The Engadget Index

We're not really traders here at Engadget, but we decided to indulge our fantasies of Gordon Gekko grandeur and put together a portfolio of tech stocks. To pull this thing together we enlisted a little help from our friends over at Blogging Stocks; we think besides being a barometer for the gadget industry, perhaps the Engadget Index will serve as a look from a different angle into the massive economy of consumer electronics. Read on for more.

What we're doing

We'll provide updates both monthly and quarter as to the progress and performance of the portfolio. Monthly updates will typically take place on the first of each month, while the quarterly updates will take place on or shortly after the beginning of the new quarter, so as to insure all quarterly reports, information, and adjusted prices can be accounted for.

How we're running the Engadget Index

We "purchased" 1 share of stock from fifty technology companies hand-selected by our editors, at prices dated October 2nd, 2006 -- the first effective date of Q4 2006. Our total investment for the fifty stocks is $1475.16. As time presses on we'll make additions and subtractions to our running list of stocks as necessary. We will, of course, notify you guys whenever the portfolio lineup changes.

We will only be tracking publicly listed companies on the major US stock markets: NYSE, Amex, and Nasdaq. Some foreign companies may be tracked, but only those traded publicly in the US (e.g. Deutsche Telekom); we won't be tracking OTC Bulletin Board or Pink Sheets markets, tech mutual funds, or anything of the like.

A brief disclaimer

We have very strict rules about owning stocks at Engadget -- namely that outside mutual funds and the like, Engadget editors who own stock in a particular company are expected to abstain from writing about or making editorial decisions about that company. Those at Engadget who participated in the Engadget Index own no stock in any of the companies selected, and no actual stock transactions have taken place in the creation of the Engadget Index. That is to say, this is an entirely fictional portfolio -- only the numbers are real.

Please note that this is for edification and reference purposes only, and should in no way be construed as investment advice. Engadget and its parent companies take no responsibility for you losing mad cash on some bum deals (e.g. TiVo). You've been warned!

The list

1. AAPL - Apple
   
2. AMD - AMD
   
3. AT - Alltel
   
4. BLS - Bell South
   
5. CAJ - Canon
   
6. CHU - China Unicom
   
7. CREAF - Creative
   
8. CSCO - Cisco
9. DELL - Dell
10. DISH - Echostar (DISH)
11. DT - Deutsche Telekom
12. DTV - DirecTV
13. EK - Eastman Kodak
    
14. ERIC - Ericsson
    
15. FUJIY - FujiFilm
    
16. GRMN - Garmin
    
17. GTW - Gateway
    
18. HIT - Hitachi
    
19. HPQ - HP
    
20. INTC - Intel
    
21. KYO - Kyocera
    
22. LOGI - Logitech
    
23. MC - Matsushita (Panasonic)
    
24. MOT - Motorola
    
25. MSFT - Microsoft
    
26. NAPS - Napster
    
27. NIPNY - NEC
    
28. NOK - Nokia
    
29. NTT - Nippon Telegraph & Telephone
    
30. PALM - Palm
    
31. PHG - Koninklijke Philips Electronics N.V. (Philips)
    
32. RIMM - Research in Motion
33. RNWK - Real Networks
    
34. S - Sprint-Nextel
    
35. SANYY - Sanyo
    
36. SI - Siemens
    
37. SIRI - Sirius
    
38. SKM - SK Telecom
    
39. SNDK - Sandisk
    
40. SNE - Sony
    
41. STX - Seagate
    
42. T - AT&T
    
43. TIVO - TiVo
    
44. TMS - Thomson (RCA)
    
45. TXN - Texas Instruments
    
46. UTSI - UT Starcom
    
47. VG - Vonage
    
48. VOD - Vodafone
    
49. VZ - Verizon
    
50. XMSR - XM

So, did we forget a good gadget stock? It's still the beginning of the quarter and we can shuffle the list for November. Let us know in the comments! Remember, they should be consumer electronics companies or related firms, and be publicly traded on the US markets listed above. (But before you suggest any to us, here's are a few symbols you might think of suggesting which didn't make the cut this time: ADPT, BRCM, BT, CMCSA, COMS, CVC, DSS, EBAY, ELNK, GOOG, IBM, IOM, MU, NVDA, NWS, Q, TMTA, TWX, VOXX, WDC, and YHOO.)

Stay tuned for our first portfolio performance update coming November 1st!

[Matthew Harris @ Oct 26th 2006 2:17PM]

Not quite, but close

[Matthew Van Lunen @ Oct 26th 2006 12:42PM]

I would drop SNE right now in faAvor of another share of AAPL

[Scott Schuster @ Oct 26th 2006 12:44PM]

National Instruments (NATI)

[Grant H @ Oct 26th 2006 12:48PM]

Should be good. Will you be incorporating some sort of quarterly/annual podcast?

[Bryan @ Oct 26th 2006 12:48PM]

Its articles like this, that when I check tech blogs, I ALWAYS go to Engadget before Gizmodo.

I'm kind of an investor, and the fact you gys coupled this together shows your savvy in all things tech.

[Eric @ Oct 26th 2006 12:55PM]

WDC should be in there.

[I LOVE THE CAPS LOCK KEY @ Jan 15th 2008 9:22PM]

SSD's are slowly starting to bite in to mechanical disc storage. If you really want to look for growth in the storage market, try those who make the actual NAND or NOR chips the drives use.

[James @ Oct 26th 2006 12:57PM]

It's not the lambo logo. It's the bull from Wall St.

Still stolen though. I like it.

[minitml @ Oct 26th 2006 1:02PM]

Great to see the big interest in tech stocks. Looks like i'll be checking this sit often for some information. Add in new about DCM (NTT DoCoMo) and i'm a happy camper. Good luck with this idea guys.

[Mr. Cranky @ Oct 26th 2006 1:02PM]

"Keeping it real fake: Engadget Index steals Lamborghini logo"

Actually, it's the bull statue the sits on Wall Street. (go figure since this is an article about stocks) Spend 10 seconds with Google images and you'll see it's not the Lambo logo.

[Zack @ Oct 26th 2006 1:04PM]

Not impressed, there are way to many stocks in this index to actually tell anything....I was reading comments yesterday and this guy started attacking engadgets recent posts and i think hes right, i love engadget but you guys are sliping, no breaking news,and a ton of articles about gadgets that i cant get.

Get your act together.

[Ryan Block @ Oct 26th 2006 3:10PM]

I really have no idea what you're talking about. We report thoroughly on every single new gadget we can -- has there been news we missed? If we're reporting on foreign gadgets, it's only because there's no US news -- foreign stuff always takes a back seat to domestic CE. I think you should try to understand how new cycles work before you lambast us for not having breaking news, or not having enough domestic CE coverage. We apply the same process for sourcing and writing news today that we did when Engadget was first started in 2004.

Best, Ryan

[Lee @ Oct 26th 2006 1:07PM]

I would strongly consider ARMHY as a barometer for the handheld market. ARMHY manufactures the processors for many, many handheld devices.

[Dark Morford @ Oct 26th 2006 1:08PM]

Is Nintendo (NTDOY) eligible?

[Nick @ Oct 26th 2006 2:29PM]

NTDOY has made me a lot of money in the last .5 year... check the chart

[Ryan Block @ Oct 26th 2006 3:11PM]

Sorry, no, that's an OTC BB stock, which we're not tracking! I wish Nintendo was on that list, though!

[Mark R @ Oct 26th 2006 1:10PM]

You should add SIRF, they make (or design, actually), the chips that go in many GPS devices.

[Grimace @ Oct 26th 2006 1:11PM]

"Actually, it's the bull statue the sits on Wall Street. (go figure since this is an article about stocks) Spend 10 seconds with Google images and you'll see it's not the Lambo logo."

Actually it doesn't sit on Wall St. It sits right in front of Bowling Green Park on Broadway. I pass by it everyday on my walk to work.

[Ian Jardine @ Oct 26th 2006 1:15PM]

SanDisk, EGHT had ads all over your site, no return love? so difficult not to have NVDA

[J. R. @ Oct 26th 2006 1:28PM]

Definately put Google in there! They are, IMO, one of the most innovative and PUBLIC PLEASING companies I've every seen. Everything they do absolutely rocks!

[Dave Mathers @ Oct 26th 2006 1:34PM]

How about Nvidia? AMD, Intel, and Texas Instruments were included.

[Gustad Mody @ Oct 26th 2006 1:38PM]

Zack... i agree, way to many posts on gadgets i can never get. i love you guys, but it has been going a bit downhill.

[Dimitri @ Oct 26th 2006 1:48PM]

While I agree that keeping Google off there makes sense (if we are focusing on gadgets), the fact that you used a price-weighted index rather than a market-weighted one means that slight changes to the value of those stocks priced higher will have a greater impact on your portfolio than they should.

If you are attempting to see how well you do, in some thoretical stock-picking game, I would suggest that you use some other sort of weighting. By doing it the way that you are doing it, if AAPL (70B market cap, share price 82) goes up 10%, your index goes up far more than if MSFT goes up 10% (280B market cap, share price 26). You may have wished to put greater emphasis on AAPL, but you should do that by buying varied numbers of shares, NOT by relying on the stock price.

[Ryan G. @ Oct 26th 2006 3:34PM]

Two things. First, I think the index should be equal weighted (i.e., $100 fictional dollars in each stock). That way, the contribution of each stock from day 1 has the same weighting.

Second, modern portfolio theory suggests that the benefits of diversification are generally realized with only 30 stocks. By using only 30 stocks (as the Dow Jones does), each stock comprising the index makes a larger contribution to the overall performance of the index. Accordingly, good picks (or bad picks) won't get diluted as much by the other stocks in the index.

The above two points are intended to maximize the impact of each pick chosen by Engadget. Only the best of the best gain entry into the index (30 vs. 50), and the contribution of each pick is equally important to the performance of the overall index (equal weighting instead of price weighting).

Great idea though! I'll keep track of your progress to see if your foresight into all things electronic really translates into market outperformance!

Speaking of market outperformance, please don't compare your index to the S&P 500. Instead, use a sub-index comprised of all technology stocks in the S&P 500, which will more closely match the "market index" for companies of this type.

[LordFarkward @ Oct 26th 2006 9:28PM]

Sorry Ryan G., while I agree 100% with Dimitri's suggestion, I don't entirely agree with your methodology, but in a very simple argument: you don't pick 'the best of the best' to be included in your portfolio, and putting them in equal weightings will definitely be detrimental to the portfolio (I'm assuming that you're trying to maximise the portfolio's performance instead of having a 'portfolio' as an indication of how the 'gadget market' is doing, which is actually wot indices (or indexes for you americans) are for). I can go on and on and on, but one word for why your method doesn't work: "hedging".

[Brad @ Oct 26th 2006 1:54PM]

National Semiconductor - NSM
Lots and lots and lots of chips come from there.

[Jon @ Oct 26th 2006 1:56PM]

Juniper Networks (JNPR)

[Ogre @ Oct 26th 2006 2:18PM]

XM & Sirius, but no Google?

I understand about the idea of a gadget fund, but excluding GOOG.... you must not care about performance of this fund....

[Ryan Block @ Oct 26th 2006 3:15PM]

Actually, that's absolutely right -- I don't care about the performance of this fund. It's not to see how well we can pick stocks, it's to track the state of the consumer electronics industry in general. Google isn't a CE company, which is why they and a lot of other internet businesses were left out.

[The Rev @ Oct 26th 2006 2:23PM]

omfg get you some ibm right now because its going to 100 by the end of the year if not sooner

[Gadi @ Oct 26th 2006 2:32PM]

ADBE and RHAT

[Terry @ Oct 26th 2006 2:33PM]

TASR -- We all need some shock therpy

[charlesjobs @ Oct 26th 2006 2:40PM]

Any possibility of adding UK stocks? e.g ARM (mobile chips), CSR (bluetooth), Woolfson Microelectronics (Ipod chips etc)
thanks

[rob job @ Oct 26th 2006 2:50PM]

Whoever it was up there in the posts that doesn't like this idea probably doesn't like it because they know next to nothing about stocks and what indexes are for.

[Beau Giles @ Oct 26th 2006 2:51PM]

Applied Materials (Nasdaq: AMAT) if you're going to include chip components and manufacturing, then you gotta include them.

[esteban @ Oct 26th 2006 3:14PM]

What about Yahoo (YHOO), IBM (IBM), Oracle (ORCL), or eBay (EBAY)?

[Ryan Block @ Oct 26th 2006 3:16PM]

Almost all of those are listed as ones we purposefully did not choose! They're not consumer electronics companies.

[degree @ Oct 26th 2006 3:15PM]

SONY CORP
SNE:NYSE
$42.20 ++1.44 (+3.53%)

Go baby Go!

[degree @ Oct 26th 2006 3:24PM]

Might think about adding Gamestop GME to the index, since they will be doing quite well this holiday season selling new PS3 & Wii systems

[Zack @ Oct 26th 2006 3:24PM]

"I think you should try to understand how new cycles work before you lambast us for not having breaking news, or not having enough domestic CE coverage."

I think you should stick to reviewing gadgets and not go and post an obsurdly haphazard attempt at making a tech stock index. This index is far from informative.

Go buy Jim Kramer's Mad Money right now, go.

[Zack @ Oct 26th 2006 3:30PM]

" It's not to see how good we can pick stocks, it's to track the state of the consumer electronics industry in general."

Index go down, tech bad, ryan change career.

Index go up, tech good, ryan play xbox.

[Crono141 @ Oct 26th 2006 3:36PM]

"we won't be tracking OTC Bulletin Board or Pink Sheets markets, tech mutual funds, or anything of the like"

So no Nintendo stocks, eh (NTDOY)

[the antique @ Oct 26th 2006 3:37PM]

i don't understand why IBM isn't up there. It's just climbing and climbing right now.

[everrette powell @ Oct 26th 2006 3:40PM]

You might want to take dell and AT&T out of your portfolio! this coming quarter is not looking good for either of them.

[Ryan Block @ Oct 26th 2006 3:46PM]

Again, that's not the point! It's not to see how well we can pick stocks, it's to see how well the tech industry is performing. Gateway's stock is under two dollars, but it's still important Gateway is in the index. Don't think of this as a performance portfolio, think of this as a consumer electronics industry barometer.

[Tony L @ Oct 26th 2006 5:52PM]

I tried to reply somewhere else in this thread but I must have messed up somehow as I didn't receive a confirmation email.

Anyway, as mentioned in others' comments, I think Engadget should try to publish a Price Index, like the DJIA (which is what you are doing by buying one share of each constituent), an Equal Weighted Index, and a Capitalization Weighted Index, because each would tell the same story, but from different perspectives. In the case of the Equal Weighted Index, you could agree to reset the weights each quarter.

In only relying on price changes to calculate performance, you would present a Price Return index. It would be interesting to see what the returns would be if Dividends were included as well, to come up with a Total Return.

As far as a benchmark, the S&P 500 Technology Sector Index (http://www.google.com/finance?q=INDEXSP%3A.SPLY) will likely do nicely, although an Industry Group index may be even closer in composition.

Editors: Let me know if based on this rambling you suspect I might be able to assist in some way.

[Lee @ Oct 26th 2006 4:31PM]

You should make a Motley Fool CAPS profile, so you can actually track these.

[Caixt. @ Oct 26th 2006 4:37PM]

GOOG Google is missing. :)

[Nate @ Oct 26th 2006 4:39PM]

GOOG , I know its expensive but its the best stock on the street

[quodlibet @ Oct 26th 2006 4:41PM]

What about IRBT?