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No. of Recommendations: 8
3/5/2012

Hi Fools,

This weekend puts another year in the books for me as I purchased my first individual stock on 3/5/2004. Less than a few weeks later, feeling a bit overwhelmed after jumping in over my head, I landed here at the Motley Fool and my life has forever been changed. I can’t imagine life without this community, or what my finances would look like for that matter!

I think most of you are somewhat familiar with me. I have been an All Access member who originally started with just HG/SA subscriptions for my early years as mpfd33. I believe Tom Gardner was the first person to ever make me a “Favorite Fool” and I remember that extra boost of confidence that and his post gave me:

From an old closed HG board 1/2005

mpfd,

That about sums up why I come to work every day. Your enthusiasm, adaptability, sense of enterprise, desire to help others, curiosity, and interest in learning more play perfectly into the spirit of Hidden Gems. I look forward to following your progress in years to come. Be assured that I will be working hard (and Foolishly) on your behalf.

Belled-cap tip,

Tom Gardner


Awesome that!

Good grief though, at first it is amusing to go back and read some of your first posts. Even more true when you are completely green to the stock market. But warning, after reading a while I started to wince and then cringe. Nitwit! Well I can honestly say I progressed from the brain of a turkey after 8 years to the equivalence to the brain of two turkeys (no offense to my fine feathered tasty friends). Or is the plural “turki”? heeeeheee

I also have become a member of Pro and MFO. I have found that with all the reading I do with the multitude of services and boards (and the 51 stocks I currently hold), I am left with less time to post anything that can be considered of worth. Now there are just so many of you I respect, admire, learn from and think of as friend.

My how time flies Fools. It just flies.

Stocks & Performance

I always find it kind of interesting to look at other Fools top holdings. Mine have not changed too much but my winners have grown. First I am going to list my stocks by newsletter:



By Service
………………………………………………………………………………………………

RB 17
SA 11
IV 8
GG 7
HG 6
II 5
MDP 14
PRO 4


I am not surprised by the number of RB businesses I have (in fact I think I tried on about 30 of them). I consider myself high risk tolerant and David G’s exciting picks draw me in like bees to honey (in SA too). I feel more comfortable in a down market than I do when my portfolio is soaring as it is today.
 


TOP STOCKS BY % AVE ANN. RETURN
% %
1 BWLD 10.4 32.5
2 AAPL 9.5 59.0
3 DIS 6.7 16.5
4 CMG 4.7 68.5
5 ZIP 4.0 -16.4
6 JNJ 3.9 6.6
7 GOOG 3.7 9.0
8 YONG 3.0 -33.8
9 DLB 2.9 5.5
10 SBUX 2.6 11.1
11 NUAN 2.5 33.0
12 NOV 2.4 69.2
13 MAKO 2.3 112.4
14 EXC 2.3 3.5
15 SSW 2.3 25.9
16 HAS 2.1 17.0
17 DNR 2.0 28.8
----------------------------------------------------
67.3 AVE ANN RET 26%
REMAINING STOCKS:
34 32.7 AVE ANN RET -0.03%
----------------------------------------------------------
51 100 TOTAL 17.70% *** (SP 500=2.3%)**



Well it certainly shows my top 17 positions (those over 2% threshold) are doing the heavy work. The annual returns are time waited for each stock for their own purchase date per Quicken (with a MAKO held 1.5 years compared to a BWLD held 7.5 years). I use Quicken and Google Finance for most of my needs and find it pretty reliable. The SP 500 2.3% average annual return is based on its 8-year ago starting price of 1156.86 on 3/5/2004.

A few things to note:
I traded in and out of small positions like Tom E. somewhat and later used different option strategies to reduce my effective cost-basis on a number of my winners.
*My BWLD shares can go to zero and I would have a 7k gain still. I think my shares have about a positive $34 basis in that way.
* Ditto for CMG bought originally in the $40s.
* AAPL bought at $80 and have about a $6 cost-basis (plus 8700% ?…lol)
*All 51 of my businesses are from the TMF universe. AEO is the lone former TMF stock I still hold.
*AAPL is now part of 4 TMF newsletter portfolios but I actually bought AAPL before any of those services did. (Hey, I told you I progressed to 2 brains of a turkey!)

Anyway, using those examples…it sounds great but geez, I still wish I had the shares of CMG and AAPL that I traded to set up those free plus positions back in my portfolio. I guess I shouldn’t wine though.

Next is my portfolio’s running 8-year simple return.
Basically my portfolio total value/net inflows – 1 at March 4 of each year.


MY SIMPLE RETURN

3/5/2004 TO: ME SP 500 vs SP 500
-----------------------------------------------------------
3/4/2005 AT YEAR 1 24.95% 5.64% 19.31%
3/4/2006 AT YEAR 2 31.88% 11.27% 20.61%
3/4/2007 AT YEAR 3 36.59% 19.91% 16.68%
3/4/2008 AT YEAR 4 8.89% 14.69% -5.80% *****
3/4/2009 AT YEAR 5 -31.80% -38.38% 6.58%
3/4/2010 AT YEAR 6 39.61% -2.93% 42.54% $$$$$$
3/4/2011 AT YEAR 7 75.43% 14.20% 61.23%
-----------------------------------------------------------------------
3/4/2012 AT YEAR 8 87.52% 18.39% 69.13%
==========================================================


I guess this is not totally an apples to apples comparison because I am constantly adding cash and sometimes taking a withdrawal in my portfolio. The SP 500 is measured here by its starting point 8 years ago, as if I invested all on that day.

It’s still nice to see the positives measured here and I only was losing to the market at the end of year 4.
*From the end of YR 3 to the end of YR 5 my portfolio got crushed to the tune of -68%! My gains went from my record high plus $42k at DOW 14000 to negative $42k at the bottom. An 84k swing! That is tough on a portfolio barley at 6 digits to start. I held my nose and started adding funds by this point. I bought beaten up businesses and left others alone. I really sold almost nothing in those down years.
*In 1 year’s time by the end of YR 6, my portfolio gained back 72% and finished with 36k more value than the year before…all while I withdrew 33k to buy a new truck (cash for clunkers, couldn’t resist. My old Explorer was in need of a mercy killing).
*Today, at DOW 13000, my portfolio has double the record gain I had at DOW 14000 in 2007!!!

Here is a look at the same results using average annual returns:



3/5/2004 TO: ME SP 500 vs SP 500
-------------------------------------------------------
3/4/2005 AT YEAR 1 34.06% 5.66% 28.40%
3/4/2006 AT YEAR 2 17.09% 5.49% 11.60%
3/4/2007 AT YEAR 3 13.81% 6.24% 7.57%
3/4/2008 AT YEAR 4 4.39% 3.49% 0.90%
3/4/2009 AT YEAR 5 -9.40% -9.22% -0.18%
3/4/2010 AT YEAR 6 6.19% -0.48% 6.67%
3/4/2011 AT YEAR 7 9.70% 1.92% 7.78%
--------------------------------------------------------
3/4/2012 AT YEAR 8 9.53% 2.13% 7.40%
=========================================================


Measuring this way shows the market just edging me in YR 5. I will take 9.5% a year any day but I aim to hit double digits. So far, funds-in have near doubled their value in 8 years time.

The last results I look at is what I have done using MFO and Options. I’m near the 2.5-year mark since using my first option strategy and becoming an MFO member. It has been quite the experience and I have really enjoyed learning the strategies. I have done pretty well so far.

My results:


Accuracy:

....................................W......L............%

Written Puts:
Trades.............................196------13---------93.8
Contracts..........................219------31---------87.6

Written Calls:
Trades……............................58-------7--------89.2
Contracts...........................66------13--------83.5

Long Calls..........................4------13---------23.5

Contracts Assigned & Sold/Called....7-------8---------46.7

Total Trades.......................250-------33-------88.7
Total by Contracts.................289-------57-------83.5

Returns
.................Yield....Days Held..Annualized.....Ave.Premium


Written Puts………….1.98%-----69.98-------10.35%----------$0.79
Written Calls…………1.73%-----66.26--------9.51%----------$0.56
Total Writes………….1.94%------69.20------10.22%----------$0.74

Long Calls……………(-4.15)%----203.1----(-95.6%)

Shares Assigned & Sold/Called Away……(-14.26%)


The written put has been the favorite statedgy and I have written for lower premiums than is recommended by MFO. I don’t worry too much about that as my goal here is to mainly generate monthly income to supplement the loveliest mrs. mpfd and my salary. After 29 months I still am averaging just south of $600 a month, which is a tad higher than $130 a week. The sale of a put assign TZOO at a covered call loss really knocked me down from last years $800 a month. Still, love the option weapon in the war chest!


So far income booked from options has accounted for about 21% of my total gains, both realized and on paper. One business to note is Amazon. It is my 5th best realized gainer and I have never owned a share.

Lessons:

This is it Fools as this is getting tediously long and probably a real bore. I have no new lessons learned that are really much different than the lessons mentioned in any of my earlier reviews. I hope no Fools took offense to the few references I made to actual $ amounts.

I still believe patience is a big take-away. Patience can help eliminate so many big mistakes I made early on. Big early mistakes can sour you on investing if you let it or you lose your savings. I think I made about every one in the book! I have been truly lucky to prosper in spite of my repeated attempts to decimate my portfolio! I never lost my faith and now feel more at home when my portfolio is in the cr**per. I have always enjoyed these endeavors, through all the ups and downs and I have had some wild swings.

I try to remember not to chase a business I missed (WPRT) because something else will come around soon enough. I try to add at better value points even if it means buying “up” or to add if I feel confident in the long-term story.

I still wish I didn’t trim any of my flowers…but don’t we all.

Anyhow, I can’t say how much TMF and this Foolish community means to me. So many of you have helped me tremendously. I do not fear Market downturns or crashes. I exploit them. This is my favorite adult hobby. I loved it as much when I was catching my lunch as I do today slapping the Market (heeeeheeee).

TMF has educated, amused and enriched me far beyond all my expectations. I hope every one of you has success.

Stay Foolish and enjoy life!

best,

mpfd
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