Investment Returns 2020

garmeg

Deleted_User said:

ZingPowZing said:

"Keep in mind that annual values self reported by chatroom users are a) meaningless and b) usually wrong.  For returns to be meaningful they need to span a meaningful period of time, eg 10 years, although longer is better.  "

Not so. Returns are for keeps, whatever the timeline. It's anyone's prerogative to ignore them but they are still real and meaningful.

"I guess that people who experience losses don’t tend to boast as much as us.  Because someone has to be on the other end of all those wonderful returns.  Perhaps its an unlucky international investor who is grossly overweight in British property and stocks."
Not so. Participants benefit from rising asset prices, there does not have to be a corresponding loss elsewhere..

FTSE 100 fell by over 14%. FTSE 250 fell by 6.4%. Foreign investors are overweight in their home markets. UK investors are overweight in the UK market.  Which means, on average, British investors underperformed world by a significant margin.    Most people reporting on this board outperformed by a large margin (on top of costs).   Someone has to be on the other end of these wonderful trades.  

Two ways to explain this phenomenon: people are reporting erroneous results or people are self selecting to participate in this chatroom and only report when their results are good. Or a combination of the two.  

The boards where people use a standardized way of calculating returns are reporting results which are far more consistent with the averages, although an element of self selection is always present. 

On page 1 I posted my results (Excel XIRR) which are the worst here so far ...

garmeg said:

My crystallised SIPP was down about 9% in 2020 and my ISA down 3% approximately. Return figures include dividends received.

Was much worse a few weeks previously so happy with that.

My uncrystallised SIPP pretty much broke even but I need to download the full transactions (contributions) list for 2020 to check.

Prism

Here is a completely anecdotal example of where some of the poor returns are. 
Last year Vanguard LifeStrategy 80 returned 7.7%. It contains around £5bn in assets.
Scottish Widows default pension fund, pension portfolio 2, is very similar in make up (roughly passive 80/20) and eats up a huge chunk of money from lots of UK workplace pensions. The fund manager looks after around 120 other funds. Last year it returned a pretty poor 3.2% using index trackers. Now the platform fee is included in that but even still. Over any time period it seems to underperform. Size of the fund is around £19bn in assets. Thats nearly 4 times the amount of money that is in VLS80, sat underperforming year on year and nobody cares.

Thrugelmir

Bobziz said:

Thrugelmir said:

Including reinvested dividends I'm up 37.7% over the past year.  Has been an exceptional year of returns. Been a year for active trading and good fortune in these volatile markets. Nor has it been a comfortable year, as the recovery from the bottom point of the year back in March is 48.6%. At which point I was 65% cash. Having liquidated a number of holdings over a period from early February.  Cannot recall a period of time when I've traded so often. As prices bounced around and plenty of opportunties arose to pocket gains in a matter of days.

Time to hang up the boots and dial back the risk exposure. As I'm not expecting 2021 to offer the same opportunities. Cautiously optimistic though a small retrenchment in markets wouldn't come as a surprise. 

Good work indeed, what drove you to liquidate in Feb, and are you aiming to move to a similar cash position in the coming weeks ? The analysis consensus in the US seems to be generally bullish, but some of the charts look scary ! I've enjoyed a 20% gain in 4 months, but I'm considering taking some money off of the table for a couple of months to take stock.

In summary news coming out of China. Such as (100 million)  immigrant workers not returning to the factories after the end of the Chinese New Year holidays and China calling force majeure on 4 major gas supply contracts.  This triggered me to sell out of sectors such as miners,  and oil and gas. Plus I took profits on some of long standing sizable investments as the subsequent news trickled out. My investing style is contrarian. With a focus on specific sectors or companies at any given time.  I make no attempt to forecast the direction of broader markets. My favourite individual share which I've traded for over 10 years.  Has returned a 120% since I bought back in early April, plus has paid three quarters of growing dividends. Today I started to top sliced the share again after yet another price rise. 

[Deleted User]

Deleted_User said:

ZingPowZing said:

"Keep in mind that annual values self reported by chatroom users are a) meaningless and b) usually wrong.  For returns to be meaningful they need to span a meaningful period of time, eg 10 years, although longer is better.  "

Not so. Returns are for keeps, whatever the timeline. It's anyone's prerogative to ignore them but they are still real and meaningful.

"I guess that people who experience losses don’t tend to boast as much as us.  Because someone has to be on the other end of all those wonderful returns.  Perhaps its an unlucky international investor who is grossly overweight in British property and stocks."
Not so. Participants benefit from rising asset prices, there does not have to be a corresponding loss elsewhere..

FTSE 100 fell by over 14%. FTSE 250 fell by 6.4%. Foreign investors are overweight in their home markets. UK investors are overweight in the UK market.  Which means, on average, British investors underperformed world by a significant margin.    Most people reporting on this board outperformed by a large margin (on top of costs).   Someone has to be on the other end of these wonderful trades.  

Two ways to explain this phenomenon: people are reporting erroneous results or people are self selecting to participate in this chatroom and only report when their results are good. Or a combination of the two.  

The boards where people use a standardized way of calculating returns are reporting results which are far more consistent with the averages, although an element of self selection is always present. There will always be a few genuine outliers in any given year; far less so over 10 year periods and beyond. 

Yes, I suppose there is an element of self selection in the spectrum of returns - some ubiquitous posters seemed. to be facing all ways at once in 2020 - but no reason to doubt the figures; no reason to imagine that one investor's good fortune must be matched by another's corresponding loss and no reason to pretend the returns are meaningless. They're real.

[Deleted User]

garmeg said:

Deleted_User said:

ZingPowZing said:

"Keep in mind that annual values self reported by chatroom users are a) meaningless and b) usually wrong.  For returns to be meaningful they need to span a meaningful period of time, eg 10 years, although longer is better.  "

Not so. Returns are for keeps, whatever the timeline. It's anyone's prerogative to ignore them but they are still real and meaningful.

"I guess that people who experience losses don’t tend to boast as much as us.  Because someone has to be on the other end of all those wonderful returns.  Perhaps its an unlucky international investor who is grossly overweight in British property and stocks."
Not so. Participants benefit from rising asset prices, there does not have to be a corresponding loss elsewhere..

FTSE 100 fell by over 14%. FTSE 250 fell by 6.4%. Foreign investors are overweight in their home markets. UK investors are overweight in the UK market.  Which means, on average, British investors underperformed world by a significant margin.    Most people reporting on this board outperformed by a large margin (on top of costs).   Someone has to be on the other end of these wonderful trades.  

Two ways to explain this phenomenon: people are reporting erroneous results or people are self selecting to participate in this chatroom and only report when their results are good. Or a combination of the two.  

The boards where people use a standardized way of calculating returns are reporting results which are far more consistent with the averages, although an element of self selection is always present. 

On page 1 I posted my results (Excel XIRR) which are the worst here so far ...

garmeg said:

My crystallised SIPP was down about 9% in 2020 and my ISA down 3% approximately. Return figures include dividends received.

Was much worse a few weeks previously so happy with that.

My uncrystallised SIPP pretty much broke even but I need to download the full transactions (contributions) list for 2020 to check.

I know.   Threads like this can be unhelpful by making people with perfectly good portfolios think “I am underperforming everyone, I am doing something wrong! Lets change!”  Apart from misreporting and bias selection, there is no doubt that investors in growth and tech sectors outperformed this year.  And people invested in large US stocks. And in China. Trends change though. Jumping between allocations is usually counterproductive. 

[Deleted User]

Prism said:

Here is a completely anecdotal example of where some of the poor returns are. 
Last year Vanguard LifeStrategy 80 returned 7.7%. It contains around £5bn in assets.
Scottish Widows default pension fund, pension portfolio 2, is very similar in make up (roughly passive 80/20) and eats up a huge chunk of money from lots of UK workplace pensions. The fund manager looks after around 120 other funds. Last year it returned a pretty poor 3.2% using index trackers. Now the platform fee is included in that but even still. Over any time period it seems to underperform. Size of the fund is around £19bn in assets. Thats nearly 4 times the amount of money that is in VLS80, sat underperforming year on year and nobody cares.

According to Morningstar, in 2019 VLS 80 returned 18.1%. In 2020 it was 7.7%.  Over 5 years looks like a very decent return too. VLS “underperforms” by the fee. Which is not high.

Someone holds these assets. And its the UK investor. 

Prism

Deleted_User said:

Prism said:

Here is a completely anecdotal example of where some of the poor returns are. 
Last year Vanguard LifeStrategy 80 returned 7.7%. It contains around £5bn in assets.
Scottish Widows default pension fund, pension portfolio 2, is very similar in make up (roughly passive 80/20) and eats up a huge chunk of money from lots of UK workplace pensions. The fund manager looks after around 120 other funds. Last year it returned a pretty poor 3.2% using index trackers. Now the platform fee is included in that but even still. Over any time period it seems to underperform. Size of the fund is around £19bn in assets. Thats nearly 4 times the amount of money that is in VLS80, sat underperforming year on year and nobody cares.

According to Morningstar, in 2019 VLS 80 returned 18.1%. In 2020 it was 7.7%.  Over 5 years looks like a very decent return too. 

Agreed. My complaint isn't with VLS I was using it as a comparison as its well known. My confusion is with funds like the Scottish Widows one which somehow constantly underperforms it and yet makes VLS look like a minnow. 

Linton

Deleted_User said:

ZingPowZing said:

"Keep in mind that annual values self reported by chatroom users are a) meaningless and b) usually wrong.  For returns to be meaningful they need to span a meaningful period of time, eg 10 years, although longer is better.  "

Not so. Returns are for keeps, whatever the timeline. It's anyone's prerogative to ignore them but they are still real and meaningful.

"I guess that people who experience losses don’t tend to boast as much as us.  Because someone has to be on the other end of all those wonderful returns.  Perhaps its an unlucky international investor who is grossly overweight in British property and stocks."
Not so. Participants benefit from rising asset prices, there does not have to be a corresponding loss elsewhere..

FTSE 100 fell by over 14%. FTSE 250 fell by 6.4%. Foreign investors are overweight in their home markets. UK investors are overweight in the UK market.  Which means, on average, British investors underperformed world by a significant margin.    Most people reporting on this board outperformed by a large margin (on top of costs).   Someone has to be on the other end of these wonderful trades.  

Two ways to explain this phenomenon: people are reporting erroneous results or people are self selecting to participate in this chatroom and only report when their results are good. Or a combination of the two.  

The boards where people use a standardized way of calculating returns are reporting results which are far more consistent with the averages, although an element of self selection is always present. There will always be a few genuine outliers in any given year; far less so over 10 year periods and beyond. 

Of course people posting on MSE aren't average.  For a start most know something about investing and those who dont want to find out. The people who dont go near MSE ae far more likely to include those who make foolish decisions, dont know and never check their investment performance, go in for wealth-destroying fashion investing and buy high and sell low.

Conversely those people who are interested in and successful at investing are likely to join and learn from forums where such matters are discussed.

If this assessment is correct the useful lesson to be learnt could be that simply by avoiding the mistakes made by the losers one can be above average.  The tracker true-believers will say that it is impossible to perform above average for extended periods of time.  If true, the reverse surely applies ie it is impossible to perform below average for extended periods of time.  However many people seem to manage it.

Linton

Linton returns Jan-Dec 2020:
Growth Portfolio (100% equity): 16.2% return
Wealth Preservation (30% equity): 6.5% return
Income (49% equity): 0.8% return

Overall (58% equity): 8.5% return

In all figures dividends where paid out are included in the returns but are not reinvested.

Ps The figures as originally posted reversed WP and Income!

[Deleted User]

Linton said:

Deleted_User said:

ZingPowZing said:

"Keep in mind that annual values self reported by chatroom users are a) meaningless and b) usually wrong.  For returns to be meaningful they need to span a meaningful period of time, eg 10 years, although longer is better.  "

Not so. Returns are for keeps, whatever the timeline. It's anyone's prerogative to ignore them but they are still real and meaningful.

"I guess that people who experience losses don’t tend to boast as much as us.  Because someone has to be on the other end of all those wonderful returns.  Perhaps its an unlucky international investor who is grossly overweight in British property and stocks."
Not so. Participants benefit from rising asset prices, there does not have to be a corresponding loss elsewhere..

FTSE 100 fell by over 14%. FTSE 250 fell by 6.4%. Foreign investors are overweight in their home markets. UK investors are overweight in the UK market.  Which means, on average, British investors underperformed world by a significant margin.    Most people reporting on this board outperformed by a large margin (on top of costs).   Someone has to be on the other end of these wonderful trades.  

Two ways to explain this phenomenon: people are reporting erroneous results or people are self selecting to participate in this chatroom and only report when their results are good. Or a combination of the two.  

The boards where people use a standardized way of calculating returns are reporting results which are far more consistent with the averages, although an element of self selection is always present. There will always be a few genuine outliers in any given year; far less so over 10 year periods and beyond. 

Of course people posting on MSE aren't average.  For a start most know something about investing and those who dont want to find out. The people who dont go near MSE ae far more likely to include those who make foolish decisions, dont know and never check their investment performance, go in for wealth-destroying fashion investing and buy high and sell low.

Conversely those people who are interested in and successful at investing are likely to join and learn from forums where such matters are discussed.

If this assessment is correct the useful lesson to be learnt could be that simply by avoiding the mistakes made by the losers one can be above average.  The tracker true-believers will say that it is impossible to perform above average for extended periods of time.  If true, the reverse surely applies ie it is impossible to perform below average for extended periods of time.  

Also, people who burn and crash usually stop posting, so there is an element of self selection.

Remember a study which looked at investments promoted by posters in financial chatrooms. They did find correlation between mentions and trading volumes.  However there was no correlation between subsequent performance and mentions. 

Your thoughts on out/underperformance ignore the fees.  “Impossible” isn’t the word I heard in this context. “Rare” would be more appropriate.  “Random” is another word that comes to mind.  There are people who have outperformed. Buffett is an obvious example. I think his returns have been around 18%/year.