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I think I started a thread with this title some time ago, but now I'll start for real. A paper port; following $$$MrMarket$$$. Disclaimer: follow this port with real money at your own risk, not mine!
How good is $$$MrMarket$$$ really? He boasts being the best stock picker in the world and beating the SP500 again and again. Now it is hard to disagree with a man with biceps like $$$MrMarket$$$'s. We'll leave that for other, more foolhardy persons. No, we're just going to follow His Hugeness. We do not strive to emulate him perfectly; we know our limits. So when we are going to invest in his picks, we are going to keep a healthy cash reserve of about 1/3 of the total portfolio. So for a full $$$MrMarket$$$ portfolio of 13 - 14 stocks, each position starting with $1,000, we start with $20,000 cash. This cash reserve also serves to rebalance. We start with 20 slots. Suppose 10 slots are full with $$$MrMarket$$$ picks. The 11th pick then gets 1/10 of the cash reserve, The 12th 1/9th of what remains, etc. You get the picture. BTW, $$$MrMarket$$$ doesn't rebalance, as far as I know. Why should he? He's $$$MrMarket$$$.
Isn't $1,000 a bit puny? Well, it is a paper port, so who cares. Besides, at this position size our $10 commission per trade is going to eat a sizeable chunk of our profits. Will $$$MrMarket$$$ be able to beat that disadvantage? You bet. And we are following $$$MrMarket$$$, so we won't buy at the price $$$MrMarket$$$ buys, but at the close of the day.
OK, so where does that get us? Our port starts 9/29/2003, when the first $$$MrMarket$$$ pick hit this board. In the meantime, $$$MrMarket$$$ scored 15 winners. Currently, there are 9 stocks in the Following $$$MrMarket$$$ portfolio: CBK, BEL, GGI, HAR, SSNC, SAFM, AACE, OFG and SPF.
The port stands at 21,288.72 from the initial 20,000, or a 6.44% gain. How well did the S&P500 and the Nasdaq100 in that time? They scored gains of 13.15% and 11.47% respectively. Is that better? No, worse! Remember, we started with an empty port, and that port has been slow to fill. We are now at about 50%, and still dragging along more cash than we planned. On average, the port held 6.3 stocks; about half of the planned total and about one third of the total number of slots (cash reserve included). The returns for SPY and QQQ are for a fully invested portfolio. Divide those returns by 3 and you get 4.4% and 3.8% respectively. Order has been restored.
Not that I don't expect this port to outpace both SPY and QQQ! But in this starting phase the Following $$$MrMarket$$$ port is even more handicapped than in full swing, so it is good to see things in perspective.
Go $$$MrMarket$$$ !!!
How good is $$$MrMarket$$$ really? He boasts being the best stock picker in the world and beating the SP500 again and again. Now it is hard to disagree with a man with biceps like $$$MrMarket$$$'s. We'll leave that for other, more foolhardy persons. No, we're just going to follow His Hugeness. We do not strive to emulate him perfectly; we know our limits. So when we are going to invest in his picks, we are going to keep a healthy cash reserve of about 1/3 of the total portfolio. So for a full $$$MrMarket$$$ portfolio of 13 - 14 stocks, each position starting with $1,000, we start with $20,000 cash. This cash reserve also serves to rebalance. We start with 20 slots. Suppose 10 slots are full with $$$MrMarket$$$ picks. The 11th pick then gets 1/10 of the cash reserve, The 12th 1/9th of what remains, etc. You get the picture. BTW, $$$MrMarket$$$ doesn't rebalance, as far as I know. Why should he? He's $$$MrMarket$$$.
Isn't $1,000 a bit puny? Well, it is a paper port, so who cares. Besides, at this position size our $10 commission per trade is going to eat a sizeable chunk of our profits. Will $$$MrMarket$$$ be able to beat that disadvantage? You bet. And we are following $$$MrMarket$$$, so we won't buy at the price $$$MrMarket$$$ buys, but at the close of the day.
OK, so where does that get us? Our port starts 9/29/2003, when the first $$$MrMarket$$$ pick hit this board. In the meantime, $$$MrMarket$$$ scored 15 winners. Currently, there are 9 stocks in the Following $$$MrMarket$$$ portfolio: CBK, BEL, GGI, HAR, SSNC, SAFM, AACE, OFG and SPF.
The port stands at 21,288.72 from the initial 20,000, or a 6.44% gain. How well did the S&P500 and the Nasdaq100 in that time? They scored gains of 13.15% and 11.47% respectively. Is that better? No, worse! Remember, we started with an empty port, and that port has been slow to fill. We are now at about 50%, and still dragging along more cash than we planned. On average, the port held 6.3 stocks; about half of the planned total and about one third of the total number of slots (cash reserve included). The returns for SPY and QQQ are for a fully invested portfolio. Divide those returns by 3 and you get 4.4% and 3.8% respectively. Order has been restored.
Not that I don't expect this port to outpace both SPY and QQQ! But in this starting phase the Following $$$MrMarket$$$ port is even more handicapped than in full swing, so it is good to see things in perspective.
Go $$$MrMarket$$$ !!!
I think I made some error last week in IWM, because IWM dropped 2% for the week. So the FMM port isn't really doing too bad, compared to the indices.
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