madsinger monthly report (April 2015)

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madsinger
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madsinger monthly report (April 2015)

Post by madsinger »

Here is a big fat collection of portfolios, with their April 2015 returns, 2015 YTD return, and annualized returns since 1999, 2005, 2010 and 2012 (16 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 50/6/11/33 stock/REIT/Gold/bond. The madsingerPP portfolio is the "permanent portfolio" portion of my portfolio consisting of 25% each of stock, long bond, cash, gold.

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                                    CAGR     CAGR     CAGR    CAGR
                    Apr     YTD     since    since    since   since
                    2015    2015    2012     2010     2005    1999
Sheltered Sam       1.12%   3.28%   15.92%   12.47%   7.60%   7.74%
Hot Hands          -0.59%   1.25%   17.62%   14.22%   7.59%  11.95%
VFINX               0.95%   1.87%   18.69%   14.66%   7.49%   5.13%
                  
Newsletter G        0.00%   3.80%   18.60%   13.77%   8.80%   9.81%
Newsletter G-IND   -0.19%   3.40%   17.58%   14.22%   8.61%   6.69%
s&d                 0.74%   3.77%   13.41%   10.71%   7.29%   7.65%
3 fund              1.69%   4.14%   13.51%   10.29%   7.08%   5.95%
LS G                1.35%   3.71%   13.85%   10.86%   6.38%   5.32%

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Newsletter CG       0.10%   3.40%   16.85%   12.80%   8.07%   8.11%
Wellington          1.09%   1.95%   13.12%   10.91%   7.91%   7.57%
coffeehouse        -0.29%   2.08%   11.40%   10.18%   7.04%   7.33%
STAR                0.83%   3.45%   12.68%   10.16%   6.95%   6.86%
LS MG               0.89%   3.11%   11.08%    9.37%   6.04%   5.40%
                  
Wellesley           0.50%   1.78%    8.73%    9.26%   7.14%   6.98%
Newsletter Inc      0.20%   2.60%   13.10%   11.20%   6.87%   5.95%
LS CG               0.42%   2.50%    8.33%    7.58%   5.39%   5.17%
                  
madsinger           0.05%   2.14%   11.03%    9.54%   6.76%   
madsinger PP       -0.50%   0.71%            
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madsinger
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Re: madsinger monthly report (April 2015)

Post by madsinger »

April had a wide variation in returns:
US Large cap up about 1%, US small caps down -1.5%, International up over 5% with emerging markets up over 9%, REITs down almost -6%. Gold was mostly flat, but the PM fund was up over 9%.

I don't know if this is noteworthy (but I guess I'll note it), the "Hot Hand" fund "portfolio" has dropped out of first place among the "all stock" portfolios (as ranked by 10 year 4 month returns) for, what I think is the first time since I've been tracking this.

-Brad.

madsinger Permanent Portfolio stats:

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           STOCK  LONG BOND   CASH     GOLD    PORTFOLIO 
January   -3.14%    9.37%     0.08%    8.37%    3.40%
February   5.68%   -5.65%     0.08%   -5.79%   -1.43%
March     -1.61%    1.13%     0.08%   -2.22%   -0.67%
April      0.91%   -3.06%     0.08%   -0.09%   -0.50%

YTD        1.50%    1.61%     0.32%   -0.72%    0.71%
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Dutch
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Re: madsinger monthly report (April 2015)

Post by Dutch »

Thanks Brad. I always appreciate your monthly reports.
investor
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Re: madsinger monthly report (April 2015)

Post by investor »

my thanks also Brad....

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Wagnerjb
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Re: madsinger monthly report (April 2015)

Post by Wagnerjb »

madsinger wrote: I don't know if this is noteworthy (but I guess I'll note it), the "Hot Hand" fund "portfolio" has dropped out of first place among the "all stock" portfolios (as ranked by 10 year 4 month returns) for, what I think is the first time since I've been tracking this.
Hi Brad: I have trouble calling the Hot Hands timing strategy a "portfolio". It is one single fund and is therefore horribly undiversified as a "portfolio". For that reason, it isn't comparable to the other more diversified strategies that a sensible investor would use.

Are you familiar with the statistic that Morningstar publishes for mutual funds, called "investor returns"? For the Hot Hands strategy, the investor returns would be far south of the "fund returns". In the early 1990's when this strategy was first publicized, it did poorly - with International Explorer, Windsor and PrimeCap underperforming a reasonable (more diversified) alternative. For that reason, it wasn't very popular. During the 2000-2002 time frame - when investors portfolios were dropping sharply - this strategy did very well. Thus, it attracted lots of followers...but of course only AFTER the great returns had already materialized. As you know, this strategy has not outperformed over the past 10+ years, and when you take into account the greater risk (from a more volatile, less diversified "portfolio"), the underperformance is more clear. Sadly, this is what the performance chasers earned.

Best wishes.
Andy
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madsinger
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Re: madsinger monthly report (April 2015)

Post by madsinger »

Wagnerjb wrote: Hi Brad: I have trouble calling the Hot Hands timing strategy a "portfolio". It is one single fund and is therefore horribly undiversified as a "portfolio". For that reason, it isn't comparable to the other more diversified strategies that a sensible investor would use.
I couldn't agree more with this statement. I have never been a fan of the "Hot Hands" and would never use it myself. However, the reason I started (10 years ago now) tracking this with other "real" portfolios (or against the S&P 500 fund) was precisely that it was criticized for being the result of "data mining"...finding a result that worked well in the past...but having no reason to believe it would do well going forward. By tracking this every month for over 10 years, I think it is fair to say that this chart is not the result of "past data mining".

In the 10 years that I've tracked these portfolios, I think it's fair to say the the "hot hands" fund has not "underperformed" nor "out performed". However, as you point out, it has been a riskier ride. In 2008, the Hot Hands fund fell -48%, while the other two portfolios (Sheltered Sam and S&P 500 index) fell about -37%. There have been other occurrences of large underperformance along the way.

I've had a number of people send me private messages over the years asking about the Hot Hands "strategy" and what I think. I have always said the same thing. It is a single Vanguard fund, not a portfolio, and it is a strategy that I would never follow myself. If you follow this strategy, on average, I would expect it to roughly track the market, and with greater volatility.

-Brad.
jefmafnl
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Re: madsinger monthly report (April 2015)

Post by jefmafnl »

Many thanks for your hard work...this is a real service to Bogleheads.

For those of us who, for whatever reasons, prefer a one-fund solution without international stocks: any chance that at some point you could add Vanguard Balanced Index Fund?

Thanks again!

J
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