Portfolio up ~40% for 2010 : Good or mediocre ?

DavidHayton

bobbyj wrote: »

and before the doubters arrive questioning anybody's honesty who returns over 7% investing in the stockmarket take a look at this years stockchallenge winner, thus like i said 40% is nowt to write home about and indeed pretty poor.

http://infoex.hemscott.net/MESSAGES/1564796.HTM

But also quoting from that website post:

"It's pleasing to note that the majority of us beat the main FTSE indices, although almost two thirds of us were beaten by the FTSE AIM All-Share index. However, that may not be a fair comparison, given that I'm not sure the index takes into account AIM stocks that are sadly no longer with us!"

In a group of people making speculative punts, some will do very well (just like some will do very well on the National Lottery), but overall it seems that 2/3 were beaten by the All-Share Index. If you invested in an index tracker, the dividends would mean that you beat the index every year.

David

JoeCrystal

lisyloo wrote: »

It's very easy in an excel spreadsheet.

Column A - contributions
Column B - Days (since last entry)
Column C - Balance - calculated as

=A7+C6+(C6*$B$3*B7/365)

Which in words means

Balance = latest contribution
PLUS previous balance
PLUS previous balance * return * number of days/365

Once you have it right, you can just copy the formula to new rows.

I am sorry but that does not make sense. I tried and it just does not seems to work. I manage to work out the amount of days between contribution from May 2009. Then I added in the formula which then went haywire. As for return, it is current value minus the current cost correct or I am missing something here?

Cheers

Joe

lisyloo

I am sorry but that does not make sense.

It makes perfect sense.
The formula works out the interest for the last period on the outstanding balance and then adds the new contribution.
I can assure you it works, although you may have to adjust the column/row numbers to your spreadsheet.

As for return, it is current value minus the current cost correct or I am missing something here?

I missed a bit out.
You need to put your return in a cell e.g. B3.
So mine says 0.10 for 10%.
This is then used in each formula as $B$3.
You can then adjust the return.
I'm not sure tabs work well here but here's an exmaple.
If you need further help then pm me, and I'll send you my emil address.
I'm suprised that sophisticated investors can't work out a simple formula for this

0.100

425 0 425.00
425 30 853.49
425 31 1285.74
1050 9 2338.91
425 22 2778.01
425 28 3224.32

In the example above, the return is 0.10.
The firs column is contributions, 2nd column is days, third column is the balance.

So for example in the thrid row we add

new contribution 425
previous balance 853.49
return for 31 days 853.49 * 0.10 *31/365

I'm happy to look at your spreadsheet if you pm me but the formula

capital * return * days /365

Is correct and very simple.

Acromion

The Sunday Times had 2 interesting pieces yesterday on investment returns. The first reviewed the record of the ST tipsters who each pick a share which they think will outperform at the beginning of January. Over 10 years "a reader who invested £100 in our recommendations on January 1 2001 would be sitting on £102 today". Dividends are excluded. The FTSE All share rose 2.6% over the period.

Secondly, Peter Shearlock who runs an imaginary "Heaven and Hell" portfolio (blue chips and speculative shares) reported a 1% fall in the value of his shares over the past year despite the All Share gaining 12.6% over the same period. Jarvis (bust) HMV and Gartmore (sic) did for his portfolio.

In that context a 40% gain is spectacular. But can you keep it up over 10 years? The ST pundits certainly couldn't.

sabretoothtigger

bobbyj wrote: »

40% in grand scheme of things pretty poor, should have been able to quite easily double your pot at least this year.

true enough I guess but its not poor. You cant tell how good until 5 or 10 years past

Consistency is king, its the most unstated thing in life. But the average joe who can make 5% a year all his life is the real great.

7% a year means you double your money in ten years. To me 7% or more every year is the target.

Look twice at any market that brings you closer to that over ten years, dont focus on one year only

The Sunday Times

Telegraph also had a round up of the last years tips. If you want to see long term, FT.com has a system to show gains. FTSE back to 1984 has about an average 3% gain per year

bobbyj_2

sabre, the private investor can of course move quicker and is much more agile than the fund manager. 20/30% should me minimum target for active trader/investor and there's plenty I know who wouldn't be happy with that.

jimjames

lisyloo wrote: »

It makes perfect sense.
The formula works out the interest for the last period on the outstanding balance and then adds the new contribution.

I'm suprised that sophisticated investors can't work out a simple formula for this

.

I'm confused too. I know how the formula should work but the reality is that the volume of numbers makes a hell of a lot of data to type or crunch for a year. (assume 10 investments per month over 12 months and thats 120 prices you need to find to calculate). Or is your formula for fixed interest savings rather than for share investments?

I think the simpler, quicker way although clearly less accurate is just to calculate the return on total funds you had at end of last year and then do the same again next year. It won't take account of the growth on investments made during the year but it is also much easier to work out.

Its very easy on a fantasy portfolio to bet all the way on highly speculative shares. Less people would be prepared to do that with their real money. It works for some that can devote the time but I'm far more comfortable chosing a set of managers to make money for me albeit at a lower rate.

sabretoothtigger

bobbyj wrote: »

sabre, the private investor can of course move quicker and is much more agile than the fund manager. 20/30% should me minimum target for active trader/investor and there's plenty I know who wouldn't be happy with that.

Trader or investor ? They are separate strategy, depends if we're talking pension funds here or money to burn

30% is unrealistic, you would need to be world class to get that every year for a decade.
I dont really think Im that good or more importantly that everyone else is so stupid that'd they let me have that much money easily


FT shows ftse gains since 1984 are 6% PA Not clear if that includes dividends but I presume not in which case I'd offset them vs inflation




Hopefully we all recognise a sell on Dec 1st 1999 would have captured alot of gains which were false. The gain upto that point would have been 12% PA

Therefore I would say anyone who gains over 10% every year should definitely start to recognise how lucky that is. Investment is not about luck, trading and gambling is

[I do agree we have exceptional circumstances in play at the moment. Im quite certain volatility will rise. Im just saying dont start to think this is normal business]

JoeCrystal

jimjames wrote: »

I'm confused too. I know how the formula should work but the reality is that the volume of numbers makes a hell of a lot of data to type or crunch for a year. (assume 10 investments per month over 12 months and thats 120 prices you need to find to calculate). Or is your formula for fixed interest savings rather than for share investments?

I think the simpler, quicker way although clearly less accurate is just to calculate the return on total funds you had at end of last year and then do the same again next year. It won't take account of the growth on investments made during the year but it is also much easier to work out.

Well, when I did it first time around, I did not realise that I need to adjust the return to reach the amount by end of the year. When I did realised, it was easier to work out the return. By using the value of portfolio by the start of the year, adding new contribution and days between them. And lastly, a row with no contribution but still have interest.

In the end, I concluded that my portfolio have increased by 16.77%. I am now trying to work out the return in 2009. I believe it was in negative return sadly.

sabretoothtigger

Put all your transaction data into the portfolio tools trustnet or morningstar give you and see what it says. The only thing Ive found it doesnt track is actual physical holdings like gold coins or your mortgage payments vs house equity

Here is the monthly view it gives me

DavidHayton wrote: »

If you're saving for a house deposit, it is probably best to stick to cash. Equity markets can and do drop by 20%, taking 20% of your deposit in the process.
David

I'd disagree, below 10k maybe cash is most simple but house deposits can be substantial and people save for years. Markets can go down 20% or most recently gain 20% too.
Cash is the one thing that goes down in value and does not recover and that is more true going forward then ever before.

Either take the house as early as possible or invest in something better then cash which is the equal of saving water in a leaky bucket then people complain why their feet are wet and they still cant afford their dream house. Be pragmatic