My brokerage has updated the performance of the Chump IRA through September 30, 2013, so my one year performance is in the books! Here is the result:
Chump portfolio = 20.17%
S&P 500 over the same timeframe = 19.34%
So, in my first full year, I beat the S&P. That puts me in the top very low percentile of all money managers on the planet! Ha. I expect the delta to grow over longer periods, since I'm getting smarter (perhaps with the exception of shorting TSLA).
I've learned a few interesting things along the way, here are some that come to mind immediately:
- Beating the S&P isn't that easy
- Managing your own portfolio isn't that hard
- FAST Graphs makes stock evaluations much easier and faster
- High quality companies bought below fair value outperform high quality companies bought at or above fair value (in general)
- Picking and buying undervalued stocks is easy; selling overvalued stocks is very hard
If you look at the "All Holdings" blog from September 11, 2012, you'll see all the holdings in the portfolio at that time, ranked by EYE ratio, or earnings yield estimate. This is a FAST Graph metric that combines PE ratio, estimated five year growth, dividend yield, and future cash flows to estimate excess return above 10 Year Treasuries (risk free return). A higher number is a good measure of undervaluation and/or potential returns.
|Worst EYE Ratio||1 YR Return||Best EYE Ratio||1 YR Return|
position on February 4, 2013 for a loss of only 3.67%
A look at the lowest EYE ratio (Worst Valuation) vs the highest EYE ratio (Best Valuation) bears out the premise. I took small positions in the 5 worst valuations, and full positions in the five best. I sold CLF before a major collapse in the stock, and so, overall returns were very good for portfolio as a whole. With the exception of CLF and CMI, which I sold recently due to overvaluation, I still hold all of these stocks. My positions in JND and MCD are near full positions, but I'm still underweight KO, MO, WMT.
That's all for now,