What is a realistic return on value investing?

[corydorus]

1-Jan-14 -5000 Buy Stock A
1-Jan-14 -15000 Buy Stock B
1-Jan-14 -30000 Virtual Stock (Idle Cash)
1-Jun-14 6000 Sell Stock A with 1K profit
1-Jun-14 -6000 Virtual Stock (added due to sale of stock A)
31-Dec-14 13000 Close Book Stock B value. Assume you lose 2K
31-Dec-14 36000 Virtual Stock Value (30K + 6K)

XIRR -2.01%


With idle cash considered into your portfolio (above) is a little tricky because if you lose money, the XIRR will reports a smaller loss due to you have a bigger fund. Well mathematically is right. it pays to do nothing sometimes.

Example below without idle cash measured.

1-Jan-14 -5000
1-Jan-14 -15000
1-Jun-14 6000
31-Dec-14 13000

XIRR -6.10%

[JanQuin]

Only saw this thread recently. Many years back I have benefitted from d.o.g. sharing on the use of nav to compute portfolio's performance. The method makes sense to me and I have been using it till now. I also advocate to maintain a separate bank account for investment as this made tracking very much easier.

[Temperament]

Instead of a separate bank account just for the stock portfolio tracking, can we use a "Virtual Bank Account" that is 2 to 3 times the actual value of you stock portfolio to begin with? Such that your Virtual Bank Account" is always available for your portfolio tracking. Will this solve the idle cash tracking problem in the stock portfolio?

[JanQuin]

I guess it will add error in the tracking? Not sure if it will work but I feel that this makes the tracking more complex.

[franko.yank]

I target 20%-25% returns over long run, it can be done if the strategy is correct. IMO if after using so much time & effort to analyze stocks still end up <15% then might as well close shop buy a S&P500 or STI ETF, why waste time?

[corydorus]

Are you joking. Just using your lower estimate of 20% , after 30 years compounded you probaby own Singapore or a very famous man. I don't even remember many fund manager makes to the headline.

Able to get 15% consistently i will park all my money with you !

[Wildreamz]

I target 20%-25% returns over long run, it can be done if the strategy is correct. IMO if after using so much time & effort to analyze stocks still end up <15% then might as well close shop buy a S&P500 or STI ETF, why waste time?

Beating the index by 5% is a lot over the long run.

[GPD]

I target 20%-25% returns over long run, it can be done if the strategy is correct. IMO if after using so much time & effort to analyze stocks still end up <15% then might as well close shop buy a S&P500 or STI ETF, why waste time?

Lower than xx% return isn't a signal to give up. Everybody has different level of expertise and knowledge and risk-taking. This give different level of targeted return.

A lot of people might close shop if they see their long-term return drop to nothing at the end of 2008.

One's long-term return might fluctuate widely during market crazy bull and bear. So at which point one use to determine if he/she is not achieving his/her target return and close shop?

During Feb this year my return dropped to 11% (to clarify I only started active investing last Mar so was spared the GFC turmoil) from a high of 28% end last year (to clarify not including idle cash but is not a lot anyway). If I closed shop then I will not see my return gong back to 22.5% today.

Surely, there are other valuable things you learn along the way, aren't there?

[yawnyawn]

I target 20%-25% returns over long run, it can be done if the strategy is correct. IMO if after using so much time & effort to analyze stocks still end up <15% then might as well close shop buy a S&P500 or STI ETF, why waste time?

We have a Warren Buffett here, no doubt about it! The great man himself only managed to compound Berkshire's per share BV by 19.7% p.a. from 1965-2013.

[CityFarmer]

I target 20%-25% returns over long run, it can be done if the strategy is correct. IMO if after using so much time & effort to analyze stocks still end up <15% then might as well close shop buy a S&P500 or STI ETF, why waste time?

We have a Warren Buffett here, no doubt about it! The great man himself only managed to compound Berkshire's per share BV by 19.7% p.a. from 1965-2013.

No harm to set high target. With a much smaller AUM, beating current Mr. Buffett's performance isn't a unthinkable proposition. I asked myself a question, How will Mr. Buffett perform, with a AUM of just few million non-OPM? My guesstimate is around 40%.