Back in the mists of time, Alfred Winslow Jones, an investor in hedge funds, had a simple idea. Buy shares that are likely to go up and offset them with short positions in shares that look overvalued. That way you should get superior returns and can be indifferent to whether or not the market moves up or down.
Discounted cash-flow (DCF) is a common way of valuing companies, often used by analysts as a basis for setting the target prices that have become a common feature of broker notes in recent years. It is, however, far from infallible.
Return on equity is widely regarded as a key measure that investors should use to judge the quality of a company. But few investors go one stage further and combine this measure with other profit and loss numbers to arrive at a more precise value.
Investors are sometimes puzzled by why high-yielding shares seem sometimes to drop sharply without any apparent reason on a Wednesday. The falls are harmless and the reason is mundane. It is bound up with the way the market takes account of dividend payments.
The two months since the ETF Portfolio was last updated have been what might be described a "steady as she goes" period. The market has recovered some poise, compared to the periodic bout of euro-itis with which it was afflicted last time round.