What is a realistic return on value investing?

(20-06-2012, 10:42 AM)mobo Wrote: This is all very interesting... I am learning a lot

But can I just do an informal poll (I trust participants here are not like the usual big cannon fairies in CNA or HWZ) who here has 10 yrs of investment experience and has managed to make a compunded return of 8% - 10% p.a.

If you have a shorter history perhaps can also state when you started investment and what is the compunded annual return up to now so far?

To start off for myself:

Started Investment: February 2012
Return up to 19 June 2012: -7.4%

Looking forward to more responses!

I'll share mine as well.

Started Investment: July 2009
2010 Portfolio Return: 14.37% (exclude dividend)
2011 Portfolio Return: -5.32% (exclude dividend)

Portfolio Mix: 68.1% Value Stocks, 18% Growth Stock, 13.9% Dividend Stock
Investment Time Horizon: 30 to 40 years
Investment Style: Mix but leaning more towards value investing.
Type: Buy and Hold (Not those which keeps on holding)

1) Welcome back KopiKat!

2) Mobo,

I see your capital is $30,000 and your 5 month journey has resulted in 7% or around $2,000 loss.

I guess reading investing books alone does not make one an investor, nor does it guarantee returns TO YOU. Even if the majority of the forum members average 8-10% compounded annually.

Average can be quite meaningless at times. If one investor get +50% and another gets -30% negative returns, the average return between them is 10%. Will that help forecast your own personal rate of return?

May I suggest you invest in an investing diary (or trading journal if you are more into buy and sell frequently). Record down the reasons why you bought during Feb this year. Has anything changed to you? If no, why sweat? If yes, what actions would you take if you can do it all over again? Or did you buy just because you have idle money lying around?

2 years. That's the average time frame for us to get used to a new promotion or job. After 2 years, you will have the answer whether investing in equities is for you.

Especially if your 2 years' return is less than bank savings return, less than whole-life insurance policy return, less than CPF returns. Less than inflation. After you have cleared these low hurdles, then consider the long term average of 8-10%

Roughly 50% of those who withdraw CPF for investing make less than the CPF 2.5% returns.

Hi KopiKat,

May I ask you a question?

When performing your swtiching, do exit all your holding or partially?

setan

(20-06-2012, 01:08 PM)setan Wrote: When performing your swtiching, do exit all your holding or partially?

A simple Q but very hard to answer as I don't have a fixed set of rules that fits all scenarios...

It depends. I'll focus on some of my considerations for my die-hard No Growth stocks ie. those I'd have previously just buy and hold for the dividends (but which I now actively manage ie switch). I'll use SPH as an example cos' I have had it the longest time and it's unlikely going to morph into a Growth stock anytime soon.

1) Latest Financials : If the indication is that the co. is likely going to enjoy some growth in earnings, I'd be less inclined to sell my entire holdings at one go. In SPH's case, FY12 will very likely show better EPS than FY11 due to Clementi Mall full contribution and I have set a higher target price of >$4 for my last few lots.

2) Time Urgency : FY11 (Nov) results (where Div is usually close to 20ct) are usually announced sometime before mid-Jan. After studying the prior results for the earlier Quarters and conjuring up some EPS figures from my Crystal Ball, I have set my target Buy price at $3.6x. As the mid-Jan deadline approaches, I may raise my target price to $3.7x or even $3.8x, assuming I have not bought back enough SPH shares. Here, I treating it a bit like a Bond ie. I'm willing to pay more as the Dividend date approaches. For selling, my trigger date is xd date.

3) Cash Position + Alternatives : Assuming my cash position is zero and today, for no fundamental reasons, I noticed an Alternative stock that'd suddenly dropped substantially (maybe a Fund Manager decided that this stock no longer fit into his portfolio and is selling a large position which caused prices to free-fall or Euro fears is causing many to switch to only selected 'Defensive' stocks), I won't hesitate to sell SPH (or another Die Hard stock that'd remained flat or dropped only a bit) to switch over. The Qty depends on how attractive the alternative is.

Unless prices are very very attractive, I usually do my Buy/Sell transactions in batches ie. Partially. I don't usually switch over to another stock immediately and I may have cash idling around till I find an alternative, exception is (3).

Hope the above answers your Q and not confuse you more instead. Basically, you'll have to develop your own set of basic rules to follow and expand on it as you gain experience. Ultimately, it should be a source of fun (also funds) and enjoyment, rather than a stress point to perform..

(20-06-2012, 11:53 AM)Jared Seah Wrote: Roughly 50% of those who withdraw CPF for investing make less than the CPF 2.5% returns.

The grim truth of the investing skills of most Singaporeans.
Only 17% of the CPF account holders manage to beat the 2.5% return in FY11.
http://mycpf.cpf.gov.sg/NR/rdonlyres/6C3...rt2011.pdf

The figure is always around 20%(13% to 28%) since 2004.

So, in general, if you have lots of friends claiming high returns from their investments, then some of them are probably not speaking the truth.
Unless your friends are Soros, Buffett, Fisher, Lynch....

(20-06-2012, 03:26 PM)yeokiwi Wrote:

(20-06-2012, 11:53 AM)Jared Seah Wrote: Roughly 50% of those who withdraw CPF for investing make less than the CPF 2.5% returns.

The grim truth of the investing skills of most Singaporeans.
Only 17% of the CPF account holders manage to beat the 2.5% return in FY11.
http://mycpf.cpf.gov.sg/NR/rdonlyres/6C3...rt2011.pdf

The figure is always around 20%(13% to 28%) since 2004.

So, in general, if you have lots of friends claiming high returns from their investments, then some of them are probably not speaking the truth.
Unless your friends are Soros, Buffett, Fisher, Lynch....

The figures actually looked fantastic if we compared it with the benchmark STI = -13.64% (pg 6).

But, I find it hard to draw any useful conclusion as the figures you quoted were for REALISED Profits / Losses ie. we don't know the impact of Unrealised P/L on these individuals.

Table 1 in pg 4 gives the UNREALISED LOSSES = -21.74% but in terms of total $ Value (not individuals) ie. Quite terrible if benchmarked against STI.

(20-06-2012, 03:54 PM)KopiKat Wrote:

(20-06-2012, 03:26 PM)yeokiwi Wrote:

(20-06-2012, 11:53 AM)Jared Seah Wrote: Roughly 50% of those who withdraw CPF for investing make less than the CPF 2.5% returns.

The grim truth of the investing skills of most Singaporeans.
Only 17% of the CPF account holders manage to beat the 2.5% return in FY11.
http://mycpf.cpf.gov.sg/NR/rdonlyres/6C3...rt2011.pdf

The figure is always around 20%(13% to 28%) since 2004.

So, in general, if you have lots of friends claiming high returns from their investments, then some of them are probably not speaking the truth.
Unless your friends are Soros, Buffett, Fisher, Lynch....

The figures actually looked fantastic if we compared it with the benchmark STI = -13.64% (pg 6).

But, I find it hard to draw any useful conclusion as the figures you quoted were for REALISED Profits / Losses ie. we don't know the impact of Unrealised P/L on these individuals.

Table 1 in pg 4 gives the UNREALISED LOSSES = -21.74% but in terms of total $ Value (not individuals) ie. Quite terrible if benchmarked against STI.

One year of result does not give good conclusion.
But if we look at the data from 2004 to 2011, then it is pretty obvious that most people could not really invest.

http://mycpf.cpf.gov.sg/NR/rdonlyres/6C3...rt2011.pdf
http://mycpf.cpf.gov.sg/NR/rdonlyres/EAF...andLossRep..
http://mycpf.cpf.gov.sg/NR/rdonlyres/D32...portpl.pdf
http://www.cpf.gov.sg/cpf_info/ie/IE_reportpl.pdf

This reminds me the question of how to track your stock investment accurately from day one till now. For me is 24 years leow.

Oh my!

I was basing my 50% on anecdotal evidence. I remember reading somewhere that more than 2/3 of CPF investors lost money. So I thought saying 50% should be more diplomatic and safe enough ball-park figure.

But 2004 to 2007 were boom years just after the Iraq war in 2003 when STI bottom out...

I guess the harsh reality is like the old poker game joke:

"OK boys! Let's all play carefully tonight and hope everyone goes home with winnings tonight."

Equities is not a zero-sum game; but someone has to pay for the winnings of others.

It seems the 80/20 rule is right again.

(20-06-2012, 10:42 AM)mobo Wrote: But can I just do an informal poll (I trust participants here are not like the usual big cannon fairies in CNA or HWZ) who here has 10 yrs of investment experience and has managed to make a compunded return of 8% - 10% p.a.
...
Looking forward to more responses!

This August it will be my 10th year anniversary of investing. So I guess it is close enough. But I did not achieve 8-10% per year. I achieved 20-21% compounded per year. However the disclaimers below should be kept in mind:

1. In the beginning the investment sum was very small. I started with about $500 (yes, five hundred dollars).

2. There was a bull market during 2003-2006 (edit: 2003-2007).

3. Historical volatility is high. I have never had an "average" year where returns were 20-21%. Sometimes it was much higher, sometimes much lower, even negative (2007, 2011) (edit: 2008, 2011).

4. I turned professional after 6 years. Even in my early years I spent as much time and effort on investing as on my "real" job, maybe even more. So it is not a fair comparison for the average investor who cannot devote this kind of time and effort.

But this is also a message to the investors out there who feel that they don't have the necessary capital or knowledge to invest successfully. It can be done.

I started with no money and no knowledge. I saved from my salary and read many books on investing. This much is not difficult. Anyone but the very poor can come up with $500, or, allowing for inflation, $1000. Books are not expensive, and can be borrowed for free from the library.

But everything has a price. Knowledge can be acquired by those willing to invest the time and effort. Indeed, knowledge is the best investment I know of. It can be acquired from books, from other people, or by trial and error. I try not to use the last method if possible - it is slow and expensive, albeit highly effective: there is nothing like losing money to drive home a lesson.

Those unwilling to pay the price may find that index funds and ETFs do a reasonable job of putting money to work. Or, if they want more, they can look for professional investors to do it for them. It would be a good idea to find a professional whose strategy they are comfortable with, rather than simply looking at past results or a big brand name.