Poor performing portfolio

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wander
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Re: Poor performing portfolio

Post by wander »

So, you invest because you expect it to make profit every year?
Flashes1
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Re: Poor performing portfolio

Post by Flashes1 »

The old adage that you will always HATE one of your investments in a well diversified portfolio is so true:

* 2020: I hate my small caps.
* 2017-2019: I hated TIPS.
* 2015-2019: I hated International.
* 2018: I hated equities.

It's hard to hold on to them, but experience has taught me to be patient and don't sell when you hate an index fund just because it's underperforming other indexes.
nix4me
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Re: Poor performing portfolio

Post by nix4me »

International is terrible and has been for 2 decades.
Small caps got crushed by virus panic.
DesertMan
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Re: Poor performing portfolio

Post by DesertMan »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100.
A lot of people have mega losses so far this year. You are doing fine.
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

I believe Large is crushed as well... the entire rally in Large is driven by 5 tech stocks. That gives me hope that the S&P 500 rally is an aberration caused by hugely overvalued tech and the S&P600 is more reflective of reality
unbiased
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Re: Poor performing portfolio

Post by unbiased »

Unless you were exclusively in mega cap US growth this year or long term treasuries, very few are "up" -- unless you timed the market perfectly by investing a boatload in March.

Also, make sure you check your Standard Deviation. Often more important than "just" returns are your risk-adjusted returns over the years. If you're taking less market risk, but still getting decent annualized returns, you should absolutely feel good about your AA.
DesertMan
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Re: Poor performing portfolio

Post by DesertMan »

unbiased wrote: Fri Sep 11, 2020 8:06 pm Unless you were exclusively in mega cap US growth this year or long term treasuries, very few are "up" -- unless you timed the market perfectly by investing a boatload in March.

Also, make sure you check your Standard Deviation. Often more important than "just" returns are your risk-adjusted returns over the years. If you're taking less market risk, but still getting decent annualized returns, you should absolutely feel good about your AA.
Yes. Study up on the Sharpe and Sortino ratios, and change your asset allocation to reflect the risk-reward balance that suits your situation and needs.
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

S&P 600 vs S&P 500 since it hit it's peak in mid 2018... currently in a bear market but the divergence is just amazing!!

Image

The 5 year tells us a lot more... the divergences were within the normal range for Small/Large but suddenly went haywire recently... as you can see at one point Small was even AHEAD of Large!

Image
Olemiss540
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Re: Poor performing portfolio

Post by Olemiss540 »

This is the problem with tilting, it leads to behavioral mistakes due to emotional reactions caused by performance chasing.

When you ride the haystack, it's much easier to resist the urge to tinker.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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Taylor Larimore
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Never underperform again

Post by Taylor Larimore »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.

Positions :

VOO (S&P 500) - 14.14%
VFWAX (Total International) - 23.31%
VBILX (Intermediate Bond) - 15.70%
VTMSX (S&P 600) - 31.86%
VTSAX (Total Stock) - 6.58%
Cash Reserves - 8.40%

2020 beginning balance: $456,426, new money invested: $20,700, current balance as of today: $477,230, net gain: $104

I understand that I have Small and non-US and this is a 75/25 portfolio but still I was expecting at least more than a $100 gain on a half million dollar portfolio on what is supposed to be a bull market? :oops:

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
stocknoob4111:

Actually, you have survived a rough 8 months when many investors wish they did as well.

With Total Stock Market Index Funds and you will never worry about underperformance.

The Three-Fund Portfolio.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The total market index is by definition the perfect investment, and the S&P 500 is virtually as good. They cannot be improved on. They will give you virtually all of the market's return, provided that the costs are minimal. No other form of indexing will give you that."
"Simplicity is the master key to financial success." -- Jack Bogle
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

Olemiss540 wrote: Sat Sep 12, 2020 6:27 am When you ride the haystack, it's much easier to resist the urge to tinker.
Total Market and the S&P 500 has a very high correlation and almost have identical returns long term. If one wants to truly diversify into Small and Mid then separate funds are required. At least that is thesis of Paul Merriman and others.

Even though I may be lamenting the under performance of Small (the comment about me doing something wrong was just frustration I guess) I am still very much holding onto the position and firmly believe it will recover very strongly when the economy comes out of this situation.

I would not be surprised by Large outpacing Small at this time, Small does poorly during recessions I know that and it usually outpaces Large coming out of recessions. This is historical fact.

What I am truly surprised IS that Large is actually setting new records totally ignoring recessionary conditions while Small is behaving more typical of how markets behave during recessions. I did expect Large to be doing better than Small but still reflect the poor economic conditions - i.e. above Small but still not doing well.
Last edited by stocknoob4111 on Sat Sep 12, 2020 12:28 pm, edited 1 time in total.
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

duplicate delete
dziuniek
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Re: Poor performing portfolio

Post by dziuniek »

You made some bets and they didn't pan out. Boo-hoo.

They might next year or they might not.

They might over a 10-year time-frame or not.

Good luck :)
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

dziuniek wrote: Sat Sep 12, 2020 12:36 pm You made some bets and they didn't pan out. Boo-hoo.\
True, but they were based on historical data. We all make bets when we invest. I am not debating the under performance of the S&P 600, it's a recession and it's doing what it has historically done. I am surprised that the S&P 500 isn't doing what it has historically done - i.e. falling instead of setting records during a recession. This has confounded all the pundits as well so it's just not my perception. If there is a huge speculative aspect about the performance of the S&P 500 due to large amounts of injected liquidity chasing the tech stocks then the S&P 500 is in trouble and my diversification bet WILL pan out. International and Small will be less affected by the upcoming crash as they have already taken the brunt of the current situation while the S&P 500 is still on Cloud 9. That is what I am hoping anyways :sharebeer
dziuniek
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Re: Poor performing portfolio

Post by dziuniek »

stocknoob4111 wrote: Sat Sep 12, 2020 12:43 pm
dziuniek wrote: Sat Sep 12, 2020 12:36 pm You made some bets and they didn't pan out. Boo-hoo.\
True, but they were based on historical data. We all make bets when we invest. I am not debating the under performance of the S&P 600, it's a recession and it's doing what it has historically done. I am surprised that the S&P 500 isn't doing what it has historically done - i.e. falling instead of setting records during a recession. This has confounded all the pundits as well so it's just not my perception. If there is a huge speculative aspect about the performance of the S&P 500 due to large amounts of injected liquidity chasing the tech stocks then the S&P 500 is in trouble and my diversification bet WILL pan out. International and Small will be less affected by the upcoming crash as they have already taken the brunt of the current situation while the S&P 500 is still on Cloud 9. That is what I am hoping anyways :sharebeer

What recession? Q3 should be up 'bigly' since q2 was so bad. So we're out of the recession then, technically...

I hope you're right, as international is a sizeable part of my portfolio as well. That being said, I'm not sure that will fall less. Look at the depths of march this year. All correlations go to 1. ;)
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arcticpineapplecorp.
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Re: Poor performing portfolio

Post by arcticpineapplecorp. »

stocknoob4111 wrote: Sat Sep 12, 2020 12:43 pm
dziuniek wrote: Sat Sep 12, 2020 12:36 pm You made some bets and they didn't pan out. Boo-hoo.\
True, but they were based on historical data. We all make bets when we invest. I am not debating the under performance of the S&P 600, it's a recession and it's doing what it has historically done. I am surprised that the S&P 500 isn't doing what it has historically done - i.e. falling instead of setting records during a recession. This has confounded all the pundits as well so it's just not my perception. If there is a huge speculative aspect about the performance of the S&P 500 due to large amounts of injected liquidity chasing the tech stocks then the S&P 500 is in trouble and my diversification bet WILL pan out. International and Small will be less affected by the upcoming crash as they have already taken the brunt of the current situation while the S&P 500 is still on Cloud 9. That is what I am hoping anyways :sharebeer
few thoughts:
1. there's a wide dispersion of returns from year to year:
https://www.realinvestingjournal.com/re ... snt-normal

2. you are confused if you think the "pundits" actually know anything.
they don't.
if you think they do, read some of Larry Swedroe's past articles about "sure things" (what the experts predicted):
https://www.google.com/search?client=fi ... ure+things

the truth is they don't know anything anyone else does. If they did, that information would be worthless because they can't trade on it. Once information comes out, it's no longer valuable because everyone knows it.

3. this is why the saying "Past performance is no guarantee of future returns" is more than just a saying.

4. I don't say we make "bets". I own the total stock market and only expect to get a return that's commensurate with the risk I take. Nothing more, nothing less. The market's going to give what it gives. I have no control over that, nor do I believe future returns "should" look like past returns because the future is not the past. I believe there's a risk premium, you "should" eventually get a reward for taking risk in excess of the riskless rate. That return could take some time to show up. Patience is rewarded. Impatience is punished. Therefore, you don't take risk with money you can't afford to be patient with.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Noobvestor
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Re: Poor performing portfolio

Post by Noobvestor »

stocknoob4111 wrote: Fri Sep 11, 2020 3:14 pm I calculated that my portfolio would've been $100K higher if I had not diversified into International and Small Caps. I did so as a long range diversification strategy based on readings of Paul Merriman and the likes
I calculated my portfolio would be astronomically high if I'd stayed in small cap and international in the 2000s, then sold when QQQ was at its lowest, and held on for over a decade while it recovered. Heck for that matter I should have used triple-leveraged ETFs ... :oops:
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
pkcrafter
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Re: Poor performing portfolio

Post by pkcrafter »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.

Positions :

VOO (S&P 500) - 14.14%
VFWAX (Total International) - 23.31%
VBILX (Intermediate Bond) - 15.70%
VTMSX (S&P 600) - 31.86%
VTSAX (Total Stock) - 6.58%
Cash Reserves - 8.40%

2020 beginning balance: $456,426, new money invested: $20,700, current balance as of today: $477,230, net gain: $104

I understand that I have Small and non-US and this is a 75/25 portfolio but still I was expecting at least more than a $100 gain on a half million dollar portfolio on what is supposed to be a bull market? :oops:

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
You have lots of replies now, and I think you understand the situation.

Looking at your taxable account doesn't tell us much about your whole portfolio, so it's difficult to offer suggestions. One thing I did notice is you are holding a bond fund and that should be in tax-advantaged.

Last comment is if you are going to mess with the bull (extreme overweight in small, and again we don't know the actual % of the whole portfolio) you sometimes only get the horn. :happy


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

I'm counting on Small Caps to rebound strongly in 2022. As for International I don't have much hope but i'll just hold on to what I have, not contributing new money to either Small Caps or International.
tibbitts
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Re: Poor performing portfolio

Post by tibbitts »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm I understand that I have Small and non-US and this is a 75/25 portfolio but still I was expecting at least more than a $100 gain on a half million dollar portfolio on what is supposed to be a bull market? :oops:

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
My portfolio is down more than yours. But you can't seriously be complaining about nine months of performance; surely you realize you could easily be down $100,000 not up by $100.

There is no broad-based bull market, and both of us have intentionally underweighted what have turned out to be the relatively few stocks that have performed extremely well. There is nothing "wrong" with our portfolios. We both made the investing choices we've made knowing they may not pay off during our investing lifetimes. You invest your money and take your chances. Nobody can give you any "prognosis"; your portfolio could easily be down after ten more years. Many of us with portfolios similar to yours are past the time of our lives when we're making further contributions, so if you think you're worried about ten down years, think about how someone who needs to live off their investments feels.
asif408
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Re: Poor performing portfolio

Post by asif408 »

stocknoob4111 wrote: Tue Sep 22, 2020 11:31 pm I'm counting on Small Caps to rebound strongly in 2022. As for International I don't have much hope but i'll just hold on to what I have, not contributing new money to either Small Caps or International.
So why bother holding them if you don't add more after they've underperformed? If you're not willing to buy low and sell high, might as well own a target date fund and let someone else who is emotionally capable of it doing the rebalancing for you. All I hear from you is making short term predictions about market movements and a unwillingness to buy low. If you continue down that path you will certainly underperform a much simpler strategy that simply rebalances unemotionally.

Nothing wrong with admitting you got in over your head and now can't handle the underperformance. You are comically short-sighted if you are bothered by one year of poor performance. This underperformance could certainly continue for many years. Personally I think you have a good portfolio for the future but I question your ability to stick with it long-term.
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ruralavalon
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Re: Poor performing portfolio

Post by ruralavalon »

As I mentioned before, in my opinion you have too much over market weight in U.S. small-cap. I think reducing that would be wise.

stocknoob4111 wrote: Tue Sep 22, 2020 11:31 pm I'm counting on Small Caps to rebound strongly in 2022. As for International I don't have much hope but i'll just hold on to what I have, not contributing new money to either Small Caps or International.
My suggestion is stop focusing on short-term performance of each index fund. Nine months (year to date) is short-term, next year is also short-term. Learn to be patient.

Instead focus on long-term performance of your total overall portfolio. It is inevitable that some fund you own will perform worse than other funds you own. Furthermore the bottom fund and top fund will change from year to year. See table, pdf.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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