My little brother is always trying out different “investing strategies”. And while his goal of building his portfolio early to set himself up for a solid retirement is admirable, he has a lot to learn about long-term investing as well as the relationship between risk and reward.
Recently, he told me that his investing strategy as of late has been to “jump on the bandwagon” by identifying the stocks that have performed well over the last few days and adding them to his portfolio. When I told him that this strategy is likely a bad idea, he argued that his portfolio has been performing very well for the last month. To help teach my brother a lesson on risk and encourage him to adopt a long-term investment mindset, I turned to Daizy.
First, I asked Daizy to show me yesterday’s best performing stocks.
There’s some missing market cap data since most of the stocks on the list are penny stocks, which tend to have limited historical performance information. After having Daizy remove the penny stocks from the list, I asked for a portfolio consisting of the top three performers as well as a risk analysis for it. Here are just a few of the charts I got:
Daizy showed me that my “top performers” portfolio was riskier than the S&P 500, but actually had a lower expected return. That’s a lose-lose.
I asked Daizy to talk to me about environmental ratings just to see if the portfolio had any redeeming qualities. No dice there, either.
Now that I had the data I needed to show my brother the error of his ways, all I needed to do was explain it to him. But I was too busy to write him an email, so I had Daizy do that too!
To read the full Daizy flow including the complete email, click here.
