Fidelity's new tool
Fidelity just added a new tool that's sort of scary. It's something I've tried to emulate for years with Excel spreadsheets but with little success. They have tracked every contribution to each account I hold there for the life of my accounts, and allowed me to evaluate returns like I would evaluate any other mutual fund - on an absolute or annualized % return basis, time-weighted for the contributions made midyear, for 1-year, 3-year, 5-year, and life-of-fund.
For the roughly 9 years I've been actively investing - and you can track my thoughts in this blog for most of that time - a passive investment in the S+P 500 would have returned a 6.94% annualized rate. My own active management has returned 11.47%.
I'm not dissatisfied with this - if you look at how people and even fund managers do on average, you'd have to conclude I've done quite well in a challenging time - but honestly, I am not convinced that what I've done have been the *right* things. I've market-timed, panicked out of positions that went on to pull ten-baggers, held outsize positions as they went down to zero (you hear me, GM?), had inadequate sector, geographic and investment-type diversifications/allocations for most of the period, and have had outsize investments in very high-beta names. In other words, I've taken a lot of risk to eke out that extra 5.5%. Spent a lot of time on it too, although it's mostly been educational and enjoyable.
This year, I'm nearly tripling my anticipated contributions to investment accounts, and most of the excess is going into a new plan: a Vanguard target date fund on a monthly-contribution, dollar-cost-averaging kind of way - even though I think the equity markets are over fair value. My actively managed account is still sitting in cash because I don't see much in the way of enticing prospects at this time; but I am getting older, have less time for the investing game, less interest in it, and am starting to wonder whether or not I should just give it up and let the wonders of low-expense passive index investing do the work for me. Quit while I'm ahead, if you will.
I know a lot of folks read this blog. Any thoughts?