HPQ - HEWLETT PACKARD CO $42.74 $9.95 $0.00 ($4,283.95)
8/10/2010 10:10 Sell 495 CIM - CHIMERA INVESTMENT $3.89 $9.95 $0.04 $1,915.56
CORPORATION
8/9/2010 14:20 Buy 100 GRA - W R GRACE AND CO $27.26 $9.95 $0.00 ($2,735.95)
8/9/2010 14:20 Buy 21 SCL - STEPAN COMPANY $64.14 $9.95 $0.00 ($1,356.89)
8/9/2010 14:19 Buy 389 PHK - PIMCO HIGH INCOME FUND $13.60 $9.95 $0.00 ($5,300.35)
8/9/2010 14:19 Buy 46 FRO - FRONTLINE LTD $31.50 $9.95 $0.00 ($1,458.95)
8/9/2010 14:19 Buy 127 BP - BP PLC $41.33 $9.95 $0.00 ($5,258.86)
8/9/2010 14:18 Buy 7 AAPL - APPLE INC $261.02 $9.95 $0.00 ($1,837.09)
8/6/2010 9:30 Buy 105 POM - PEPCO HOLDINGS INC $17.19 $9.95 $0.00 ($1,814.90)
8/6/2010 9:30 Sell 118 MTA - MAGYAR TELEKOM $15.80 $9.95 $0.04 $1,854.41
TELECOMMUNICATIONS PLC
8/5/2010 9:30 Buy 3 AAPL - APPLE INC $261.44 $9.95 $0.00 ($794.27)
8/5/2010 9:30 Sell 32 PVX - PROVIDENT ENERGY TRUST $6.78 $9.95 $0.01 $207.00
8/4/2010 9:30 Buy 122 UTF - COHEN AND STEERS $14.84 $9.95 $0.00 ($1,820.43)
INFRASTRUCTURE FUND INC
8/4/2010 9:30 Sell 300 PVX - PROVIDENT ENERGY TRUST $6.75 $9.95 $0.04 $2,015.01
8/3/2010 0:00
8/2/2010 9:57 Buy 23 BP - BP PLC $39.24 $9.95 $0.00 ($912.47)
7/30/2010 10:19 Buy 30 XOM - EXXON MOBIL CORP $60.19 $9.95 $0.00 ($1,815.65)
7/30/2010 10:13 Sell 150 AVP - AVON PRODUCTS INC $30.15 $9.95 $0.08 $4,512.47
7/30/2010 9:30 Sell 58 GRA - W R GRACE AND CO $24.63 $9.95 $0.03 $1,418.56
7/28/2010 11:04 Sell 50 AVP - AVON PRODUCTS INC $29.93 $9.95 $0.03 $1,486.52
7/27/2010 9:30 Buy 158 GRA - W R GRACE AND CO $26.46 $9.95 $0.00 ($4,190.63)
7/27/2010 9:30 Buy 54 FRO - FRONTLINE LTD $33.91 $9.95 $0.00 ($1,841.09)
7/27/2010 9:30 Buy 147 SYX - SYSTEMAX INC $17.15 $9.95 $0.00 ($2,531.00)
7/27/2010 9:30 Buy 29 SCL - STEPAN COMPANY $71.43 $9.95 $0.00 ($2,081.42)
7/27/2010 9:30 Buy 161 PHK - PIMCO HIGH INCOME FUND $12.75 $9.95 $0.00 ($2,062.70)
7/27/2010 9:30 Buy 332 PVX - PROVIDENT ENERGY TRUST $6.85 $9.95 $0.00 ($2,284.15)
7/27/2010 9:30 Buy 495 CIM - CHIMERA INVESTMENT $3.92 $9.95 $0.00 ($1,950.35)
CORPORATION
7/27/2010 9:30 Buy 118 MTA - MAGYAR TELEKOM $15.69 $9.95 $0.00 ($1,861.37)
TELECOMMUNICATIONS PLC
7/27/2010 9:30 Buy 44 MORN - MORNINGSTAR INC $46.02 $9.95 $0.00 ($2,034.83)
7/27/2010 9:30 Buy 30 LFC - CHINA LIFE INSURANCE COMPANY $67.69 $9.95 $0.00 ($2,040.65)
LIMITED
7/26/2010 0:00 Buy 200 AVP - AVON PRODUCTS INC $29.65 $9.95 $0.00 ($5,930.00)

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Appendix C

Appendix C provides the portfolio calculations on the last day of the portfolio as well as

the portfolio return over the three-week period.

 Covariance – The covariance of the portfolio was calculated using the excel data

analysis toolpak. The matrix was created by taking the covariance table and copying

a transposed version over the excel output. This allows for portfolio mean, variance

and standard deviation calculations.

 Portfolio Mean Return – The mean was calculated by using the excel MMULT

function which calculates the product of two matrix arrays.

 Variance and Standard Deviation – The variance was calculated by using a nested

MMULT excel formula to use the covariance matrix and the portfolio weights to

calculate the portfolio variance and standard deviation.

The portfolio on the last day consisted of the following stocks:

Ticker Weight Avg. Return


AAPL 5.955% -0.277%
BP 13.961% 0.069%
F 8.714% -0.436%
GRA 12.294% -0.020%
HPQ 9.671% -0.955%
IGD 7.682% 0.054%
MORN 4.499% -0.509%
PHK 17.423% 0.455%
POM 4.398% 0.194%
SCL 6.914% -1.325%
UTF 4.191% -0.009%
XOM 4.297% 0.054%

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The table below presents the covariance matrix created and the resulting statistical analysis.

Covariance Matrix

AAPL BP F GRA HPQ IGD MORN PHK POM SCL UTF XOM
AAPL 0.000174 0.000054 0.000159 0.000134 0.000201 0.000070 0.000146 0.000123 0.000132 0.000067 0.000112 0.000112
BP 0.000054 0.000357 0.000109 0.000091 -0.000001 0.000062 0.000167 0.000073 0.000029 0.000120 0.000142 0.000069
F 0.000159 0.000109 0.000261 0.000219 0.000134 0.000090 0.000195 0.000127 0.000131 0.000148 0.000125 0.000118
GRA 0.000134 0.000091 0.000219 0.000326 0.000118 0.000074 0.000230 0.000108 0.000079 0.000284 0.000107 0.000075
HPQ 0.000201 -0.000001 0.000134 0.000118 0.000882 0.000103 0.000226 0.000061 0.000160 0.000112 0.000153 0.000240
IGD 0.000070 0.000062 0.000090 0.000074 0.000103 0.000056 0.000092 0.000042 0.000056 0.000072 0.000072 0.000052
MORN 0.000146 0.000167 0.000195 0.000230 0.000226 0.000092 0.000253 0.000099 0.000101 0.000263 0.000137 0.000126
PHK 0.000123 0.000073 0.000127 0.000108 0.000061 0.000042 0.000099 0.000146 0.000103 0.000075 0.000084 0.000048
POM 0.000132 0.000029 0.000131 0.000079 0.000160 0.000056 0.000101 0.000103 0.000163 -0.000003 0.000093 0.000081
SCL 0.000067 0.000120 0.000148 0.000284 0.000112 0.000072 0.000263 0.000075 -0.000003 0.000573 0.000060 0.000101
UTF 0.000112 0.000142 0.000125 0.000107 0.000153 0.000072 0.000137 0.000084 0.000093 0.000060 0.000125 0.000078
XOM 0.000112 0.000069 0.000118 0.000075 0.000240 0.000052 0.000126 0.000048 0.000081 0.000101 0.000078 0.000161

mean -0.1602%
variance 0.0127%
std. dev 1.1262%
Total Return – Daily (Last Day Portfolio)
Date AAPL BP F GRA HPQ IGD MORN PHK POM SCL UTF XOM S&P 500
7/26/2010 259.28 38.65 12.94 25.84 46.57 10.73 46.02 12.56 17.07 70.00 14.40 59.96 1,115.01
7/27/2010 264.08 38.00 13.03 25.76 47.57 10.81 45.75 12.63 17.42 65.82 14.51 60.38 1,079.25
7/28/2010 260.96 37.71 12.91 25.16 47.13 10.81 44.86 12.68 17.33 65.40 14.34 60.48 1,083.61
7/29/2010 258.11 38.47 12.97 25.47 46.41 10.84 45.02 12.69 17.04 65.34 14.38 59.91 1,089.47
7/30/2010 257.25 38.47 12.77 25.67 46.04 10.94 45.10 12.70 16.91 66.01 14.46 59.26 1,121.06
8/2/2010 261.85 39.42 13.16 26.23 47.56 11.01 46.50 12.83 17.18 67.47 14.73 61.50 1,127.79
8/3/2010 261.93 40.00 12.91 25.82 47.36 11.00 45.87 12.91 17.17 65.90 14.82 62.27 1,121.64
8/4/2010 262.98 39.39 13.11 26.74 46.77 10.99 45.74 13.14 17.28 65.89 14.80 62.27 1,125.81
8/5/2010 261.70 40.68 12.98 26.74 46.35 10.95 45.66 13.22 17.23 64.12 14.90 62.26 1,127.24
8/6/2010 260.09 41.33 13.04 26.78 41.85 10.96 45.25 13.35 17.33 63.09 14.89 61.53 1,120.46
8/9/2010 261.75 40.86 13.05 27.39 42.60 11.00 45.92 13.47 17.56 64.88 14.91 62.01 1,125.86
8/10/2010 259.41 40.11 12.92 26.77 42.33 10.98 44.71 13.42 17.70 61.71 14.90 61.49 1,101.60
8/11/2010 250.19 38.79 12.41 26.07 40.77 10.79 43.11 12.96 17.22 59.76 14.43 60.39 1,101.53
8/12/2010 251.79 38.38 12.27 25.88 40.14 10.70 42.81 13.22 17.26 59.06 14.31 60.23 1,106.13
8/13/2010 249.10 38.93 12.15 25.71 40.45 10.71 42.77 13.25 17.52 57.84 14.37 59.91 1,113.84

Dividends
7/26/2010
7/27/2010
7/28/2010
7/29/2010
7/30/2010
8/2/2010 0.100
8/3/2010
8/4/2010
8/5/2010
8/6/2010
8/9/2010
8/10/2010 0.122
8/11/2010 0.440
8/12/2010
8/13/2010

Total Return - Daily


7/26/2010 - - - - - - - - - - - - -
7/27/2010 1.85% -1.68% 0.70% -0.31% 2.15% 0.75% -0.59% 0.56% 2.05% -5.97% 0.76% 0.70% -3.21%
7/28/2010 -1.18% -0.76% -0.92% -2.33% -0.92% 0.00% -1.95% 0.40% -0.52% -0.64% -1.17% 0.17% 0.40%
7/29/2010 -1.09% 2.02% 0.46% 1.23% -1.53% 0.28% 0.36% 0.08% -1.67% -0.09% 0.28% -0.94% 0.54%
7/30/2010 -0.33% 0.00% -1.54% 0.79% -0.80% 0.92% 0.18% 0.08% -0.76% 1.03% 0.56% -1.08% 2.90%
8/2/2010 1.79% 2.47% 3.05% 2.18% 3.30% 1.55% 3.10% 1.02% 1.60% 2.21% 1.87% 3.78% 0.60%
8/3/2010 0.03% 1.47% -1.90% -1.56% -0.42% -0.09% -1.35% 0.62% -0.06% -2.33% 0.61% 1.25% -0.55%
8/4/2010 0.40% -1.53% 1.55% 3.56% -1.25% -0.09% -0.28% 1.78% 0.64% -0.02% -0.13% 0.00% 0.37%
8/5/2010 -0.49% 3.27% -0.99% 0.00% -0.90% -0.36% -0.17% 0.61% -0.29% -2.69% 0.68% -0.02% 0.13%
8/6/2010 -0.62% 1.60% 0.46% 0.15% -9.71% 0.09% -0.90% 0.98% 0.58% -1.61% -0.07% -1.17% -0.60%
8/9/2010 0.64% -1.14% 0.08% 2.28% 1.79% 0.36% 1.48% 0.90% 1.33% 2.84% 0.13% 0.78% 0.48%
8/10/2010 -0.89% -1.84% -1.00% -2.26% -0.63% -0.18% -2.64% 0.53% 0.80% -4.89% -0.07% -0.84% -2.15%
8/11/2010 -3.55% -3.29% -3.95% -2.61% -3.69% -1.73% -3.58% -3.43% -2.71% -3.16% -3.15% -1.07% -0.01%
8/12/2010 0.64% -1.06% -1.13% -0.73% -1.55% -0.83% -0.70% 2.01% 0.23% -1.17% -0.83% -0.26% 0.42%
8/13/2010 -1.07% 1.43% -0.98% -0.66% 0.77% 0.09% -0.09% 0.23% 1.51% -2.07% 0.42% -0.53% 0.70%

Average -0.277% 0.069% -0.436% -0.020% -0.955% 0.054% -0.509% 0.455% 0.194% -1.325% -0.009% 0.054% 0.002%
Variance 0.019% 0.038% 0.028% 0.035% 0.095% 0.006% 0.027% 0.016% 0.018% 0.062% 0.013% 0.017% 0.020%
Std. Dev. 1.370% 1.960% 1.678% 1.875% 3.083% 0.779% 1.652% 1.254% 1.324% 2.484% 1.161% 1.318% 1.410%

Weight 5.955% 13.961% 8.714% 12.294% 9.671% 7.682% 4.499% 17.423% 4.398% 6.914% 4.191% 4.297%

16
Benchmark Comparisons (Actual Portfolio)

Three-Week Performance Data

MSCI Large
Net Portfolio Russell 1000 Cap Value
Date Value Value Index Index S&P 500
7/26/2010 24,996.05 572.73 1,382.55 1,115.01
7/27/2010 24,272.56 572.58 1,384.58 1,079.25
7/28/2010 23,984.76 568.00 1,375.49 1,083.61
7/29/2010 24,172.93 566.21 1,371.98 1,089.47
7/30/2010 24,092.09 566.35 1,371.39 1,121.06
8/2/2010 24,606.85 579.19 1,402.74 1,127.79
8/3/2010 24,424.73 575.71 1,397.12 1,121.64
8/4/2010 24,507.12 578.65 1,404.13 1,125.81
8/5/2010 24,449.45 577.92 1,403.94 1,127.24
8/6/2010 24,397.36 575.68 1,397.60 1,120.46
8/9/2010 24,550.78 578.84 1,404.67 1,125.86
8/10/2010 23,896.93 575.17 1,397.95 1,101.60
8/11/2010 21,971.65 558.29 1,360.01 1,101.53
8/12/2010 21,858.15 556.59 1,357.01 1,106.13
8/13/2010 21,856.51 554.90 1,352.48 1,113.84

Total Return – Daily (Actual Portfolio)

Total Return - Daily

Russell MSCI Large


1000 Value Cap Value
Portfolio Index Index S&P 500

-2.894% -0.026% 0.147% -3.207%


-1.186% -0.800% -0.657% 0.404%
0.785% -0.315% -0.256% 0.541%
-0.334% 0.025% -0.043% 2.900%
2.137% 2.267% 2.287% 0.600%
-0.740% -0.601% -0.401% -0.545%
0.337% 0.511% 0.502% 0.372%
-0.235% -0.126% -0.014% 0.127%
-0.213% -0.388% -0.451% -0.601%
0.629% 0.549% 0.506% 0.482%
-2.663% -0.634% -0.478% -2.155%
-8.057% -2.935% -2.714% -0.006%
-0.517% -0.305% -0.221% 0.418%
-0.008% -0.304% -0.333% 0.697%

Avg. -0.926% -0.220% -0.152% 0.002%


Variance 0.059% 0.012% 0.011% 0.020%
Std. Dev 2.426% 1.092% 1.040% 1.410%

17
Cumulative Wealth Index Data

MSCI Large
Net Portfolio Russell 1000 Cap Value
Date Value Value Index Index S&P 500
7/27/2010 0.971 1.000 1.001 0.968
7/28/2010 0.960 0.992 0.995 0.972
7/29/2010 0.967 0.989 0.992 0.977
7/30/2010 0.964 0.989 0.992 1.005
8/2/2010 0.984 1.011 1.015 1.011
8/3/2010 0.977 1.005 1.011 1.006
8/4/2010 0.980 1.010 1.016 1.010
8/5/2010 0.978 1.009 1.015 1.011
8/6/2010 0.976 1.005 1.011 1.005
8/9/2010 0.982 1.011 1.016 1.010
8/10/2010 0.956 1.004 1.011 0.988
8/11/2010 0.879 0.975 0.984 0.988
8/12/2010 0.874 0.972 0.982 0.992
8/13/2010 0.874 0.969 0.978 0.999

18
Appendix D

Appendix D shows the RiskGrades.com reports for each day of the portfolio, showing

how the risk in the portfolio varies.

July 27th

Mouse over dot for Full name and Statistics.

 This portfolio's RiskGrade™ of 138 suggests Speculative


Plan investment strategy.
 Diversification benefits have lowered this portfolio's risk
by 22%.
 This portfolio is 1.31 times as volatile as the S&P - S&P
500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
July 27 138 41 $994 $26,816

19
Risk Risk Market
XLoss™
Grade™ Impact™ Value
Asset Class July 27

Equities 138 100% $994 $26,816

RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument July 27

AVP 143 17% $251 $5,880


GRA 227 20% $215 $4,062
PHK 112 4% $84 $2,133
PVX 147 6% $97 $2,112
LFC 113 4% $73 $1,928
CIM 139 5% $100 $1,916
SYX 370 14% $125 $1,890
MORN 112 4% $50 $1,882
MTA 194 6% $103 $1,765
SCL 226 7% $95 $1,677
FRO 240 8% $94 $1,571

20
RiskGrade
Select statistic to view:

Results

Comparison of Portfolio(July 27) against the stocks in S&P 500.

RiskRanking Chart

Portfolio(July 27) has a rank of 33%.


In other words 67% of the stocks in S&P 500 are riskier than Portfolio(July 27).

Portfolio(July 27) RiskGrade: 138

About the stocks in S&P 500:

Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.

21
July 28

Mouse over dot for Full name and Statistics.

 This portfolio's RiskGrade™ of 140 suggests


Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 23%.
 This portfolio is 1.32 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
July 28 140 42 $948 $25,346

22
Risk Risk Market
XLoss™
Grade™ Impact™ Value
Asset Class July 28

Equities 140 100% $948 $25,346

RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument July 28

AVP 143 13% $188 $4,410


GRA 227 21% $215 $4,062
PHK 112 4% $84 $2,133
PVX 147 6% $97 $2,112
LFC 113 5% $73 $1,928
CIM 139 5% $100 $1,916
SYX 370 15% $125 $1,890
MORN 112 5% $50 $1,882
MTA 194 7% $103 $1,765
SCL 226 7% $95 $1,677
FRO 240 8% $94 $1,571

RiskGrade
Select statistic to view:

23
 This portfolio's RiskGrade™ of 140 suggests
Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 23%.
 This portfolio is 1.32 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
July 28 140 42 $948 $25,346

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument July 28

AVP 143 13% $188 $4,410

24
GRA 227 21% $215 $4,062
PHK 112 4% $84 $2,133
PVX 147 6% $97 $2,112
LFC 113 5% $73 $1,928
CIM 139 5% $100 $1,916
SYX 370 15% $125 $1,890
MORN 112 5% $50 $1,882
MTA 194 7% $103 $1,765
SCL 226 7% $95 $1,677
FRO 240 8% $94 $1,571

RiskGrade
Select statistic to view:

Results

Comparison of Portfolio(July 28) against the stocks in S&P 500.

RiskRanking Chart

Portfolio(July 28) has a rank of 35%.


In other words 65% of the stocks in S&P 500 are riskier than Portfolio(July 28).
Portfolio(July 28) RiskGrade: 140

About the stocks in S&P 500:

Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.

25
July 30

Mouse over dot for Full name and Statistics.

 This portfolio's RiskGrade™ of 135 suggests


Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 24%.
 This portfolio is 1.27 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
July 30 135 43 $728 $20,162

26
Risk Risk Market
XLoss™
Grade™ Impact™ Value
Asset Class July 30

Equities 135 100% $728 $20,162

RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument July 30

PHK 112 5% $84 $2,133


PVX 147 8% $97 $2,112
LFC 113 6% $73 $1,928
CIM 139 7% $100 $1,916
SYX 370 19% $125 $1,890
MORN 112 6% $50 $1,882
XOM 108 5% $50 $1,797
MTA 194 9% $103 $1,765
SCL 226 9% $95 $1,677
FRO 240 11% $94 $1,571
GRA 227 10% $79 $1,491

RiskGrade
Select statistic to view:

27
Comparison of Portfolio(July 30) against the stocks in S&P 500.

RiskRanking Chart

Portfolio(July 30) has a rank of 31%.


In other words 69% of the stocks in S&P 500 are riskier than Portfolio(July 30).

Portfolio(July 30) RiskGrade: 135

About the stocks in S&P 500:

Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.

28
August 2

Mouse over dot for Full name and Statistics.

 This portfolio's RiskGrade™ of 133 suggests


Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 26%.
 This portfolio is 1.26 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
August 2 133 49 $748 $21,058

29
Risk Risk Market
XLoss™
Grade™ Impact™ Value
Asset Class August 2

Equities 133 100% $748 $21,058

RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument August 2

PHK 112 5% $84 $2,133


PVX 147 8% $97 $2,112
LFC 113 6% $73 $1,928
CIM 139 6% $100 $1,916
SYX 370 18% $125 $1,890
MORN 112 6% $50 $1,882
XOM 108 5% $50 $1,797
MTA 194 9% $103 $1,765
SCL 226 9% $95 $1,677
FRO 240 11% $94 $1,571
GRA 227 10% $79 $1,491
BP 297 3% $66 $895

RiskGrade
Select statistic to view:

30
Comparison of Portfolio(August 2) against the stocks in S&P 500.

RiskRanking Chart

Portfolio(August 2) has a rank of 30%.


In other words 70% of the stocks in S&P 500 are riskier than Portfolio(August 2).

Portfolio(August 2) RiskGrade: 133

About the stocks in S&P 500:

Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.
August 4

Mouse over dot for Full name and Statistics.

31
 This portfolio's RiskGrade™ of 133 suggests
Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 26%.
 This portfolio is 1.25 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
August 4 133 47 $727 $20,903

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Asset Class August 4

Equities 133 100% $727 $20,903

32
RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument August 4

PHK 112 5% $84 $2,133


LFC 113 6% $73 $1,928
CIM 139 6% $100 $1,916
SYX 370 19% $125 $1,890
MORN 112 6% $50 $1,882
XOM 108 5% $50 $1,797
MTA 194 9% $103 $1,765
UTF 117 6% $63 $1,753
SCL 226 9% $95 $1,677
FRO 240 11% $94 $1,571
GRA 227 10% $79 $1,491
BP 297 3% $66 $895
PVX 147 0% $9 $204

RiskGrade
Select statistic to view:

33
Results

Comparison of Portfolio(August 4) against the stocks in S&P 500.

RiskRanking Chart

Portfolio(August 4) has a rank of 30%.


In other words 70% of the stocks in S&P 500 are riskier than Portfolio(August 4).
Portfolio(August 4) RiskGrade: 133
About the stocks in S&P 500:
Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.

August 5

Mouse over dot for Full name and Statistics.

34
 This portfolio's RiskGrade™ of 132 suggests
Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 26%.
 This portfolio is 1.24 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
August 5 132 47 $740 $21,447

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Asset Class August 5

Equities 132 100% $740 $21,447

RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument August 5

35
PHK 112 5% $84 $2,133
LFC 113 6% $73 $1,928
CIM 139 6% $100 $1,916
SYX 370 18% $125 $1,890
MORN 112 6% $50 $1,882
XOM 108 5% $50 $1,797
MTA 194 9% $103 $1,765
UTF 117 6% $63 $1,753
SCL 226 9% $95 $1,677
FRO 240 11% $94 $1,571
GRA 227 10% $79 $1,491
BP 297 3% $66 $895
AAPL 135 2% $29 $747

RiskGrade
Select statistic to view:

Comparison of Portfolio(August 5) against the stocks in S&P 500.


RiskRanking Chart

Portfolio(August 5) has a rank of 29%.


In other words 71% of the stocks in S&P 500 are riskier than Portfolio(August 5).
Portfolio(August 5) RiskGrade: 132
About the stocks in S&P 500:
Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.

August 6

Mouse over dot for Full name and Statistics.

36
 This portfolio's RiskGrade™ of 126 suggests
Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 26%.
 This portfolio is 1.19 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
August 6 126 46 $710 $21,521

Risk Risk Market


XLoss™
Grade™ Impact™ Value

37
Asset Class August 6

Equities 126 100% $710 $21,521

RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument August 6

PHK 112 5% $84 $2,133


LFC 113 6% $73 $1,928
CIM 139 6% $100 $1,916
SYX 370 19% $125 $1,890
MORN 112 6% $50 $1,882
POM 113 5% $56 $1,840
XOM 108 6% $50 $1,797
UTF 117 6% $63 $1,753
SCL 226 9% $95 $1,677
FRO 240 11% $94 $1,571
GRA 227 10% $79 $1,491
BP 297 3% $66 $895
AAPL 135 3% $29 $747

RiskGrade
Select statistic to view:

38
Comparison of Portfolio(August 6) against the stocks in S&P 500.
RiskRanking Chart

Portfolio(August 6) has a rank of 28%.


In other words 72% of the stocks in S&P 500 are riskier than Portfolio(August 6).
Portfolio(August 6) RiskGrade: 127
About the stocks in S&P 500:

Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.

August 9

Mouse over dot for Full name and Statistics.

39
 This portfolio's RiskGrade™ of 125 suggests Speculative
Plan investment strategy.
 Diversification benefits have lowered this portfolio's risk by
31%.
 This portfolio is 1.18 times as volatile as the S&P - S&P 500
Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
August 9 125 58 $986 $29,971

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Asset Class August 9

Equities 125 100% $986 $29,971

RiskGrade
Select statistic to view:

40
Risk Risk Market
XLoss™
Grade™ Impact™ Value
Instrument August 9

PHK 112 9% $204 $5,154


BP 297 19% $366 $4,944
GRA 227 12% $136 $2,571
LFC 113 4% $73 $1,928
CIM 139 4% $100 $1,916
SYX 370 12% $125 $1,890
MORN 112 4% $50 $1,882
POM 113 4% $56 $1,840
XOM 108 4% $50 $1,797
UTF 117 4% $63 $1,753
AAPL 135 4% $67 $1,744
FRO 240 6% $80 $1,338
SCL 226 4% $68 $1,215

RiskGrade
Select statistic to view:

Results

Comparison of Portfolio(August 9) against the stocks in S&P 500.


RiskRanking Chart

Portfolio(August 9) has a rank of 27%.


In other words 73% of the stocks in S&P 500 are riskier than Portfolio(August 9).
Portfolio(August 9) RiskGrade: 125
About the stocks in S&P 500:

Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.

41
August 10

Mouse over dot for Full name and Statistics.

 This portfolio's RiskGrade™ of 131 suggests


Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 29%.
 This portfolio is 1.24 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
August 10 131 55 $1,092 $31,798

42
Risk Risk Market
XLoss™
Grade™ Impact™ Value
Asset Class August 10

Equities 131 100% $1,092 $31,798

RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument August 10

PHK 112 8% $204 $5,154


BP 297 17% $366 $4,944
HP 194 14% $204 $3,742
GRA 227 10% $136 $2,571
LFC 113 3% $73 $1,928
SYX 370 11% $125 $1,890
MORN 112 4% $50 $1,882
POM 113 3% $56 $1,840
XOM 108 4% $50 $1,797
UTF 117 4% $63 $1,753
AAPL 135 4% $67 $1,744
FRO 240 6% $80 $1,338
SCL 226 4% $68 $1,215

RiskGrade
Select statistic to view:

43
 This portfolio's RiskGrade™ of 131 suggests
Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 29%.
 This portfolio is 1.24 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
August 10 131 55 $1,092 $31,798

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Asset Class August 10

Equities 131 100% $1,092 $31,798

RiskGrade
Select statistic to view:

44
Risk Risk Market
XLoss™
Grade™ Impact™ Value
Instrument August 10

PHK 112 8% $204 $5,154


BP 297 17% $366 $4,944
HP 194 14% $204 $3,742
GRA 227 10% $136 $2,571
LFC 113 3% $73 $1,928
SYX 370 11% $125 $1,890
MORN 112 4% $50 $1,882
POM 113 3% $56 $1,840
XOM 108 4% $50 $1,797
UTF 117 4% $63 $1,753
AAPL 135 4% $67 $1,744
FRO 240 6% $80 $1,338
SCL 226 4% $68 $1,215

RiskGrade
Select statistic to view:

45
Results

Comparison of Portfolio(August 10) against the stocks in S&P 500.


RiskRanking Chart

Portfolio(August 10) has a rank of 29%.


In other words 71% of the stocks in S&P 500 are riskier than Portfolio(August 10).
Portfolio(August 10) RiskGrade: 131
About the stocks in S&P 500:

Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.
August 11

 This portfolio's RiskGrade™ of 137 suggests Speculative


Plan investment strategy.
 Diversification benefits have lowered this portfolio's risk by
28%.
 This portfolio is 1.29 times as volatile as the S&P - S&P 500
Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
August 11 137 55 $1,201 $33,515

46
Risk Risk Market
XLoss™
Grade™ Impact™ Value
Asset Class August 11

Equities 137 100% $1,201 $33,515

RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument August 11

PHK 112 7% $204 $5,154


BP 297 15% $366 $4,944
HP 194 13% $204 $3,742
F 200 12% $188 $3,645
GRA 227 10% $136 $2,571
SYX 370 10% $125 $1,890
MORN 112 4% $50 $1,882

47
POM 113 3% $56 $1,840
XOM 108 3% $50 $1,797
UTF 117 4% $63 $1,753
AAPL 135 3% $67 $1,744
FRO 240 5% $80 $1,338
SCL 226 3% $68 $1,215

RiskGrade
Select statistic to view:

Results

Comparison of Portfolio(August 11) against the stocks in S&P 500.

RiskRanking Chart

Portfolio(August 11) has a rank of 33%.


In other words 67% of the stocks in S&P 500 are riskier than Portfolio(August 11).
Portfolio(August 11) RiskGrade: 137
About the stocks in S&P 500:

Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.
August 12

Mouse over dot for Full name and Statistics.

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 This portfolio's RiskGrade™ of 123 suggests
Speculative Plan investment strategy.
 Diversification benefits have lowered this portfolio's
risk by 28%.
 This portfolio is 1.16 times as volatile as the S&P -
S&P 500 Index.

Risk Diversification Market


XLoss™
Grade™ Benefit Value
August 12 123 50 $1,166 $33,500

Risk Risk XLoss™ Market

49
Grade™ Impact™ Value
Asset Class August 12

Equities 123 100% $1,166 $33,500

RiskGrade
Select statistic to view:

Risk Risk Market


XLoss™
Grade™ Impact™ Value
Instrument August 12

PHK 112 8% $204 $5,154


BP 297 18% $366 $4,944
HP 194 14% $204 $3,742
F 200 14% $188 $3,645
IGD 118 6% $157 $3,213
GRA 227 11% $136 $2,571
MORN 112 4% $50 $1,882
POM 113 3% $56 $1,840
XOM 108 4% $50 $1,797
UTF 117 4% $63 $1,753
AAPL 135 4% $67 $1,744
SCL 226 4% $68 $1,215

RiskGrade
Select statistic to view:

50
Results

Comparison of Portfolio(August 12) against the stocks in S&P 500.

RiskRanking Chart

Portfolio(August 12) has a rank of 26%.


In other words 74% of the stocks in S&P 500 are riskier than Portfolio(August 12).
Portfolio(August 12) RiskGrade: 123
About the stocks in S&P 500:
Minimum RiskGrade in the group: 66. Maximum RiskGrade in the group: 861.
Average RiskGrade: 168.

References

Investment Company Institute, 2010 Investment Company Factbook. Retrieved from

http://www.icifactbook.org/

Jones, Charles P., 2010. Investments, Analysis and Management, John Wiley & Sons, Inc.

MSCI Large Cap Value Index. Retrieved from

'http://www.mscibarra.com/products/indices/domestic_equity_indices/us/performance.

html

Ritter, Jay R, 2003. "Behavorial Finance", Pacific-Basin Finance Journal, Vol. 11, No.4

Russell 1000 Value Index. Retrieved from

http://finance.yahoo.com/q/hp?s=%5ERLV+Historical+Prices

51
Soe, A., and Dash, S. (2008). Dividend Investing, Standard & Poor's, October. Retrieved from

http://www2.standardandpoors.com/spf/pdf/index/Dividend_Investing.pdf

S&P 500 Index. Retrieved from

http://finance.yahoo.com/q/hp?s=%5EGSPC&a=06&b=26&c=2010&d=07&e=13&f=20

10&g=d

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