madsinger monthly report (April 2013)

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madsinger monthly report (April 2013)

Postby madsinger » Wed May 01, 2013 5:19 pm

Here is a big fat collection of portfolios, with their April 2013 returns, 2013 YTD return, and annualized returns since 1999, 2003, 2008 and 2010 (14 years 4 months, 10 years 4 months, 5 years 4 months, 3 years 4 months). I broke them into four categories, roughly corresponding to 100/0, 80/20, 60/40, 40/60 stock/bond portfolios, sorted by 10 year Total Return. The 3 fund is 50/30/20 Total Stock/Total Int'l/Total Bond. The s&d is 10 each of VFINX, VIVAX, NAESX, VISVX, VGSIX, 25 VGTSX, 5 VINEX, 20 VBMFX. The coffeehouse is a 60/40 described at The Coffeehouse Investor. The Newsletter portfolios are from a newsletter following Vanguard funds. William Bernstein's "Sheltered Sam" is an all stock portfolio which is 20% VFINX, 25% VIVAX, 5% NAESX, 15% VISVX, 10% VGSIX, 3% VGPMX, 5% each VEURX, VPACX, VEIEX, and 7% VTRIX. The madsinger portfolio is my real-world portfolio, roughly 60/5/3/32 stock/REIT/PM/bond.

-Brad.
Code: Select all
                                   CAGR    CAGR    CAGR    CAGR
                   Apr    YTD      since   since   since   since
                   2013   2013     2010    2008    2003    1999
Hot Hands         2.56%  15.87%   14.18%  -0.24%  11.59%  11.63%
Sheltered Sam     2.28%  11.17%   12.40%   3.44%  10.18%   7.08%
VFINX             1.91%  12.68%   13.59%   3.77%   7.99%   3.64%
                 
Newsletter G      1.88%  13.70%   12.13%   3.68%  10.04%   8.90%
s&d               2.33%   9.20%   11.02%   4.37%   9.86%   7.30%
Newsletter G-IND  1.53%  12.60%   13.63%   3.76%   9.73%   5.55%
3 fund            2.10%   8.56%    9.95%   3.52%   8.86%   5.29%
LS G              1.97%   8.88%   10.63%   2.63%   8.00%   4.52%

Code: Select all
Newsletter CG     2.09%  12.60%   11.78%   4.16%   9.17%   7.25%
Wellington        2.27%   9.48%   11.09%   5.76%   8.88%   7.15%
coffeehouse       1.81%   7.86%   10.92%   5.87%   8.81%   7.10%
STAR              1.97%   7.31%   10.01%   4.82%   8.16%   6.37%
LS MG             1.71%   6.91%    9.60%   3.49%   7.39%   4.91%
                 
Wellesley         1.97%   6.04%   10.99%   7.64%   7.56%   7.06%
Newsletter Inc    1.97%   8.80%   11.04%   5.22%   7.27%   5.20%
LS CG             1.43%   4.85%    8.06%   3.80%   6.40%   4.94%
                 
madsinger         2.04%   7.37%   10.01%   4.13%     
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Re: madsinger monthly report (April 2013)

Postby madsinger » Wed May 01, 2013 5:22 pm

Another volatile, but ultimately positive month for the portfolios.

Int'l and REITs were up strong this month. Another dive for my precious metals fund (down -8.9%). Total Bond fund up almost 1% in a month.

Wishing you all well.
Brad.
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Re: madsinger monthly report (April 2013)

Postby investor » Wed May 01, 2013 6:25 pm

Thanks Brad.
Stodgy Wellington still ticking along. Reminds me of the Energizer rabbit.

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Re: madsinger monthly report (April 2013)

Postby Scooter57 » Wed May 01, 2013 7:24 pm

Thanks for posting these each month! I find it nteresting that the newsletter portfolios outperform the 3 fund portfolio that is so heavily promoted here, some by a goid margin over a long time.

When I searched for info on that newsletter here, I saw many negative posts. They don't seem deserved.
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Re: madsinger monthly report (April 2013)

Postby telemark » Wed May 01, 2013 8:13 pm

What catches my eye is how closely the YTD column matches all the CAGR columns. We've had a year's worth of returns in four months.
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Re: madsinger monthly report (April 2013)

Postby Rob5TCP » Wed May 01, 2013 8:49 pm

Scooter57 wrote:Thanks for posting these each month! I find it nteresting that the newsletter portfolios outperform the 3 fund portfolio that is so heavily promoted here, some by a goid margin over a long time.

When I searched for info on that newsletter here, I saw many negative posts. They don't seem deserved.


The newsletter(s) is having a rather strong 2013. The most recent few months has a very strong effect on the overall performance.
But, that is fleeting. I took two different starting point and had one perform 1/2% point better per year. On the 11th year, I took the lesser
performer have a much better year (9 vs 13%). It then had higher numbers than the one performing 1/2% point better each year.

Even with this strong year, I noticed Welllsely and Wellington performing better than the equivalent newsletter. And the newsletter
being close, with the exception of this year (the difference since 1999 is heavily influenced, as stated, by the last few months.
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Re: madsinger monthly report (April 2013)

Postby BigFoot48 » Wed May 01, 2013 8:51 pm

Every month I look at this (thank you madsinger!) and see how Coffeehouse is doing as I have a bond-heavy version of that, but I always ponder: "Why isn't everyone invested using the Hot Hands approach?" After 13 years of superior results can't one conclude that methodology has some merit? (I read what it was years ago, something about selling the worse performing fund and buying the best, or vis-a-versa, but don't remember the specifics, which is obvious.)
Retired | Two-time Top-10 Diehard S&P500 Picker; Nine-Time Loser
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Re: madsinger monthly report (April 2013)

Postby madsinger » Wed May 01, 2013 10:59 pm

BigFoot48 wrote:Every month I look at this (thank you madsinger!) and see how Coffeehouse is doing as I have a bond-heavy version of that, but I always ponder: "Why isn't everyone invested using the Hot Hands approach?" After 13 years of superior results can't one conclude that methodology has some merit? (I read what it was years ago, something about selling the worse performing fund and buying the best, or vis-a-versa, but don't remember the specifics, which is obvious.)


Thank you for your kind words.

As for just using "Hot Hands". It is a "stock only" portfolio, which may or may not be appropriate as a whole portfolio. While the Hot Hand approach performed spectacularly well from 2000-2007 (using International Explorer four years in a row during that stretch), it can also underperform for long periods as well. For the past 5 years 4 months, the Hot Hand strategy has had a negative return (a little over -1% total), the S&P 500 fund is up about 22% over the same period.

For me, the Hot Hands is simply not diversified enough as an investment portfolio.

(Oh, as I re-read your post...) The "Hot Hands" strategy is buying the "top performing diversified stock fund" from the past calendar year and holding for one year. It's really not intended to be a "portfolio", but rather an observation that this "strategy" seems to have done well. Will it continue to do so? I have no idea.

-Brad.
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Re: madsinger monthly report (April 2013)

Postby madsinger » Wed May 01, 2013 11:10 pm

Scooter57 wrote:Thanks for posting these each month! I find it nteresting that the newsletter portfolios outperform the 3 fund portfolio that is so heavily promoted here, some by a goid margin over a long time.

When I searched for info on that newsletter here, I saw many negative posts. They don't seem deserved.


I do not "promote" nor "denounce" the newsletter. I am not a subscriber myself. I do think that many investors would be much better off if they followed these newsletter portfolios rather than invested through most full service brokers or "financial planners". I also guess (no data to back it up...) that most boglehead readers do just fine.

For some perspective, the newsletter portfolios tend to be more stock heavy then other portfolios in their "category". In the year 2002, the newsletter portfolios underperformed these categories by quite a bit (a very bad year for stocks), but because the 10 year "look back" dropped 2002 starting in 2013, the 10 year returns jumped considerably.

I just try to unemotionally show the data. You may decide whether this is significant yourself.

-Brad.
Last edited by madsinger on Wed May 01, 2013 11:44 pm, edited 1 time in total.
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Re: madsinger monthly report (April 2013)

Postby BigFoot48 » Wed May 01, 2013 11:34 pm

Thank you for that insight into and explanation of Hot Hands. Clearly not something a Boglehead would want to use, but a good illustration of why any portfolio structure needs to be examined year by year, down years and up years, and in comparison to market indexes.

Think I will retire my lust for Hot Hands and cuttle up with Coffeehouse for a few more years until I finally evolve into Taylor's Three Fund for the duration.
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Re: madsinger monthly report (April 2013)

Postby Scooter57 » Thu May 02, 2013 9:44 am

Brad,

When I wrote "here" referring to people badmouthing the newsletter, I meant the Boglehead board as a whole, not your threads. Sorry if that was confusing!

Any of those portfolios would have beat the portfolio put together by the obscenely expensive "wealth managers" who managed my parent's assets while they were still alive. For that matter, an All CD portfolio would have trounced it. Or a Christmas Club account at the local bank.
Last edited by Scooter57 on Thu May 02, 2013 2:58 pm, edited 1 time in total.
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Re: madsinger monthly report (April 2013)

Postby madsinger » Thu May 02, 2013 12:02 pm

Scooter57 wrote:Brad,
When I wrote "here" referring to people badmouthing the newsletter, I meant the Boglehead board as a whole, not your threads. Sorry if that was confusing!


No apology necessary! It was clear to me what you wrote, and I agree with it.

I can feel your frustration as well...watching my parents and in-laws getting the "financial help" treatment has be very hard.

-Brad.
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Re: madsinger monthly report (April 2013)

Postby Imbros » Thu May 02, 2013 3:10 pm

I really like index funds and simplicity, and I particularly like the allocation of LS Growth fund. But when I look at the 10 year return of LS G and Wellington (two funds that make up the large portion of my portfolio together), I just can't figure out the cause of significant performance difference. It is over 2.5%!
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Re: madsinger monthly report (April 2013)

Postby jjustice » Thu May 02, 2013 3:27 pm

Like Imbros, I compare LS G to Wellington. I use Wellington, but keep thinking about including LS G. Wellington beats LS G in all 6 periods. Maybe I need to just forget about LS G.
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Re: madsinger monthly report (April 2013)

Postby EmergDoc » Thu May 02, 2013 11:45 pm

Tough year for the goldbugs. Impressive performance for the Weinermeister this year. Congrats to him.

Mostly I just compare my portfolio to Madsingers and either rejoice or get depressed depending on the results. (My portfolio generally tracks the S&D option.)
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Re: madsinger monthly report (April 2013)

Postby Wagnerjb » Fri May 03, 2013 8:45 am

madsinger wrote:Thank you for your kind words.

As for just using "Hot Hands". It is a "stock only" portfolio, which may or may not be appropriate as a whole portfolio. While the Hot Hand approach performed spectacularly well from 2000-2007 (using International Explorer four years in a row during that stretch), it can also underperform for long periods as well. For the past 5 years 4 months, the Hot Hand strategy has had a negative return (a little over -1% total), the S&P 500 fund is up about 22% over the same period.

For me, the Hot Hands is simply not diversified enough as an investment portfolio.

(Oh, as I re-read your post...) The "Hot Hands" strategy is buying the "top performing diversified stock fund" from the past calendar year and holding for one year. It's really not intended to be a "portfolio", but rather an observation that this "strategy" seems to have done well. Will it continue to do so? I have no idea.

-Brad.


Brad: I know you were around on the old Board when the meits of the Hot Hands strategy was debated with intensity. However, you will note that on this board, the debate is over and nobody cares about the strategy. I would like to offer a constructive suggestion that you change the location of this strategy in your line-up. By placing it first (and near VFINX) you give unwarranted exposure to the strategy. I would prefer to see you remove the strategy from a list of intelligent portfolios, but I can understand if you want to keep it there for consistency. However, will you consider placing it in a much lower profile in the list?

The question you just fielded on this strategy is an example of the confusion caused by the positioning of the strategy.

Thanks.
Andy
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Re: madsinger monthly report (April 2013)

Postby Rob5TCP » Fri May 03, 2013 10:23 am

Keep up the good work. I remind myself of your postings every time I get another email telling me how to get 100% better return than the
average Vanguard investor.
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Re: madsinger monthly report (April 2013)

Postby Bounca » Fri May 03, 2013 11:18 am

Brad, another big thank you from myself. It has been awhile since I showed my appreciation. You realize that you have been at this since at least October of 2007. Looking at my excel records, that is the date I literally started cutting/pasting your data in a file along with my retirement folios. That’s approaching seven years now! Every month since then I’ve been diligently doing this. The portfolio data you post serves as a quick benchmark to compare against mine. I wanted express my gratitude openly on the forum rather than a PM. :sharebeer

You win the Cal Ripken award for forum contribution.
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