The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Mechanical Investing

URL:  http://boards.fool.com/so-as-a-guy-new-to-the-board-this-is-deflating-30690968.aspx

Subject:  Re: maybe done Date:  5/18/2013  4:54 PM
Author:  hiphop Number:  243161 of 251808

So as a guy new to the board this is deflating. If the vets are saying they are bailing out, does it make sense for a new guy to jump in? If so, then what?

As yet another one of the board members who has been around for a while (1997). I was around at the time that we were photocopying old VL index pages out of the Stanford business school library (and nearly got my library privileges yanked for trying to get to the CRSP database). I keep almost all of my investments in some form of MI. I have suffered through 50% draw downs on my portfolio three or four times now, and it has always come back. Sometimes it has taken longer than I had hoped.

I have made mistakes (mostly when being emotional, like exiting the market on Dec. 31 because our political class were playing chicken with each other). Mostly, I have learned to be sanguine about MI and just keep on keeping on.

1999 through early 2000 was an aberration, to the upside, but if I look across my years of doing MI and ignore that pop, the growth has been fairly noisy exponential growth. I have beat the market over the long term, underperformed it during some years, outperformed it during others.

My screens have changed, albeit slowly, and I have finally added some timing to my portfolio during the past two years. I often think that the timing hurts rather than helps (mostly I use the NAHL), but I understand that when it helps, it helps much more than it hurts when it is wrong.

I add options to the mix (both 6/3 long, and Cohen style puts) and I use MI to give me my candidates to comb through.

Since May 1997 through yesterday, my portfolio has had a CAGR of 15.44%, during that same time frame, the SP500 has had a return of 6.08% with dividends reinvested.

Since May 2010 through yesterday, my portfolio has had a CAGR of 13.59%, during that same time frame, the SP500 has had a return of 15.025% with dividends reinvested. Without the dividends, it was 12.864%.

Since May 2012 through yesterday, my portfolio has had a CAGR of 37.54%, during that same time frame, the SP500 has had a return of 22.47% with dividends reinvested.

I'm OK with years of underperformance, especially as I don't know which index (SP500, Nasdaq, Dow) is going to be the best one to invest in ahead of time.

The have been some minor additions and withdraws along the way, so my numbers are probably not entirely accurate (though they are pretty close). But looking back on my 16 year history with MI, I definitely have learned a great deal about investing, about myself, and learned that sometimes I should pay attention to more than just the ticker symbol.

I'm an engineer, and MI jibes well with my intellectual background. I have a day job, so I don't need to live off of the returns quite yet, though hopefully it will allow my kids to have a decent education. All in all, it has worked for me.

--Gabriel
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us