What is a Portfolio Grader
A Portfolio Grader is one of many tools that an investor can use in order to have an objective view of the general strength of their portfolio as well as the projected profitability. Portfolio graders do however, come with their own risks.
Risks of Using a Portfolio Grader
Most of the portfolio graders that a person can find an use for free have not been created by accredited financial institutions, and there is no way that you can ensure that the information that you are receiving is correct.
There are also no set guidelines as to how the portfolio grader is to measure the strength of your portfolio, so the rating may differ incredibly between portfolios. And, any predictions that are made by the portfolio grader will probably be based on the past performance of whatever aspect of the asset it is assessing.
Because of all of this, it is important that you take the score given by the portfolio grader with a pinch of salt, or that you consult more than one, and try to delve as deep into any additional information provided as possible, in order to ensure that you are not in any way misled.
Benefits of Using a Portfolio Grader
Having said that there are a few risks associated with using a portfolio grader, it is also important to address all of the benefits. Sometimes it is easy to observe the success of a single asset through websites or tools that are easily accessible to you.
However, it is not always as simple to determine whether your entire portfolio works well together. Some of your investments may prevent profitability, but may also hedge against additional risk, however, finding a balance is not always simple, especially for new investors.
Portfolio graders make it relatively easy, and can also be used without any additional cost in some cases. This means that portfolio graders are the ideal tool for traders to experiment with adding additional assets to their portfolio before they actually purchase the asset.
Free Portfolio Graders
Some portfolio graders might have additional costs. For the sake of simplicity, we will be avoiding those for the purpose of this article, even those that have a free trial lasting only a few weeks, because it will usually take a beginner trader far longer than that to experiment with their possible investment opportunities before they are comfortable and educated enough to place their first trades.
Additionally, all portfolio graders will assess the same portfolio, made up of four stocks - AAPL, TSLA, VOO and GS - which aims to mimic the stocks that newer investors might be interested in.
You can read about "VUG vs VOO: Best Vanguard ETF for You" here.
1. Navellier Growth Portfolio Grader
The Navellier Growth Portfolio Grader is a relatively simple portfolio grader. It allows you to simply enter the ticker symbols of the stocks that make up your portfolio, and then spits out a grader similar to conventional school grades, with A being the highest.
As can be seen in the image above, the overall portfolio score was given a 'B' with a recommendation of removing the lowest rated stocks in order to improve the portfolio score. In this case, that would be GS - Goldman Sachs Group Inc.
Overall, this portfolio grader is simple to understand and easy to use. There is also additional information available on each individual stock.
However, one of the biggest downfalls is that it does not seem to accept tickers for index funds, which most investors include in their portfolio in order to minimize risk.
2. TipRanks Portfolio Grader
TipRanks advertises a Portfolio Grader service, but in reality it seems to be more of an individual stock grader than an entire portfolio.
You need to seek out each individual stock and will then be informed if it is a good buy/sell etc. Additionally, this portfolio grader also does not seem to deal with index funds, although the TipRanks website does give at least some information, as can be seen below.
Interestingly, the ranking that TipRanks gives to the assets in the portfolio differs from those that have been given by Navellier Growth. AAPL and GS are considered strong buys, while TSLA is only considered a moderate buy.
Although this gives a general indication as to the strength of the portfolio there are still many aspects that are lacking.
3.The Impeccable Stock Software Portfolio Grader
The Impeccable Stock Software portfolio grader is again very easy to use. You simply add in the tickers that you wish to assess and it gives you a final conclusion in the form illustrated below.
As you can see, individual stocks still receive a score out of 100, which allows you to see which stocks are negatively affecting your portfolio. What makes this portfolio grader stand out is the fact that it predicts a profit or a loss.
This can not be accurate by any means, as there is no option to enter the percentages of the stocks that make up the portfolio, so it can only be assumed that they are all seen as having equal weighting, which is never the case in actual trading.
Portfolio Grader Conclusion
There are a variety of free portfolio graders available on the market, which can be used to help you assess both the strength of individual investments as well as your entire portfolio, however many of them are lacking.
None of the portfolio managers that we looked at above gave the option for entering the percentage that the asset made up the portfolio, so they were all flawed. Additionally, some of them gave very different results.
Using multiple portfolio managers in order to get a general consensus of whether your portfolio in general is suitable for current market conditions, however portfolio graders should not be used in isolation.
There are many different reasons why you might want a poor buy in your portfolio. In the end it is important to remember that a successful investor knows how to manage their risk. That is how they not only keep their money, but grow it too. Trade at your own risk.
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