You know how on Facebook most people will only post positive messages and status updates, and tag themselves only in happy photos? There are even Facebook groups dedicated to posting only positive things, in order to keep up the facade of a sterilized perfect life. We’ve all got that one friend who tosses up the passive aggressive statuses, or constantly complains – but here in 2013, it’s pretty rare.
So it is with investors. People like to hide their losses and pump their gains. As a writer on this quite-public site, I wanted to buck that trend – and tell you my individual stock investment performance over the last 13 months. I underperformed the S&P 500 – and Friday put an exclamation point on it (2 percentage point under-performance!). Here’s the story!
PK’s Individual Stocks
For those of you who don’t hang on my every word (so, everyone except the NSA), I’ve had a funky relationship with individual stocks. Even though I’ve been a long time investor, I didn’t buy stocks on their own until 3/3/09. Before that I had participated in an investment game (UpDown.com) for a few years, and racked up an absurd track record (109% annual returns, as of today). I had always been a mutual fund true believer – the belief was that even while I devoured investment information, it was easier for me to use mutual funds.
Even with my ‘virtual success’ on UpDown, I recognize the truism that it’s better to be lucky than good – so out of my security investment portfolio, my individual stocks are only 1/6 of the whole… the rest are in mutual funds where I stay relatively hands off (mainly index funds).
However, since last year I did the math on whether I was actually beating the market (I was), I had to run it again. The results? I’m still beating the S&P since 3/3/09, but I’m up by less than I was last year. That can only mean one thing: since I last tested my portfolio, I underperformed the S&P 500:
3/3/09 – 5/4/2012:
My return (annualized): 29.93%
S&P 500 Return (annualized): 26.37%
3/3/09 – 6/7/2013:
My return (annualized): 25.61%
S&P 500 Return (annualized): 24.96%
And if you’re interested in when I made my sales and buys:
What Went Right and Wrong? An Introspective
What went right is an easy one – I still own PDLI, which has had quite a run (and still pays a hefty dividend). I owned AGP – Amerigroup, Corp – when it sold.
Still, the higher waters were drained by two stocks: TTM, Tata Motors – which I had purchased right before my contest entry in the Financial Uproar stock picking contest. But the big drain? APA – Apache Corporation – which has done essentially nothing price-wise since I bought it. Doing nothing in a bull market? Yeah – that’s one way to get underperformance.
Tata? I’m still a believer. Apache? I’ve soured a bit – odds are you won’t see it in the 2014 update!
Note that I’m not too interested in giving a real time update on my buys and sells, nor do I recommend you try to emulate my portfolio (why would you anyway? I underperformed the S&P 500 last year!). Why have that philosophy? Once someone buys due to your recommendation, you have an implied responsibility to warn them about when to sell. That’s why stock tips bother me – buying is the easy part… getting out is the challenge. So, yeah, do your own research.
So Now What?
Should I divest my modest collection of stocks for mutual funds, declaring victory by beating the S&P 500 since 3/3/2009? No, I’m going to keep it going. It’s up to you to decide – was I previously lucky? Was I good? Has my luck run out? Has my skill ran out? Should I sell all 1/6 of my security portfolio and buy more mutual funds?