Tracking expected returns via the dashboard

You buy a stock for the return you expect from it, but once the position is in the portfolio that expected return tends to fade from view while the market price stays in front of you every day. The Margin dashboard keeps the expected return on screen alongside the price, so the figure that decided the purchase is still available while you hold.

The concept behind the feature

Your expected return on a stock is not fixed. It moves as the price moves and as your view of the business updates. A stock you bought for a 15 percent expected return might, after a sharp rally, offer only 6 percent at the current price, even though nothing about the business has changed. Unless that figure is recalculated and shown to you, a holding that has become expensive looks the same as one that is still working.

Expected return is what connects your valuation work to your portfolio decisions, and the dashboard is where the two meet.

What the dashboard shows

For each holding, the dashboard combines your valuation assumptions with the live market price to surface:

• Expected return implied at today’s price, given your intrinsic value
• The gap between intrinsic value and market price, your margin of safety right now
• How that has shifted as prices have moved since you took the position

Because it reads from the same DCF and reverse DCF assumptions you set on each stock, updating a view in one place flows straight through to the expected return you see here.

Using it well

Use the dashboard to drive your review. A holding whose expected return has fallen well below your hurdle is a candidate to trim or exit, regardless of whether it is up or down since you bought it. A holding whose expected return has risen after a sell off, with the thesis intact, is a candidate to add.

Set a return threshold you are unwilling to hold below and use the dashboard to enforce it, so that the valuation keeps working after the purchase instead of being done once and filed away. To keep the underlying assumptions honest, revisit the stock story whenever the business materially changes. For what each column on the dashboard is computed from, and how to put a price anchor of your own beside the expected return, see Reading the dashboard columns.