What is a realistic return on value investing?

[csl123]

Hi,

Personally, I will think it should be higher than the 7% (The long term return of S&P 500 is 7.6%. See this. By going passive and buy a low expense etf, the return should be at least 7%)

Value investing in theory should outperform a passive investment method, as it is active management of portfolio.

Well, if we include dividends to S&P ... that's 9% ?

Dividends are included in the return computation. 7.6% is from 2005 - 2014.

[Musicwhiz]

If I can achieve 10% return I'll be damn happy, as for now 5-8% I will be quite satisfy. Just now the main focus is to improve my skill and knowledge on the world of investing.

Noted with thanks, GiraffeValue.

If you stick to your process and improve/refine it as you go along, I think a 10% return should not be a big problem. But do always watch out more for your downside than the upside - this has helped me a lot over the years!

All the best!

[Temperament]

If I can achieve 10% return I'll be damn happy, as for now 5-8% I will be quite satisfy. Just now the main focus is to improve my skill and knowledge on the world of investing.

Noted with thanks, GiraffeValue.

If you stick to your process and improve/refine it as you go along, I think a 10% return should not be a big problem. But do always watch out more for your downside than the upside - this has helped me a lot over the years!

All the best!

Strictly speaking, the real realistic return is anything when you have stoped completely and ready to hand in your I C or your legacy. i do it differently. I "hand in" slowly to my only son to see whether he can do investment or not.
If can not then I have to do something differently.

[Temperament]

If I can achieve 10% return I'll be damn happy, as for now 5-8% I will be quite satisfy. Just now the main focus is to improve my skill and knowledge on the world of investing.

Noted with thanks, GiraffeValue.

If you stick to your process and improve/refine it as you go along, I think a 10% return should not be a big problem. But do always watch out more for your downside than the upside - this has helped me a lot over the years!

All the best!

[CityFarmer]

Hi,

Personally, I will think it should be higher than the 7% (The long term return of S&P 500 is 7.6%. See this. By going passive and buy a low expense etf, the return should be at least 7%)

Value investing in theory should outperform a passive investment method, as it is active management of portfolio.

Well, if we include dividends to S&P ... that's 9% ?

Dividends are included in the return computation. 7.6% is from 2005 - 2014.

The best reference of S&P500 return, is in Mr. Buffett's shareholder letter. From 1965-2013, the return cum dividend was 9.8%. This consistent with other references which state 9-10% (w/ dividend) e.g. SPDR S&P500 ETF report since 1993

http://www.berkshirehathaway.com/letters/2013ltr.pdf

http://www.spdrs.com.sg/etf/fund/fund_detail_SPY.html

In fact, similar return was observed for STI, which is 8-9%, base on SPDR STI ETF, since 2002, from the same link above

IMO, the expected return of active managed fund, should be around 12% min in SGX, with a 3% risk premium, otherwise a passive fund may be a better choice.

[corydorus]

Hi,

Personally, I will think it should be higher than the 7% (The long term return of S&P 500 is 7.6%. See this. By going passive and buy a low expense etf, the return should be at least 7%)

Value investing in theory should outperform a passive investment method, as it is active management of portfolio.

Well, if we include dividends to S&P ... that's 9% ?

Dividends are included in the return computation. 7.6% is from 2005 - 2014.

The best reference of S&P500 return, is in Mr. Buffett's shareholder letter. From 1965-2013, the return cum dividend was 9.8%. This consistent with other references which state 9-10% (w/ dividend) e.g. SPDR S&P500 ETF report since 1993

http://www.berkshirehathaway.com/letters/2013ltr.pdf

http://www.spdrs.com.sg/etf/fund/fund_detail_SPY.html

In fact, similar return was observed for STI, which is 8-9%, base on SPDR STI ETF, since 2002, from the same link above

IMO, the expected return of active managed fund, should be around 12% min in SGX, with a 3% risk premium, otherwise a passive fund may be a better choice.

Why don't we just look at the chart and tell me you are comfortable whether it will meet future returns.

S&P 500 Chart

Roller Coaster Rider for the past 20 years rather than consistent increment prior to 1982.

[CityFarmer]

Hi,

Personally, I will think it should be higher than the 7% (The long term return of S&P 500 is 7.6%. See this. By going passive and buy a low expense etf, the return should be at least 7%)

Value investing in theory should outperform a passive investment method, as it is active management of portfolio.

Well, if we include dividends to S&P ... that's 9% ?

Dividends are included in the return computation. 7.6% is from 2005 - 2014.

The best reference of S&P500 return, is in Mr. Buffett's shareholder letter. From 1965-2013, the return cum dividend was 9.8%. This consistent with other references which state 9-10% (w/ dividend) e.g. SPDR S&P500 ETF report since 1993

http://www.berkshirehathaway.com/letters/2013ltr.pdf

http://www.spdrs.com.sg/etf/fund/fund_detail_SPY.html

In fact, similar return was observed for STI, which is 8-9%, base on SPDR STI ETF, since 2002, from the same link above

IMO, the expected return of active managed fund, should be around 12% min in SGX, with a 3% risk premium, otherwise a passive fund may be a better choice.

Why don't we just look at the chart and tell me you are comfortable whether it will meet future returns.

S&P 500 Chart

Roller Coaster Rider for the past 20 years rather than consistent increment prior to 1982.

I am not so sure on the Chart. Let me approach it differently.

Refer to data provided by Mr. Buffett.

Average gain (1965-2013) was 11.1% and SD was 17.9%. Let's see the last 20 years (1993-2013), the average was 11.1% and SD was 19.2%.

It is more volatile in the last 20 years, comparing with the last 49 years, with the average remains the same.

Should I tell myself that the S&P500 future return will be very much different from last half a century? Well, I will say it should be not much a diff, albeit the past will never tell the future for sure.

[corydorus]

Well, if we include dividends to S&P ... that's 9% ?

Dividends are included in the return computation. 7.6% is from 2005 - 2014.

The best reference of S&P500 return, is in Mr. Buffett's shareholder letter. From 1965-2013, the return cum dividend was 9.8%. This consistent with other references which state 9-10% (w/ dividend) e.g. SPDR S&P500 ETF report since 1993

http://www.berkshirehathaway.com/letters/2013ltr.pdf

http://www.spdrs.com.sg/etf/fund/fund_detail_SPY.html

In fact, similar return was observed for STI, which is 8-9%, base on SPDR STI ETF, since 2002, from the same link above

IMO, the expected return of active managed fund, should be around 12% min in SGX, with a 3% risk premium, otherwise a passive fund may be a better choice.

Why don't we just look at the chart and tell me you are comfortable whether it will meet future returns.

S&P 500 Chart

Roller Coaster Rider for the past 20 years rather than consistent increment prior to 1982.

I am not so sure on the Chart. Let me approach it differently.

Refer to data provided by Mr. Buffett.

Average gain (1965-2013) was 11.1% and SD was 17.9%. Let's see the last 20 years (1993-2013), the average was 11.1% and SD was 19.2%.

It is more volatile in the last 20 years, comparing with the last 49 years, with the average remains the same.

Should I tell myself that the S&P500 future return will be very much different from last half a century? Well, I will say it should be not much a diff, albeit the past will never tell the future for sure.

Volatility maybe biased because we use 2013 as the reference point to count backward to 1965 and 1993. As past 20 year are very volatile we basically have both periods included them that forms a big segment on both their measures.

I am sure it will be different picture if we measure 4 segmental periods on volatility without overlap but not sure how to do it.

1974-1984
1984-1994
1994-2004
2004-2014


Cory

[GFG]

Just saw this thread.
I have been looking for some VBs to share their honest returns over a longer period of time, just to have a gauge on how I have been doing personally. Would appreciate if some fellow VBs give their HONEST returns to do a comparison.
No egos hopefully and anyway this is all anonymous.
I'll share mine:
I track returns using XIRR function, computing the NAV every quarterly. I only started tracking in May 2011 as before that, my approach wasn't strictly value oriented. Here's my annual returns:

2011 (started tracking from 3rd May 2011): 11.07%
2012: 17.96%
2013: 9.47%
2014: 12.23%
CAGR from 3rd May 2011 - 31 Dec 2014: 12.41%

I do employ leverage. (just started using leverage in 2013) Previously I benchmarked against STI ETF, but have decided to stop doing so starting 2015. Afterall, whats the point of active management if I cant beat STI ETF. So I am trying to benchmark against some of the value oriented fund managers. I am not a professional fund manager, although I spend a considerable amount of time studying and researching. My AUM is in the low 7 digits range.
Do share your returns as well as some of your philosophy so that we can all have an idea of where we stand and of course, ultimately, how we can do better.

[Temperament]

Dividends are included in the return computation. 7.6% is from 2005 - 2014.

The best reference of S&P500 return, is in Mr. Buffett's shareholder letter. From 1965-2013, the return cum dividend was 9.8%. This consistent with other references which state 9-10% (w/ dividend) e.g. SPDR S&P500 ETF report since 1993

http://www.berkshirehathaway.com/letters/2013ltr.pdf

http://www.spdrs.com.sg/etf/fund/fund_detail_SPY.html

In fact, similar return was observed for STI, which is 8-9%, base on SPDR STI ETF, since 2002, from the same link above

IMO, the expected return of active managed fund, should be around 12% min in SGX, with a 3% risk premium, otherwise a passive fund may be a better choice.

Why don't we just look at the chart and tell me you are comfortable whether it will meet future returns.

S&P 500 Chart

Roller Coaster Rider for the past 20 years rather than consistent increment prior to 1982.

I am not so sure on the Chart. Let me approach it differently.

Refer to data provided by Mr. Buffett.

Average gain (1965-2013) was 11.1% and SD was 17.9%. Let's see the last 20 years (1993-2013), the average was 11.1% and SD was 19.2%.

It is more volatile in the last 20 years, comparing with the last 49 years, with the average remains the same.

Should I tell myself that the S&P500 future return will be very much different from last half a century? Well, I will say it should be not much a diff, albeit the past will never tell the future for sure.

Volatility maybe biased because we use 2013 as the reference point to count backward to 1965 and 1993. As past 20 year are very volatile we basically have both periods included them that forms a big segment on both their measures.

I am sure it will be different picture if we measure 4 segmental periods on volatility without overlap but not sure how to do it.

1974-1984
1984-1994
1994-2004
2004-2014


Cory

Ha! Ha!
That's why it's not really up to you. When you hand in your IC counts. Unless you choose to stop investing earlier than usual. Because i think once you are in the stock market it is very difficult for you to stop.