What is a realistic return on value investing?

[swakoo]

If it were 2007 now and we were having the same conversation, anyone doing CAGR of 30%-40% for the past 5 years ie. from 2003-2007 would be considered mediocre!

Yes, it's a matter of perspective but since this is a value investing forum, perhaps 5 years is too short to measure? Welcome back from the Gobi desert (?)

On the other hand, to achieve superior returns (>15%) would require not only incredible skill, but also significant time and effort and perhaps, luck.

There are so many moving parts in the investing environment today that I find some luck is always helpful.

[CityFarmer]

I had not actively monitored my portfolio return(too much of a hassle) but I had started to monitor my investible assets(exclude flat and CPF but includes idle cash) since 1st Jan 2004. So, since 2004(around 9.5 years till date, my assets(investments + salaries) is compounding at an average of 36% annually. In simple term, I have 18x the investible assets now as compared with year 2004.

The wide ride over the years can be rather heartattacking. In one or two years, my investible assets could double and in a bad quarter like 1st quarter of 2009, the asset washalved.

It is quite an amazing investment journey for myself.

If base on same approach, my investible asset (exclude property, CPF and emergency cash) now is only 7-8x of 2004. It is a wild ride, but so far never been to losses. I am lucky to start at bull time.

I am still lot of learn to get on par with all of you.

[Jared Seah]

"If it were 2007 now and we were having the same conversation, anyone doing CAGR of 30%-40% for the past 5 years ie. from 2003-2007 would be considered mediocre! "

I like this!


Here we go!

Now we are into to different definitions of returns.

Some want inflation adjusted.

Some say 5 years too short.

Some use simple interest.

Some use compound interest.

Some use Total Cash available to invest

Some include salary

After all the sound and fury, 30-40% is still mediocre... LOL!


Nice to know I am a laggard

[yeokiwi]

"If it were 2007 now and we were having the same conversation, anyone doing CAGR of 30%-40% for the past 5 years ie. from 2003-2007 would be considered mediocre! "
I like this!
Here we go!
Now we are into to different definitions of returns.
Some want inflation adjusted.
Some say 5 years too short.
Some use simple interest.
Some use compound interest.
Some use Total Cash available to invest
Some include salary
After all the sound and fury, 30-40% is still mediocre... LOL!
Nice to know I am a laggard

Basically, we account to no one here ... haha. And no one is going to be interested to pay me to monitor my portfolio.
So, I just offered my kind of information and up to you to believe and interpret

There are much more interesting activities than monitoring the returns of the portfolio. If you do it right, it will just grow by itself.

[Jared Seah]

yeokiwi,

It's people like you (and a few others) here that makes this forum so interesting! We don't take ourselves too seriously.

Exactly! If we do well at what we do at the poker table, there's all the time in the world to do the counting - when the dealing is done.
And in whichever cut-and-slice dimension we prefer too!

Is so interesting to see some of the charts from on-line mutual fund distributors. Most start index 100 from June 2009 as default.

If they had started index 100 at June 2007, it tells another story! LOL!

[ValueBeliever]

http://www.straitstimes.com/BreakingNews...13388.html

Its true the way things are going with Central bankers is that we have not been able to tell inflation will cause yield to spike on bond down the road or as it is now a more likely scenario of yield being depressed due to problem in euro's southern economy.

Business Insider have charts of past southern European states yield - wow the current yield is still too low from normality base on the trouble they are having.

So where we are today is a very strange concoction of depressed yield and in-between bouts of inflation and contagion scarce!

The theme of dividend yield on stock with a history of dishing it out with some growth certainty is already know. Stock like cigarette maker Philip Morris, Reynold and Alteria are now trading at historical high unheard of?

Will our own SPore back yard play come into action? Our yield looks interesting too, but our local Co. does not promote them or do it for the benefit of minority? Perhaps gov should provide incentives to give our Local Co. to dish out dividend and in return attract good yield play into our local market instead of just emphasizing on REITS only?

[KopiKat]

I had not actively monitored my portfolio return(too much of a hassle) but I had started to monitor my investible assets(exclude flat and CPF but includes idle cash) since 1st Jan 2004. So, since 2004(around 9.5 years till date, my assets(investments + salaries) is compounding at an average of 36% annually. In simple term, I have 18x the investible assets now as compared with year 2004.

The wide ride over the years can be rather heartattacking. In one or two years, my investible assets could double and in a bad quarter like 1st quarter of 2009, the asset washalved.

It is quite an amazing investment journey for myself.

If base on same approach, my investible asset (exclude property, CPF and emergency cash) now is only 7-8x of 2004. It is a wild ride, but so far never been to losses. I am lucky to start at bull time.

I am still lot of learn to get on par with all of you.

Aw Shucks...
All these years, I'd been feeling so happy and lucky as using the same method, my Total Assets (Stocks + Cash) is 5.6x that of end-Jan '03 (when my records become more detailed). Now, I think I better spend more time scruntinising, asking and learning instead of poking fun at everyone..

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Welcome back from the Gobi desert (?)

Thx! But, you see me too up. The only desert I saw was the one on Mars when I watched the inflight movie 'John Carter'.
I imagine you may be blessed / cursed by a good memory, perhaps like me, haha..

[redcorolla95]

I suppose comparing compounded returns of salary + investment is not terribly meaningful for assessing investment performance. Let's say you have $500 when you start work, every year you save $1000, and make 0% on your investments, after 10 years you then have 'compounded' at 35%. But it does reinforce Buffett's point that it's much easier to 'grow' a small sum of money than a large one.

I think the Singapore stock market is quite attractively valued. Price to book is 1.3 (from SIAS), which puts it around 1 standard deviation below average. The Shiller PE is less than 13 (from the World Beta blog), vs a fair value of around 16-18. So a buy-hold investment in the STI ETF should yield do better than 7-8% over the next 7 years. This 7 years comes from GMO - they have gone over a lot of academic literature which shows that PE/PB has a fairly limited ability to predict returns over a 1 year period; however, they predict returns over the next 7 (or 10) years with quite chilling accuracy. This also suggests it's not meaningful to look at any track record that is less than 7 years.

I agree with d.o.g. that most people are better off sticking to an ETF, but not so sure if most people can pick professionals or other people to manage their money for them.
At least for picking stocks there's a whole methodology called value investing, and people have gotten rich by using it. Whereas I'd really like to know more about people getting rich by picking fund managers. Yes there are fund-of-funds, but the people who run them get rich by collecting fees from assets from their marketing efforts rather than picking managers.

http://www.straitstimes.com/BreakingNews...13388.html

Its true the way things are going with Central bankers is that we have not been able to tell inflation will cause yield to spike on bond down the road or as it is now a more likely scenario of yield being depressed due to problem in euro's southern economy.

Business Insider have charts of past southern European states yield - wow the current yield is still too low from normality base on the trouble they are having.

So where we are today is a very strange concoction of depressed yield and in-between bouts of inflation and contagion scarce!

The theme of dividend yield on stock with a history of dishing it out with some growth certainty is already know. Stock like cigarette maker Philip Morris, Reynold and Alteria are now trading at historical high unheard of?

Will our own SPore back yard play come into action? Our yield looks interesting too, but our local Co. does not promote them or do it for the benefit of minority? Perhaps gov should provide incentives to give our Local Co. to dish out dividend and in return attract good yield play into our local market instead of just emphasizing on REITS only?

[d.o.g.]

Whereas I'd really like to know more about people getting rich by picking fund managers. Yes there are fund-of-funds, but the people who run them get rich by collecting fees from assets from their marketing efforts rather than picking managers.

You have hit the nail on the hand. The fact of the matter is, it is very hard to get rich by investing only, whether on your own or with a fund manager. I always make it clear to my clients that I can only help them stay rich. They are already rich - for me to make them much richer, they would have to allocate a large portion of their wealth for me to manage, which they should not do until they are thoroughly comfortable with the way I invest. This level of trust takes years to earn.

The most sensible way to get rich is to work first and invest second. Even if you are a genius investor, it takes time for your capital to grow to the point that you can live off investment returns alone. Until then, you need a job to pay the bills and add to the investment capital.

For the majority of people, living off investment returns is not a realistic goal. It is probably more realistic to aim for a large enough nest-egg at retirement to fund a comfortable lifestyle (but drawing down investment capital). If there are enough assets that you can leave something to your descendants, great. If not, so be it.

[yeokiwi]

Whereas I'd really like to know more about people getting rich by picking fund managers. Yes there are fund-of-funds, but the people who run them get rich by collecting fees from assets from their marketing efforts rather than picking managers.

The most sensible way to get rich is to work first and invest second. Even if you are a genius investor, it takes time for your capital to grow to the point that you can live off investment returns alone. Until then, you need a job to pay the bills and add to the investment capital.

Possibly the best advice to any value investor.
A value investor must recognize the value of his/her job. In fact, doing well in job is probably the precursor to building up a sizable investment capital.

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Aw Shucks...
All these years, I'd been feeling so happy and lucky as using the same method, my Total Assets (Stocks + Cash) is 5.6x that of end-Jan '03 (when my records become more detailed). Now, I think I better spend more time scruntinising, asking and learning instead of poking fun at everyone..

I have an additional source of income and so the comparison is not fair.
So, my point is and which is the same as what many gurus here had pointed out, do not neglect your job that gives you the monthly salary. It helps to accelerate your growth of the investment capital.