What is a realistic return on value investing?

[Temperament]

This reminds me whatever style of investing you use, nothing is more important than when you buy and when you sell; besides what you buy. The best is B/S in your "own terms" if you can. Patience.

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A realistic long-term return to gun for would be 8-9% per annum; consisting of about 5-6% dividend yield and about 3-4% capital gain per annum. And that's for an average value investor who purchases with his required margin of safety and assesses intrinsic value fairly accurately. For more enterprising investors, a long-term return of 10% to 12% is not unusual over say 5-10 years; but I would probably think 15% is a little too ambitious.

And oh yes, don't bother about what friends/peers/colleagues tell you about their performance in the short-term. Performance is measured in years, over bull-bear cycles and is about consistency. Those I respect are able to achieve their long-term returns while remaining true to their investment motto/philosophy.

For me, i agreed. Me even with very limited education is very close to what you describe. i bet you will have a better result than me going forward. As for me, now i am trying very hard not to lose money first before talking about profit.

[mobo]

Hi all,

Once again, these input are very useful. It seems that base on what I hear from here and also on some blogs I read, an average of 7%-8% is the most commonly cited. Looks like my initial expectations are too optimistic, I will need to adjust my projections accordingly.

Also found out from fundsupermart that the top performing mutual fund investing in SG stocks is the Aberdeen Singapore Equity Fund which averaged at only 9+ % for the last 10 years… The rest of the funds are quite simply atrocious and most are below 5% for the past 10 years. From what I observe 2003 – 2007 were good years where most people made huge returns year after year, but most of them exploded during 2008 crisis.

Seems like the best way to get good returns is not really stock picking buy & hold but selling and keeping cash when the market is very high and then loading back when the market drops?

Cheers & I apologies if this is a stupid question, still quite new to investments.

[dzwm87]

Seems like the best way to get good returns is not really stock picking buy & hold but selling and keeping cash when the market is very high and then loading back when the market drops?

On hindsight, it's always easy to buy when it's low and sell when it's high. Looking at historical price charts, it's almost innate that we look at the low and compare it to the high and made the common mistake of "wow, won't it be great if we buy at the low and sell at the high?"

It's a mistake I make as well but I have realised that we can never time the market as well. You can simply do this via a paper trade. If you can pull off 10 out of 10, then go in with cash but probably even that, it will fail given law of large number and performance averaging.

As retail investors, our edge over institutional investor is our ability to be patient. We can buy and hold a stock for 10 years and we won't face any risk of redemption. But of course, we need to justify the reason for such a long wait.

All in all, I won't go for market timing. Averaging down will be a better and safe approach.

[Temperament]

Seems like the best way to get good returns is not really stock picking buy & hold but selling and keeping cash when the market is very high and then loading back when the market drops?

On hindsight, it's always easy to buy when it's low and sell when it's high. Looking at historical price charts, it's almost innate that we look at the low and compare it to the high and made the common mistake of "wow, won't it be great if we buy at the low and sell at the high?"

It's a mistake I make as well but I have realised that we can never time the market as well. You can simply do this via a paper trade. If you can pull off 10 out of 10, then go in with cash but probably even that, it will fail given law of large number and performance averaging.

As retail investors, our edge over institutional investor is our ability to be patient. We can buy and hold a stock for 10 years and we won't face any risk of redemption. But of course, we need to justify the reason for such a long wait.

All in all, I won't go for market timing. Averaging down will be a better and safe approach.

You are right in some way. i usually buy & sell too early no matter what happens. But it's O. K. for me. As long as net, net++. Only once in a green moon, perfect.

[Some-one]

Hi all,

Once again, these input are very useful. It seems that base on what I hear from here and also on some blogs I read, an average of 7%-8% is the most commonly cited. Looks like my initial expectations are too optimistic, I will need to adjust my projections accordingly.

Also found out from fundsupermart that the top performing mutual fund investing in SG stocks is the Aberdeen Singapore Equity Fund which averaged at only 9+ % for the last 10 years… The rest of the funds are quite simply atrocious and most are below 5% for the past 10 years. From what I observe 2003 – 2007 were good years where most people made huge returns year after year, but most of them exploded during 2008 crisis.

Seems like the best way to get good returns is not really stock picking buy & hold but selling and keeping cash when the market is very high and then loading back when the market drops?

Cheers & I apologies if this is a stupid question, still quite new to investments.

Do not forget that if you buy mutual funds, you are required to pay sales charges, pay the fund managers every year, pay fund expense, pay quarterly charges. As such, your return would be lesser than the 9% that they cited.

[Temperament]

Hi all,

Once again, these input are very useful. It seems that base on what I hear from here and also on some blogs I read, an average of 7%-8% is the most commonly cited. Looks like my initial expectations are too optimistic, I will need to adjust my projections accordingly.

Also found out from fundsupermart that the top performing mutual fund investing in SG stocks is the Aberdeen Singapore Equity Fund which averaged at only 9+ % for the last 10 years… The rest of the funds are quite simply atrocious and most are below 5% for the past 10 years. From what I observe 2003 – 2007 were good years where most people made huge returns year after year, but most of them exploded during 2008 crisis.

Seems like the best way to get good returns is not really stock picking buy & hold but selling and keeping cash when the market is very high and then loading back when the market drops?

Cheers & I apologies if this is a stupid question, still quite new to investments.

Do not forget that if you buy mutual funds, you are required to pay sales charges, pay the fund managers every year, pay fund expense, pay quarterly charges. As such, your return would be lesser than the 9% that they cited.

As i am in my "distribution phase" the closest index-fund i may start buying is STI ETF, when Mr. market tell me so. From experience never make any money from unit trusts or any funds. (Sorli, if anyone take offence). Don't ever try if you can DIY stocks. No one is more interested in your money then yourself. Learn you must. You must learn.

[corydorus]

Echo that. If i have nothing to invest, I rather leave my money in bank than put into unit trust.

[yeokiwi]

Seems like the best way to get good returns is not really stock picking buy & hold but selling and keeping cash when the market is very high and then loading back when the market drops?

Most of my gains came from buy and hold for at least a period of more than 2 years.
The gains typically came from doubling of revenue or profits, increase dividends, realisation of undervalued assets or buyouts. To enjoy these gains, it is necessary to adopt a buy and hold technique since no one will know when the above events will transpire.

Buying at low will improve the odds of outperforming the market return but it is basically a hit or miss action.

However, as I had written, the stock selection strategy will in a way cap your returns over a long period of time. If 15% is desired as a long term outcome, a predominantly blue chips and REITs portfolio is unlikely to see that kind of return over a long period of time.(Can you imagine SPH, SMRT, Singtel growing at 15% annually for the next 5-10 years???)

Of course, there are always exceptions that will prove me wrong.

[mobo]

Thanks for all the valuable feedback, appreciate that.

It does make me wonder why so many people continue to buy unit trust since the returns are poor and there are so many hidden costs.

Worse are the ILPs which add another layer of cost on top of the fund costs to the insurance companies.

[Some-one]

Thanks for all the valuable feedback, appreciate that.

It does make me wonder why so many people continue to buy unit trust since the returns are poor and there are so many hidden costs.

Worse are the ILPs which add another layer of cost on top of the fund costs to the insurance companies.

It's not too late to realise it now. I make the same mistakes as well in 2007. Recently, I've just sold off all my unit trusts with losses.