2014 and 2015 Portfolio Reviews
Still Kicking Mr. Markets Ass
The above quote from Benjamin Graham is one of my favorites.
It means in the short-term the market is driven by emotion and psychology more than anything. But in the long-term the market - and individual stocks - get judged on how well they've operated and grown over time.
This is great news for us long-term oriented value investors.
If we can find a few great companies at cheap to fair prices and hold them for the long-term, we'll have great returns over time. Why? Because...
"Time is the friend of the wonderful company, the enemy of the mediocre." Warren Buffett
With this as a backdrop, below are the 2014 and 2015 portfolio reviews for all companies I've recommended.
I realized when doing my 2015 portfolio review that I didn't do a review of 2014. So I've included both 2014 and 2015 portfolio reviews in this post.
I didn't do much in 2014 because I started a business at the beginning of the year. Didn't buy or sell anything for almost a full year. And got hired by the investment newsletter in September 2014.
These are why I didn't write a portfolio review for 2014 here.
Below are 2014 portfolio results.
- CMT gained 2% in 2014.
- VIVHY gained 3% in 2014 before I sold my position on June 4th 2014 for a total gain of 50% in less than two years.
- BOBS lost 15.4% during 2014 before getting bought on May 2015 for a total 129% gain. I'll get back to this in the 2015 section.
- PARF lost 21.7% in 2014.
- Cash earned 0% in 2014. And this was my biggest position after selling and getting bought out in several positions.
Average gain in 2014 was 3% after including 50% realized gain from sold Vivendi position.
For context on the following numbers please read the 2012 and 2013 portfolio reviews linked above.
Cumulative average gain for my stock picks at the end of three years is 101.1%. Or an average gain of 33.7% each year. (Not a compounded gain).
Cumulative average three-year portfolio gain equals 64.9%. Or 22.6% each year over the last three years after accounting for cash position. Cash made up more than 50% of portfolio for most of 2013 and 2014 after selling several positions.
Not a great year by earlier years standards but I expected a drop in results after huge years in 2012 and 2013. I'll explain why at the end of this post.
For now let's got to 2015.
I included two picks I made while working at the investment newsletter in 2015's results. The spreadsheet is below.
I've blocked out the names of the picks above for non Press On Research subscribers. If you're a Press On Research subscriber I'm sending an unedited version of the spreadsheet your way.
Press On Research picks gained on average 5% as of the end of 2015.
Like in 2014, 2015 wasn't a great year for my picks either. Even with this down year we still beat most investors. Almost 70% of investors lost money in 2015. And unlike the investors who lost money we continued to grow our money.
As noted above I sold out of BOBS after it got bought out in May 2015 for a total gain of 129%.
Cumulative average stock gains for my stock picks at the end of four years are 168.1%. (Not a compounded gain) Or an average gain every year for four years of 42%.
Cumulative average four-year portfolio gain equals 109.6% after accounting for cash position. Or an average gain every year for four years of 27.4%. (Not a compounded gain)
Cash made up more than 50% of portfolios for most of 2013, 2014, and 2015 after multiple sales of companies.
What does this mean? That we've kicked Mr. Market's ass over the last four years.
What's Mr. Market Done Since 2012?
From the beginning of 2012 to the end of 2015 the Russell 3000 index gained 38%. Or an average gain of 12.7% every year. This index includes the 3,000 largest companies listed on US stock markets. This is the closest thing to a micro cap index.
This means my stock picks have crushed the market by 130.1 total percentage points. And the whole portfolio beat the market by 71.6 total percentage points since the beginning of 2012. Even when over the last three plus years the portfolios I manage had more than 50% cash positions earning zero.
How big of a difference is this over time?
Let's say you invested $100,000 in my stock picks at the beginning of 2012 until December 31st 2015. At the end of four years - with no new additions in money - your money would have grown from $100,000 to $406,587.
If you followed the same above, but instead invested 50%+ of your portfolio in cash like I did, your $100,000 would turn into $263,438 at the end of the last four years.
The Russell 3000 index would have turned your $100,000 into $161,323 after the last four years.
I could have made you $102,115 and $245,264 in excess of what the market would have.
I started posting my results publicly in 2012 because this is when I began doing "real", in-depth, investment research and analysis instead of speculating.
Results have been great thus far... Better than I expected... But there's still a lot of work and improvement to do as seen from the last two years subpar results.
As expected my average gain per year over the last two years dropped a lot.
With the market's continued rise I've sold or gotten bought out of most positions. At one point the portfolios I managed held only two companies. And until late 2014 I wasn't able to deploy any of the cash towards better use.
At its height after multiple sales of companies cash in the portfolios I manage was 85% of the portfolios. This of course means lower returns.
I also knew I wasn't going to repeat the huge gains earned in 2013 due to the markets ever rising valuations. This made it harder to find great and cheap companies. In 2012 and 2013 the market was still fairly to a bit overvalued making it easier to find cheap companies then.
No matter what the market continues to do, over time I'm confident we'll continue to beat the market by a wide margin. And continue to compound our wealth over time.
But this isn't all we've done in the last few years...
Since Value Investing Journey started on a free WordPress site until now on a paid WordPress site there have been more than 200,000 total views on the joint sites.
And after coming back from the investment newsletter at the beginning of 2015 there have been a lot of changes and improvements on the blog.
The major change being the blog is now dedicated towards helping others instead of myself.
Some other highlights from 2015 are below.
- Started Press On Research.
- Grew from zero subscribers to more than 320 between Value Investing Journey and Press On Research in only nine months since April 2015.
- Given away more than $400 worth of books and prizes to subscribers.
- Next prize pool is already over $200 worth of books when that's given away.
- Value Investing Journey got views from 142 countries in 2015 alone.
- Grew to 720 followers on Twitter in 2015.
- Answered 44 questions on Quora in 2015.
- Grew to 790 connections on LinkedIn.
- And we helped Michaella and her family in the Philippines survive and thrive.
Here's looking forward to an even bigger and better 2016.
Thanks so much for everyone who's been a part of this journey so far. And please let me know how I can continue to improve things going forward in the comments below.
P.S. And remember if you want access to my exclusive stock picks that are crushing the market over the last four years you need to subscribe to Press On Research. And free Value Investing Journey subscribers get a 50% discount on a year-long Press On Research subscription.