My batting average

[mrmarket]

I've been meaning to do this for awhile as I'm also basically a "bottom line" kinda guy. I went through all of the MrM picks that are currently posted on the /huge page starting with SYNT on 08/18/09 through today. During that period (assuming SYNT was the first postion) the highest number of open positions was 10. I assumed an account size of 10k and used MrM's own figure of 14 positions. 10k/14 = 714.29 per position before any reinvested gains. As each position closed I added the gain to the total, divided by 14 and increased the next open position amount to that value. For simplicity and to give the best possible number I assumed that for positions occurring on the same day, the existing close occurred before the new open so that the new position gain was realized. For the period from 08/18/09 through today the total portfolio gain (assuming current open positions are flat) is $3973.78 or 39.74%. If on 08/18/09 you would have plunked the entire 10k in SPX and just let it ride you would be up 37.12%. Pretty much a wash. One of the problems was that I had to scale in the portfolio so there was a lot of time spent sitting on idle cash. It took almost a year just to get to 9 open positions. I re-ran the numbers using a 10 position account since that was the highest seen in the numbers I have. Using 10 positions you end up with a 58.43% gain over the same period. Basically just putting more of the idle cash to work. To mitigate the scale-in issue somewhat I looked just at the last 12 months (using the 10 position formula). The total portfolio gain is 31.54% (05/03/2010-05/05/2011). The SPX is up about 13% for the same period. The GLD index is up about 26% for that same period. I guess you could say MrM is huger than gold!
Later

Interesting...remember no analysis is complete unless you risk adjust the investment. Higher risk requires higher returns. I like to think that since I use valuation as a criteria, most (not all) of the companies I buy trade at valuations lower than the SPX. So beating the SPX, while taking less risk, always allows me to sleep better at night.

By the way, we shouldn't be so fascinated with my overall returns. I think how each of you do with YOUR money is much more interesting.

[smaskell]

MrM returns...

Well it sounds pretty impressive but I’ve been tracking you since last Nov and in that time frame you have had 12 winners. Based on an equal position size with enough spare cash in the account to hold 14 positions the realized gain is 13.32%; pretty damn good; sure beats a savings account.

But that Old Lazy Dog, He started a portfolio with only 8 stock around the same time. Out of 7 pick he only had 5 winners. But you know the realized gain on the portfolio is 14.25%.

Could it be that the number of winners in a row isn’t the number we should be concerned about. I’d rather know how much money my money made for me.

I've been meaning to do this for awhile as I'm also basically a "bottom line" kinda guy. I went through all of the MrM picks that are currently posted on the /huge page starting with SYNT on 08/18/09 through today. During that period (assuming SYNT was the first postion) the highest number of open positions was 10. I assumed an account size of 10k and used MrM's own figure of 14 positions. 10k/14 = 714.29 per position before any reinvested gains. As each position closed I added the gain to the total, divided by 14 and increased the next open position amount to that value. For simplicity and to give the best possible number I assumed that for positions occurring on the same day, the existing close occurred before the new open so that the new position gain was realized. For the period from 08/18/09 through today the total portfolio gain (assuming current open positions are flat) is $3973.78 or 39.74%. If on 08/18/09 you would have plunked the entire 10k in SPX and just let it ride you would be up 37.12%. Pretty much a wash. One of the problems was that I had to scale in the portfolio so there was a lot of time spent sitting on idle cash. It took almost a year just to get to 9 open positions. I re-ran the numbers using a 10 position account since that was the highest seen in the numbers I have. Using 10 positions you end up with a 58.43% gain over the same period. Basically just putting more of the idle cash to work. To mitigate the scale-in issue somewhat I looked just at the last 12 months (using the 10 position formula). The total portfolio gain is 31.54% (05/03/2010-05/05/2011). The SPX is up about 13% for the same period. The GLD index is up about 26% for that same period. I guess you could say MrM is huger than gold!
Later

[Deaddog]

Deaddog,

I guess I do have a DRIP set up. Haven't heard that word for a long time. It's more than a share or 2 having been doing this for more than 25 years the accumulation becomes Huge. I've not taken out a dime in all that time.Also most of the big div. payers aren't very volatile and not as risky as the speculative picks. Maybe a little boring but I can live with 10%+ compounded each year. These are long term. My play money buys the others.

---------------billy

I did the same thing for years but now I’m in the withdrawal mode so those dividends and capital gains go towards worthwhile causes like sending the Old Dog to winter in warmer climates than the Frozen North.

[Deaddog]

I'm not a financial manager but Austin Dutton is. However, conventional wisdom dictates that one ought not to put money in equities that they will need in less than 5 years.

Conventional Consmentional: Mr. Market isn’t conventional is he now?

Here’s where I disagree with conventional wisdom. If equities have the best return why wouldn’t you want your money there? I know; I know the market could crash. What law says you have to leave you money in the market when it goes down?

A good portion of my income is derived from my investments. With fixed income being so low and inflation looming I can’t afford to not be in equities.

It may be a little riskier so I control my risk by cutting my losers. The only way the market can take money from me is if I let it. It’s a more hands on approach than most people are comfortable with but who is the best person to manage my money: Me.

This way I can only blame one person if I screw up.

[billyjoe]

Billy:
I take it these are long term holdings. Do you have a DRIP set up with your broker or do you just buy an extra share or 2 when dividends are issued?

For the type of stocks I am picking (Growth & Momo) for the Lazy Dog Portfolio, I’m hoping I don’t hold them long enough to collect a dividend.

The other thing that affects my compounding is that I use my trading profits to finance for my lifestyle. I have been operating with a fixed position and portfolio size, taking my profits out of the portfolio at the end of each month. This tends to make me cut my losses a bit quicker and not let a non performer sit in the portfolio for any length of time.

I’m taking a long hard look at compounding and will attempt to come up with a strategy that allows for both taking a little spending money and adding to the portfolio.

Deaddog,

I guess I do have a DRIP set up. Haven't heard that word for a long time. It's more than a share or 2 having been doing this for more than 25 years the accumulation becomes Huge. I've not taken out a dime in all that time.Also most of the big div. payers aren't very volatile and not as risky as the speculative picks. Maybe a little boring but I can live with 10%+ compounded each year. These are long term. My play money buys the others.

---------------billy

[mrmarket]

Billy:
I take it these are long term holdings. Do you have a DRIP set up with your broker or do you just buy an extra share or 2 when dividends are issued?

For the type of stocks I am picking (Growth & Momo) for the Lazy Dog Portfolio, I’m hoping I don’t hold them long enough to collect a dividend.

The other thing that affects my compounding is that I use my trading profits to finance for my lifestyle. I have been operating with a fixed position and portfolio size, taking my profits out of the portfolio at the end of each month. This tends to make me cut my losses a bit quicker and not let a non performer sit in the portfolio for any length of time.

I’m taking a long hard look at compounding and will attempt to come up with a strategy that allows for both taking a little spending money and adding to the portfolio.

I'm not a financial manager but Austin Dutton is. However, conventional wisdom dictates that one ought not to put money in equities that they will need in less than 5 years.

[mrmarket]

No that requires a skill set I don't have.
I'm still trying to get this stock picking thing down.

When I get to the stage that I can pick more that 4 or 5 winners I'll ask for some help with the Blog. Right now I'm just happy to be pointed in the right direction as far as stock picking goes.

And yes I understand compounding. The only reason my 8 stocks outperform your 14 is that I'm always fully invested. To have something to compare with I have to keep your position size to 1/14th. I know you do better but I have to have some kind of bench mark.

Interesting subject though. I am wondering what the best way to put compounding to work for me.. I'm considering increasing position size (total $ per position) by 20% every time I have a realized gain of 20%.

So if my 8 stock portfolio is worth $80000 and my position size today is $10000 per stock; as soon as I have realized a profit of $16000 (20% of 80k) I will increase my position size to $12000. The question is should I just make new positions the increased size or should I top up all my positions at the same time. I trade with IB so brokerage cost won't be a big influence.

Now you're getting it...reinvesting profits is the way to make your nest egg grow and grow. Take a 15% gain and reinvest it 8 times and see what you get.

[Deaddog]

Deaddog,
Compounding is also helped by reinvesting dividends. I'm up on PM, NJR, HQL, NYB, IDE. And the divs. just make it an added bonus.


---------------billy

Billy:
I take it these are long term holdings. Do you have a DRIP set up with your broker or do you just buy an extra share or 2 when dividends are issued?

For the type of stocks I am picking (Growth & Momo) for the Lazy Dog Portfolio, I’m hoping I don’t hold them long enough to collect a dividend.

The other thing that affects my compounding is that I use my trading profits to finance for my lifestyle. I have been operating with a fixed position and portfolio size, taking my profits out of the portfolio at the end of each month. This tends to make me cut my losses a bit quicker and not let a non performer sit in the portfolio for any length of time.

I’m taking a long hard look at compounding and will attempt to come up with a strategy that allows for both taking a little spending money and adding to the portfolio.

[peanuts]

All your picks are HUGE. I've enjoyed wild success with many of your choices. It's like having Babe Ruth in my lineup.

[billyjoe]

Deaddog,
Compounding is also helped by reinvesting dividends. I'm up on PM, NJR, HQL, NYB, IDE. And the divs. just make it an added bonus.


---------------billy

[Deaddog]

Sounds like we should have deaddogishuge.com

No that requires a skill set I don't have.
I'm still trying to get this stock picking thing down.

When I get to the stage that I can pick more that 4 or 5 winners I'll ask for some help with the Blog. Right now I'm just happy to be pointed in the right direction as far as stock picking goes.

....the magic of compounding maybe escaped your arithmetic?

And yes I understand compounding. The only reason my 8 stocks outperform your 14 is that I'm always fully invested. To have something to compare with I have to keep your position size to 1/14th. I know you do better but I have to have some kind of bench mark.

Interesting subject though. I am wondering what the best way to put compounding to work for me.. I'm considering increasing position size (total $ per position) by 20% every time I have a realized gain of 20%.

So if my 8 stock portfolio is worth $80000 and my position size today is $10000 per stock; as soon as I have realized a profit of $16000 (20% of 80k) I will increase my position size to $12000. The question is should I just make new positions the increased size or should I top up all my positions at the same time. I trade with IB so brokerage cost won't be a big influence.

[mrmarket]

Well it sounds pretty impressive but I’ve been tracking you since last Nov and in that time frame you have had 12 winners. Based on an equal position size with enough spare cash in the account to hold 14 positions the realized gain is 13.32%; pretty damn good; sure beats a savings account.

But that Old Lazy Dog, He started a portfolio with only 8 stock around the same time. Out of 7 pick he only had 5 winners. But you know the realized gain on the portfolio is 14.25%.

Could it be that the number of winners in a row isn’t the number we should be concerned about. I’d rather know how much money my money made for me.

....the magic of compounding maybe escaped your arithmetic?

[mrmarket]

Well it sounds pretty impressive but I’ve been tracking you since last Nov and in that time frame you have had 12 winners. Based on an equal position size with enough spare cash in the account to hold 14 positions the realized gain is 13.32%; pretty damn good; sure beats a savings account.

But that Old Lazy Dog, He started a portfolio with only 8 stock around the same time. Out of 7 pick he only had 5 winners. But you know the realized gain on the portfolio is 14.25%.

Could it be that the number of winners in a row isn’t the number we should be concerned about. I’d rather know how much money my money made for me.

Sounds like we should have deaddogishuge.com

[Deaddog]

Well it sounds pretty impressive but I’ve been tracking you since last Nov and in that time frame you have had 12 winners. Based on an equal position size with enough spare cash in the account to hold 14 positions the realized gain is 13.32%; pretty damn good; sure beats a savings account.

But that Old Lazy Dog, He started a portfolio with only 8 stock around the same time. Out of 7 pick he only had 5 winners. But you know the realized gain on the portfolio is 14.25%.

Could it be that the number of winners in a row isn’t the number we should be concerned about. I’d rather know how much money my money made for me.

[billyjoe]

Of my last 40 picks...I sold 31 for a 15%+ profit. Of my 9 open positions, 6 of them are profitable and 3 are in the red.

That makes 37 out of 40 winners or a winner rate of 93%....how's that?

I was feeling good. Now my 73% sucks! Slowly learning from the Master.

-----------billy