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dwot (99.57)

Your 10 year Return?

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January 27, 2010 – Comments (6)

PFBlog is one that I have followed for a few years and the reason I was following it was I was wondering how he would fair though the crash.  Anyway, his blog drew my attention to the 10 year performance of the various stock exchanges.  The blog I linked to is about a fund that went from $10k at the beginning of 2000 and is now worth 98 cents.

I am more interested in the 10 year return.  I have not kept accurate records of where I was before the dot com bust, but we lost 30-40% in that mess as we joined the club late.  But, if I look at about what I had before the crash and what I have now my 10 year return is about 13%. If I just look back from what I bottomed my return is about 19% per year. 

No question that because I am still out of market my annualized return is declining, but that's ok.  I have just put into motion my most recent investment, my house.  I have a tenant so not only am I not paying rent, the income I am getting from my rental works out to about 6.5% return on investment on the whole house.  I suppose the extra expenses that come with home ownership eat up any savings from not paying rent. 

6 Comments – Post Your Own

#1) On January 27, 2010 at 11:03 AM, floridabuilder2 (99.65) wrote:

Probably 0% compounded annually including fees.  Dot com killed me, builder put options killed me in 2006.  I finally got back to even in the last few years and have been almost all cash since Sept 2008 (Lehman episode).  I only own Alcoa now and a short ETF, but those are so minor vs. when I used to swing trade, trade on margin, do options. 

I'm sticking with homebuilding and land.  The old FB would have lost so much money last year shorting the market because he would have said "the market can't go up in this type of economy". 

I did add another short position at the beginning of this year because my other one RWM is a 30% loss.  I just want the market to tank enough so that the two short positions cancel each other out. 

House construction costs are so low it is mind boggling.  I think we have one last flush of homebuilders and then it is off the races for this industry group. 

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#2) On January 27, 2010 at 1:22 PM, Melaschasm (89.11) wrote:

It is difficult for me to accurately calculate my 10 year return.

I own a duplex that represents most of my wealth, and all of my debt.  It has decreased in value a bit since I bought it, but I do not know the exact current price (I suspect the real value is less than zillow.com claims).  I collect rent from one half, and enjoy some moderate tax advantages from owning the property as well.

My retirement accounts are showing modest profits.  I was mostly in the S&P 500 during both the dot com and recent market crashes.  I also had a little money in bonds and foreign investments.  If you include my employer match in my 401k, that would represent most of my profits. 

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#3) On January 28, 2010 at 2:41 AM, dwot (99.57) wrote:

fb, I didn't think the market could go up in this kind of economy either, but the market simply isn't sane.  If it was the great opportunities that arise would not exist.  Like you, I got to about even from the dot com crash about when I got serious about investing my portfolio.  I had three serious hits in my past so when it looked more risky then sane to me, I just cashed out. 

Melaschasm, I am so glad I have no debt anymore.  Just 5 years ago I'd look at the household finances and totally stress out over it.  Housing and taxes were eating about 75%.

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#4) On January 28, 2010 at 9:58 AM, floridabuilder2 (99.65) wrote:

dwot,

that is the reason why I have been bashing bears even though I am a bear.  because it was the dot com bulls that convinced me to buy on big dips.  you know, the new economy....

so when bears are saying it is the end of the world, people get convinced that shorting stocks is a sure thing.  this is the trap of the market I have seen too many times over the decades.  all last year the biggest bears kept blogging on and on that the market is over valued, the economy is a disaster, etc... and fools are shorting the market because of that.  They think they can't lose. 

when the market had already been cut all the way down into spy 1,000, 900, 800, 700, etc... it gets to the point that you might not want to go long because of the economy, but you are playing with fire going short.  I don't want to lose everything i worked for to try to double my money in a casino.

the thing is i closed almost all my picks after lehman on caps regardless of where they were at really to signify that i was done investing in the market long or short.  I've always believed we would have a W shaped bad recession and that I would buy on the second leg down of the W.  I figured by then that most people would have given up on the stock market and you can gauge much better the values after all the companies have done multiple years of cost cutting.

I think if you pick a decent time to buy during this recession and hold a decade you will be rewarded greatly.  That is the reason I took a minor position in Alcoa.  I just want to take some minor positions over the next few years one at a time in the biggest best companies.  I'm still almost all cash though until commercial real estate starts to trade

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#5) On January 28, 2010 at 10:58 PM, dwot (99.57) wrote:

Yep, things did not go as I thought they would, but when I look at why, massive government spending and governments getting themselves further into debt at a faster rate then ever before practically, well, it is unsustainable and is simply creating a bigger problem.

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#6) On January 29, 2010 at 11:26 AM, floridabuilder2 (99.65) wrote:

The problem is that pretty much every solution created a massive problem.  If the gov't didn't do massive spending and made the banks mark to market, I would have lost everything as well as most people in the US.  UE probably would be at great depression levels in the mid 30s or higher.

The govt realized this and made the decision to print money and screw over all the savers and all the elderly (long term) because this is going to cause inflation eventually and who knows what the consequences are (no more social security? no more military? etc...)

I for one can live with the bigger problem down the road, because it will buy me enough time to build up enough savings in hard assets to survive whatever occurs.  In the meantime, I can't argue with bears about how stupid our gov't is or the big problems coming down the pipeline eventually.  I can only work my arse off trying to build the ark before the flood. 

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