madsinger monthly report (January 2013)

[madsinger]

Here is a big fat collection of portfolios, with their January 2013 returns, 2013 YTD return, and annualized returns since 1999, 2003, 2008 and 2010 (14 years 1 month, 10 years 1 month, 5 years 1 month, 3 years 1 month). 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.

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                                   CAGR    CAGR    CAGR    CAGR
                   Jan     YTD     since   since   since   since
                   2013    2013    2010    2008    2003    1999
Hot Hands         7.21%   7.21%   12.54%  -1.76%  11.03%  11.23%
Sheltered Sam     4.92%   4.92%   11.36%   2.43%   9.81%   6.77%
VFINX             5.18%   5.18%   12.23%   2.56%   7.46%   3.20%
                 
s&d               3.75%   3.75%   10.12%   3.54%   9.56%   7.04%
Newsletter G      5.80%   5.80%   10.56%   2.40%   9.51%   8.50%
Newsletter G-IND  5.80%   5.80%   12.52%   2.68%   9.30%   5.18%
3 fund            3.61%   3.61%    9.13%   2.74%   8.58%   5.03%
LS G              3.73%   3.73%    9.80%   1.78%   7.69%   4.25%


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Newsletter CG     5.10%   5.10%   10.30%   2.96%   8.66%   6.86%
coffeehouse       2.86%   2.86%   10.14%   5.18%   8.52%   6.87%
Wellington        3.52%   3.52%   10.03%   4.89%   8.50%   6.86%
STAR              3.03%   3.03%    9.41%   4.22%   7.94%   6.18%
LS MG             2.68%   2.68%    8.98%   2.84%   7.15%   4.69%
                 
Wellesley         1.45%   1.45%   10.34%   7.09%   7.29%   6.85%
Newsletter Inc    3.00%   3.00%   10.02%   4.35%   6.87%   4.98%
LS CG             1.53%   1.53%    7.61%   3.33%   6.23%   4.79%
                 
madsinger         3.60%   3.60%    9.59%   3.61%     



[madsinger]

US stocks had a big month, up 5% to 7% for the month! International had a big range: Europe 5%, Pacific 3%, EM less than 1%. Bonds down a little. PM down over -3%.

I rebalanced my portfolio right at the beginning of the month and moved my bond allocation up from 31% to 32% (which is less than 31% by the end of the month). Feeling "rich" with the big jump in January...and starting to wonder if I should rebalance again so soon! (Haven't hit my limits, so I'm staying the course).

I hope you all enjoyed a good month, and kept your wits about you among all of the enthusiasm!

-Brad.

[midareff]

Thanks for putting in the time and work Brad.

[Norris]

I hope you all enjoyed a good month, and kept your wits about you among all of the enthusiasm!

-Brad.

I had a good month and kept my wits about me, at least from an investing standpoint

Thanks, madsinger, for your report!

Norris

[MariaT]

Thanks again, Brad.

Warm regards,
Maria

[bogleblitz]

, roughly 60/5/3/32 stock/REIT/PM/bond.

What does PM mean?

How do I generate similar reports for myself? I have vanguard and fidelity accounts and they only give me "your total YTD is 3.3%"

[madsinger]

, roughly 60/5/3/32 stock/REIT/PM/bond.

What does PM mean?

How do I generate similar reports for myself? I have vanguard and fidelity accounts and they only give me "your total YTD is 3.3%"

PM is "precious metals", and more specifically, Vanguard Precious Metals and Mining fund (VGPMX).

What report are you interested in creating? I do this by downloading the YTD returns each month for each fund in these portfolios into an Excel spreadsheet and computing the returns from there.

-Brad.

[bogleblitz]

My portfolio is most similar to s&d. I'm interested in creating in excel as well.
Do you have a sample excel file or google docs file to share?
Thanks

[investor]

Thanks Brad, always appreciate.
Hot Hands is looking good.

investor

[johnep]

Thanks. What is AA of Hot Hands?

[runner9]

I track my returns using the XIRR feature in Excel as detailed here: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=107964

My slice and dice had returns per fund of 3 to 7 percent.

[spanky123]

Thanks. What is AA of Hot Hands?

The "Hot Hands" method was developed by Dan Wiener -- Founder and Chairman, Adviser Investments. He says, "My “hot hands” thesis is quite simple: Investors who purchase the prior year's best diversified Vanguard equity fund and hold it for a year and follow this strategy year after year will beat the stock market over time."

[Wagnerjb]

Thanks. What is AA of Hot Hands?

The "Hot Hands" method was developed by Dan Wiener -- Founder and Chairman, Adviser Investments. He says, "My “hot hands” thesis is quite simple: Investors who purchase the prior year's best diversified Vanguard equity fund and hold it for a year and follow this strategy year after year will beat the stock market over time."

It is a strategy that costs performance chasers lots of money. Chasing a strategy is no different than chasing a lucky mutual fund manager or a hot stock. In the early 1990's the strategy didn't work well, with the investor underperforming substantially with International Growth in 1994 and Windsor in 1997. But from about 2000 to 2006 the strategy got lucky and produced some nice outperformance, and all the performance chasers piled in. Then the luck ran out. In 2007 the chosen fund (International Explorer) underperformed a more diversified international index by over 10%, and it has underperformed an alternative diversified index in 5 of the past 6 years. Needless to say, the performance chasers have taken their lumps (quietly) and gone on to other pursuits. You see this in Brad's data. The very poor performance since 2008 reflects the recent poor streak. The since 2003 and since 1999 data reflect the influence of the six year hot streak. Had Brad shown more history, the record would look a lot more mediocre.

Another factor that is often overlooked is the additional risk of such a strategy. Instead of investing in broadly diversified funds, you are taking a gamble on a single narrower fund.

Best wishes.

[spanky123]

Another factor that is often overlooked is the additional risk of such a strategy. Instead of investing in broadly diversified funds, you are taking a gamble on a single narrower fund.

Could this be said about sector funds despite spectacular performance of the Vanguard Health-care sector fund with lower volatility than that of the S&P 500? The Vanguard Health-care sector fund seems to be a very good sector bet as more baby boomers requiring more health care as time goes on.

[investor]

The Hot Hands is momentum investing and has never claimed to be anything other than that. It is for play money not for long term money.

investor