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Detailed Portfolio Analysis...How Are We Really Doing?



February 13, 2013 – Comments (8)

CAPS is a really fun game, but I've never felt as though it was a completely accurate gague of how one's investments have done.  When you eliminate shorting all of the pump and dump scams and leveraged ETFs and actually close positions when you would in real-life it comes close, but I wanted a more detailed analysis of my personal investment track record, so I went to my broker.  Charles Schwab, was never one for fancy reports and portfolio analysis (at least not that I knew of). However, they seem to have made a number of changes for the better since the last time I checked out the available features.

Today I found both a portfolio analysis tool that analyzes by investments by type and even better analyzes my returns versus various benchmarks.

First for my portfolio weighting. As you will be able to see, while they have been amazing investments in their own right, the monster slug of corporate bonds that I picked up during the credit crisis (when yields were the most attractive relative to Treasuries that I have ever seen in my life) has acted as a huge headwind for my overall performance during the recent bull market. Does that bother me? It might have in the past, but not today. I love the stead stream of income that they provide me with that I can plow into new equity investments. Furthermore, I love the safety that they provide me and my family...and that's ultimately why I invest. I'm not some hedge fund manager who will lever up and place risky bets hoping to maximize the "20" part of "2 and 20" and then just say "Oh well" if things blow up and walk down the street to start another fund. This is my real savings for real people who I love. Anyhow, onto the portfolio breakdown:

Asset Class:


SMALL CAP EQUITY: 50.9% (HA interesting. They say that's where the
best values and best returns can be found)


FIXED INCOME: 24.5% (and this is after a number of maturities and calls)

CASH INVESTMENTS: 5.7% (this was a little higher until recently when I
began putting more of it to work)

OTHER: 0.3 (Hmmmm, I wonder what this is. Preferred stock perhaps? If
so, I would think that it would be higher)

Now onto the good stuff...performance. I post this here not to brag or toot my own horn. Not at all. To be honest with you, I actually don't have anyone else to talk to it about, and I find it very interesting, so you get to hear about it whether you like it or not ;). My wife is an amazing woman, but doesn't care about this sort of stuff, and my kids are 8 and 4 so I don't think that they're ready to hear about it yet.

You will see, that while my total portfolio performance has mirrored to outperformed the S&P 500 slightly, depending upon what day you look at it, I've done it with the massive 25% bond headwind. So I feel a ton better about my investing prowess when I look at things like this. There are all since I turned the tracking feature on in my accounts in January 2009:

Asset Class:

Me: +16.82%
S&P 500: +15.95%

(Not bad, but there isn't much of an edge there.  Everyone knows about these stories and it take a lot to move mamoth stocks)

Me: +44.33%
Russell 2000: +17.51%

(Ahhhh, now here's where small investors like you and I have an edge.  Less followed stocks with room to grow.)

Me: +21.39%
MSCI EAFE: 10.95%

Me: +14.04%
Barclays Aggregate Bond: +5.76%

(I told you that those bonds were awesome, I was like a kid in a candy shop)

Me: -91.85%
No Benchmark

The dismal performance of the "Other" category leads me to believe that this is preferred stock. I made my worst ever investment in this category, ATP Oil & Gas preferred stock...a lesson learned. ATP essentially went to zero, but fortunately I limited the size of this investment so the overall impact on my portfolio was like firing a pea shooter at an elephant. Most of my other preferred stocks are flat to up slightly, but they keep churning out 7% to 8% dividends so I'll gladly take it.

So there you have it. No patting myself on the back or tooting my own horn, just straight analysis, much like a hedge fund would lay out in its letter to investors.

As you can see, my fund allocation in terms of sectors leaves a little to be desired, but again I have no regrets. As I continue to learn, with the help of everyone here at The Motley Fool, I honestly believe that I am becoming a better investor. I don't know that my absolute performance will continue to provide such results going forward, but I suspect that my performance relative to benchmarks will continue to improve as I become better over time. All I can do is look for interesting stock ideas that fit my personal investment style, value with catalyst or special situations with a mix of high yield, and roll the dice when I think that the odds are significantly in my favor.

On a somewhat related note, I sold one of my longest-term holdings today after looking at it and all of the catalysts that I was looking for had played out. I'll talk about that more when I'm allowed to in a couple of days.

Thanks for reading everyone. Have a great evening.


8 Comments – Post Your Own

#1) On February 13, 2013 at 5:16 PM, constructive (99.97) wrote:

Awesome. When are you opening a small cap equity/bond fund? I'd invest with you.

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#2) On February 13, 2013 at 7:17 PM, CMFbbmaven (100.00) wrote:

Thanks for sharing this Deej.  You inspired me to go back and try to do the same thing because more than half of my investments have been in small caps - primarily HG small caps - but also some personal favorites.  Going back to March 2009, I look like a maven and my small caps have blown the world away - I should be retired and living on the Riviera. 

Unfortunately, I bought many of those small caps before 2009.  While the overall market went down about 50% from Oct 2007 through Feb 2009 (depending on which index you use), I lost over 75% of my portfolio - in my late 50's!!.  Fortunately, I just went down to my basement, curled up in a fetal ball for six months and didn't trade anything.  As the recovery began, I started pruning and adding and now am back to being positive - in effect, a 350% rise since then.  But when you lose 75%, you need a 300% rise to get back to even:)

I am proud that I just kept my head down and didn't do any selling - but the experience will always keep me humble.  My best attribute as an investor turned out to be not 1) insight, 2) wisdom, 3) investing prowess, 4) brilliance, 5) financial analysis or 6) market savvy.  It was stubbornness and denial:)

Congratulations on playing the bonds - I have never bought a bond and my ignorance intimidates me.


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#3) On February 14, 2013 at 10:01 AM, lemoneater (56.93) wrote:

Yes, the Schwab portifolio tool gives a great summary of one's holdings. Mine are

Large Cap 59.8%

Small Cap 24.3%

Foreign    13.2%

Cash         2.7%

I used to have 50% of my holdings  in Small Caps, but ISRG changed from small to large and I have not sold it yet. I have not yet found a stock with a similar story to replace it. My greatest losses have been with micro stocks--VUOC for example. I think I bought it too soon, but I've decided to hold it. (Megashort told me to be cautious. At least I did not sink all my money into lightbulbs:)

Unrealized gain sounds weird, but it is currently at 28%. That is several years worth of accumulation.

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#4) On February 14, 2013 at 11:30 AM, constructive (99.97) wrote:

"VUOC for example. I think I bought it too soon, but I've decided to hold it."

I'd take whatever you can get for your shares. If you look at the most recent balance sheet, they are down to $0 cash and $5.2M in liabilities. How will they pay employees or buy equipment?  It also looks like they haven't sold a single lightbulb in the past year.

Good luck.

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#5) On February 14, 2013 at 11:33 AM, TMFDeej (97.71) wrote:

Thanks Mega.


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#6) On February 14, 2013 at 11:37 AM, TMFDeej (97.71) wrote:

Great story bbmaven.  Thanks for sharing.  Your resilliance is very impressive.  Persistance in the face of adversity is one extremely admirable quality.

I don't know of anyone who escaped the carnage of the financial crisis.  That certainly was the time to buy though.  We'll be ready for the next one ;).

I haven't bought any bonds in a long time.  The yields just aren't there right now.  I think that the last issue that I purchased was AIG's exchange traded debt...and that wasn't all that recently.

I thought about buying JC Penney bonds after Roumell Asset Management did a compelling write-up on them, but they must be below "investment grade" because Schwab won't let me buy them.  That is one of the major drawbacks of buying bonds thruogh Schwab.  I guess that they're trying to protect their investors from buying crummy paper, but they let us buy crummy stocks all day long.  What's the difference.  I could probably buy by calling them on the phone and talking with a broker, but it's so much easier to do it on-line.


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#7) On February 14, 2013 at 11:38 AM, TMFDeej (97.71) wrote:

Hey lemon.  Having one of your holdings graduate from a small cap to a large cap is a good problem to have ;).  I'll take it.


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#8) On February 14, 2013 at 3:46 PM, lemoneater (56.93) wrote:

MegaShort, evidently, VUOC never brought the bulbs to market last year which explains why none were sold. An article dated 12/20/12 is titled "Vu1 Adds U.S.-Based R&D Team To Lead Production Of Its Forthcoming ESL Bulbs." I wonder how forthcoming is coming.

VUOC's flickering start is why having smaller positions in a wide variety of industries and market caps works for me.

Thanks, Deej.  Occasionally I make lots of lemonade which helps to make up for the lemons. On a given day ISRG and TTM are contenders for the stock that has grown the most.

One of my other holdings is HNZ so this Buffet buyout is rather interesting. I only have 10 shares so it will not make my fortune by itself.

I do not have much control over the mix or weighting of investments that my employer chooses, but I know that bonds are a major part of that portifolio.


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