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Posted by dapperdobbs on November 18, 2009, 2:48 pm
A year ago discussion about mutual funds, risk and diversification, v.
stock picking, prompted me to slap together 10 stocks (for the benefit
of those from Missouri). There was also discussion about the end of
the world. It has not quite been 365 days, but I added up some numbers
today for the trailing earnings (about four hours, including reading
about the businesses). Next year looks to be better than this year,
but managements are marginally cautious, for the most part.
Most importantly, the earnings of the portfolio dropped from $8,838 to
$6,938. Those are roughly comparable after GAAP and non-GAAP
adjustments, continuing ops, mergers and acquisitions, share
repurchases, and so on. The PE has increased from 11 to 21. Of the
five dividend paying stocks, four increased, one lowered. Total payout
$1,747.
http://www.stockalicious.com/portfolio-holdings/4710
http://www.stockalicious.com/portfolio-holdings/4745
Comparative performance was less than I actually expected, but the
market has risen more than I expected, Seven stocks outperformed the
market, three under-performed. I should'a ....
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Posted by Tad Borek on November 19, 2009, 12:47 pm
dapperdobbs wrote:
> http://www.stockalicious.com/portfolio-holdings/4710
> http://www.stockalicious.com/portfolio-holdings/4745
>
> Comparative performance was less than I actually expected, but the
> market has risen more than I expected, Seven stocks outperformed the
> market, three under-performed. I should'a ....
Less than expected! If this were a mutual fund you'd be on the cover of
Barron's. After almost a year the 10-stock portfolio has a pile more
money than "the monkey." It depends on how you define the returns and
the effect of dividends but it looks to be something on the order of
15-20% more than the market based on those links. So if you worked for
____ mutual funds you could ditch it all in spiders, and ride that
outperformance for the next 5 years while doing the talking-head circuit.
BUT
It looks like it was all about Ingersoll-Rand. It wasn't that the dart
hit 10 winners, it's that one dart hit one big winner. Throw that one
out and here's what I get:
Site says (both, no-divs, correct?)
Monkey: 32.47% return
Darts: 50.77% return - Super!
Darts minus best pick: 35% average return for 9 stocks, no divs
Darts minus best & worst pick: 40% average return for 8 stocks, no divs
It's a nice micro example of "the mutual fund manager selection
problem." Is it that you have a method of stock-picking that is going to
find an IR at least 10% of the time? Or was that Just Dumb Luck?
And what's the next move...?
-Tad
PS I love that the "dartboard portfolio" lives on MIFP, the WSJ having
canned the feature. I'm curious how this will look 3 years from now, the
WSJ only ran it in 6-month blocks
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Posted by dapperdobbs on November 20, 2009, 4:08 pm
No, no, Tad. Ten stocks are ten stocks. You "Fundies" are just used to
throwing perfectly good money away! :-) Like paying ordinary income
tax rates on short-term distributions, guessing which stocks you might
actually be invested in, relying on probabilities, fudging
numbers ...:-)
Thanks for the compliments (but you confused me with the monkey and
the darts). Excluding IR five stocks appreciated above the market, BP
matched (if I recall correctly - 30% up). So in total, seven "winners"
for this time period. A more thorough presentation would compare the
earnings of the broad market to the earnings of the paper portfolio.
There is no next move. These are sound companies with serious
businesses. All were then and are now earning money. Hopefully they
will do a bit better over the next three years.
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