Detailed Portfolio Analysis...How Are We Really Doing?
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:
LARGE CAP EQUITY: 6.5%
SMALL CAP EQUITY: 50.9% (HA interesting. They say that's where the
best values and best returns can be found)
INTERNATIONAL EQUITY: 12.1%
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:
LARGE CAP EQUITY
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)
SMALL CAP EQUITY
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.)
MSCI EAFE: 10.95%
Barclays Aggregate Bond: +5.76%
(I told you that those bonds were awesome, I was like a kid in a candy shop)
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.