Over the years, I’ve noticed that people tend to overestimate their own stock-picking prowess – myself included. Especially over longer periods of time, if you’re not tracking things carefully you probably don’t know how well you’re doing on a relative basis. We all tend to remember the winners and forget the losers. The sooner you figure out you’re not Buffett, the sooner you can improve your returns. (Otherwise, the sooner you can start your own hedge fund.)

If you like the idea of my Beat The Market Experiment but don’t want to expend too much effort in tracking your own performance, you should check out LikeAssets.com. This new portfolio tracking site recently became the backend for the Wall Street Journal’s Portfolio tool (paid subscribers only), but the direct site is free to all. I’ve been playing around with it for a few days, and here’s my review.

LikeAssets is similar to a Mint.com, SigFig, or Personal Capital (review) in that you hand over your login information and they automatically sync with your brokerage accounts to pull in your holdings. However, their key differentiator is that they automatically choose the appropriate benchmark ETFs based on your holdings in order to determine your “alpha” (excess return above benchmark). You don’t have to do anything. So if you’re holding a bunch of big dividend-paying companies, you’ll probably be matched up with a large-cap value index ETF. The custom benchmark goes even further to match your trades in real-time, not just your current asset allocation:

How is the LikeAssets custom benchmark calculated?
A benchmark portfolio is constructed based on the types of securities in your portfolio. When you make a trade, your custom benchmark portfolio mirrors the trade using an appropriate ETF or set of ETFs.

Once you sign up, you can either choose to import your data electronically from a supported brokerage firm, or manually input your trades. Supported firms include Fidelity, Vanguard, TD Ameritrade, Schwab, E-Trade, Scottrade, and OptionsXpress. Below is a screenshot of my linked TD Ameritrade benchmark portfolio. I would expect my “alpha” here to be close to zero as they are already passive investments, and that is indeed the case.

(click to enlarge)

Unfortunately LikeAssets only works with about 50 brokers right now, and my TradeKing speculative portfolio is currently not supported. Typing in the trades manually is somewhat of a pain as you’d expect, although the software does automatically fill in your buy/sell price based on the market’s closing price that day (not exact, but a good estimate and you can edit it). In addition, dividend distributions are automatically calculated for you (any reinvestment of dividends still must be input manually). Here’s a screenshot of my manually-input TradeKing account:

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When I first reviewed JemStep in 2011, it analyzed your current portfolio and made customized mutual fund rankings. Flash forward to 2013, and they’ve moved into the portfolio management and advice space, similar to previously-reviewed sites like Betterment or Personal Capital. Now it’s called Jemstep Portfolio Manager.

After signing into my old account and looking around at the new features, I was happy to see they’ve actually gotten pretty close to my wishlist:

• Import my existing portfolio directly from broker. Check.
• Track asset allocation across entire portfolio. Check.
• Customized rebalancing alerts. Not quite. They do give rebalancing alerts, but only customized to their portfolio recommendations, not my personal chosen preferences. See below.
• Detailed performance stats vs. benchmarks. Incomplete? I don’t see this, but I haven’t be able to get past the trade recommendations.
• Reasonable cost. During their initial beta, the service will be free for everyone until March 1st, 2013. After that, the service remains free for those with assets of $25,000 or less. Otherwise see fee schedule discussion below.

Test Drive

The first step is to set a goal. They want things like age, income, target retirement age, risk tolerance, etc. You have provide a preference of mutual funds or ETFs. Given their previous support of actively-managed funds with high recent risk-adjusted returns, I was surprised to see the following:

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I’ve had an account with Scottrade for several years now, and here is an updated, in-depth review for 2012 (last one I did was in 2006!). I will focus on all the little things that make brokers different from each other, from completing your taxes to buying a stock on a moment’s notice. This review will be from the point of view of a casual private investor who does not trade daily but does mostly buy-and-hold ETF investing and also trades some individual stocks with a small portion of his portfolio (less than 5% of overall portfolio).

Unique Characteristics

• 505 physical branches nationwide. No other discount broker has nearly the same footprint. If you like the feeling of knowing there is a physical branch with friendly humans to interact with nearby, this is the broker for you.
• Fiercely privately-owned. The current CEO, Rodger Riney, is the same person that founded the company in 1980. He has rebuffed repeated offers to be sold to public corporations like E-Trade or Ameritrade. I kind of like this independence and unwillingness to cash-out. It helps them not have to worry about profits all the time. For example, even during both recent stock market busts, no one has ever been laid off, and no office has ever been closed. Their branch brokers don’t offer advice to customers and do not work on commission.

Commissions and Fees

• Stock commissions are $7 a trade. No maintenance fees, no minimum balance fees, no inactivity fees. $500 minimum to open the account. Options trades are $7 + $1.25 per contract.
• Electronic statements and trade confirmations are free, but paper ones are not. Mailed statements are $2 each, mailed trade confirmations are $1 each. It’s easy to download the statements as PDFs and print if necessary.
• No account closing or transfer-out fee. This is rare, as nearly all the other places charge you $50+ to move your positions away to another broker.
• No free dividend reinvestment. There is no free dividend re-investment plan (DRIP) at Scottrade. What I do is wait until enough dividends accumulate and then reinvest them along with new money, because I don’t like dealing with many small tax lots with partial shares.

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