“Creme List” for July 15, 2011

Photograph: 1954 Plymouth

Three new stocks broke into the elite list this week and none were eliminated.  This makes the largest number (26) of stocks ever assembled on the "Creme List," if memory serves correctly.  The latest "Creme List" of stocks are located on the far left column of this new database. 

Platinum membership available for $5.00 per month.  Check out the "Creme List" with a membership.


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Adding A New Investment To The TLH Spreadsheet

Photograph: Pierce-Arrow

Since several of the former Camtasia video/audio clips are not working, I prepared a new one that explains what is required to insert a new investment in a portfolio.  There are four essential steps shown in the video clip.

  1. Insert the actual purchase.  In the example, I bought 100 shares of the ETF, BIV.
  2. Make sure to insert a row and list BIV as one of the holdings.
  3. Prepare a special worksheet for the BIV investment.  This requires insertion of a new worksheet followed by a simple copy and paste operation.
  4. Open up a row in the Holdings worksheet and insert proper information for the BIV holding.

For some reason, there are a few places where the automatic zoom feature of Camtasia did not follow my cursor.  If this creates problems, let me know and I will redo or create a new example.

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Fama & French’s Three-Factor Model

This is a revision of a blog I posted over a year ago.

In 1992, Fama and French broke out their three-factor model and changed the way we construct portfolios. Again, quoting from Hebner as to how the three-factor model advanced the relationship between return and risk as it relates to a portfolio. The Fama/French model added two other fundamental determinants. Fama and French sought to determine the factors that best describe why there are differences among the returns of stock asset classes over long periods of time. They first studied the period starting in 1964, the year that reliable computer data was available. It was later updated and confirmed with data dating back to 1926. In short they tried to identify the factors that explained the remaining 30% of returns left unexplained by Sharpe. While the Sharpe model argues the amount of a portfolio invested in stocks accounts for the greatest return, there are still missing factors. F&F filled in some of the gaps.

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