A market-beating year, but not good enough ...
First, the good news: my total portfolio return -- after accounting for cash contributions made during the year -- was 12.21%. That's a market-beater. (The S&P 500 was up 3.53% during 2007, AP reports.)
Now, here's the bad news:
2006: Up 11.96% (lagging the S&P's 15.8%)
2005: Up 3.63% (lagging the S&P's 4.9%)
2004: Up 13.01% (beating the S&P's 10.9%)
Four years. Two years of market-beating returns. I can do better.
What happened? Worse than average portfolio management. Before 2007, I didn't "swing hard at fat pitches," as Bill Mann likes to say. Take Akamai. Even though, in 2004, I was convinced the stock was a multibagger, I bought in for only 2% of my portfolio.
Not that you should be surprised. Look at the numbers again. My returns weren't much different than the returns of the overall market. In fund parlance, you might say -- from 2004 to 2006 -- I was an index hugger; my best picks didn't add enough value.
But I learned my lesson in 2007. No longer a timid investor, I (mostly) arranged my portfolio bets according to prospective returns, and was rewarded as a result.
aQuantive was a multibagger after Microsoft offered $6 bil for the company. Applix provided a more modest, but still market-beating, return after Cognos bought the company. Nokia and Oracle finally realized their multibagger potential.
You get the idea.
So, even though my multi-year record as a portfolio manager -- not as a stock picker; on that, my record is pretty solid -- isn't as great as I'd like, my 2007 "alpha" was as good as it ever has been.
Foolish best wishes for 2008 and beyond,