Performance in 2012

[CityFarmer]

I'm not trying to be funny here but like I explained and Freedom has demonstrated (with an exaggerated example no less), IRR has well known inherent pitfall if you use short periods. Freedom is not delusional One year is considered short.
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I'm not saying that the figures that are posted in this thread are wrong, but that we have to be aware. I'm just trying to contribute some facts to the discussion between cory and freedom, if it is distasteful i apologise.

I'm not against anything, but to highlight the rational XIRR is used instead of NAV, at least for me. So far we are still on track in our discussion, so i do feel no apology needed.

No one method is perfect, same for NAV and XIRR, but i do see XIRR is suitable for the usage here for its easy-of-use. There are pitfalls in XIRR which you have highlighted and i agreed. They can be avoided, at least for our usage.

I did not follow closely on cory/freedom discussion, but i assume it is just issue of usage, rather than pitfall of XIRR.

IMO, this is not a debate on the perfect tool for tracking investment, but on the most suitable tool for our usage since most of us are part-time investors and doing self-service for tracking

[funman168]

Best Performer in 2012:
1) Yoma (1500%)

Worst Performer in 2012:
1) ChinaACorp (-30%)

[CityFarmer]

Best Performer in 2012:
1) Yoma (1500%)

Worst Performer in 2012:
1) ChinaACorp (-30%)

Yoma, the Myanmar play. 15-bagger wow... But i do feel that it is over-hyped and over-valued.

Myanmar need time to settle down with new changes... IMO

[Musicwhiz]

For Yoma, you're probably paying for a lot of positive changes to take effect and which has already been currently priced in. If anything should hiccup, it could materially alter the valuation.....

Sorry if this is OT.

[sgd]

myanmmar the juntas are still running the military and the military is still in charge of everything. The west is really only interested in tapping into myanmmar's vast virgin natrual resources by releasing 1 political prisoner aung san si kii they have made it look like the country is on the positive path to reform tourist and investments are pouring in.

you see their parliament she is the only person surrounded by over a hundred military generals what can she 1 person do? If you ask me she is still very much a prisoner but now in a gilded cage.

[hyom]

Many forummers on valuebuddies have done exceedingly well in 2012. Congratulations!

When I have an exceedingly good year marked by a substantial outperformance over the benchmark index, I ask myself ... is it due to excessive risk-taking? I think it is quite hard for us to be honest with ourselves because all of us would like to think of ourselves as geniuses who outperform by taking prudent risk-adjusted gains. A more objective test would be to compare ourselves with the benchmark index in both bad years and good years and how much we underperform/outperform during the bad/good years.

2011 and 2012 taken together are good years to gauge one's investment prowess. 2011 was a bad year. 2012 was a good year.

If an investor makes 30% when STI makes 19% in 2012 but loses 40% when STI lost 17% in 2011, he should self-reflect on whether he has been taking excessive risks.

My 2011 Performance: -5%
2011 STI Performance: -17%

My 2010 Performance: +24.5%
2010 STI Performance: +10.1%

2011 is tough for me. XIRR -13.11%

2012 SG Stock Performance XIRR +44% is a large turn around.

The performance of Musicwhiz and corydorus (hope all of you don't mind) are examples of outperformance with good risk-adjusted gains by outperforming the STI in both good and bad years.

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There are some debates over whether to use NAV or XIRR to calculate one's investment returns. I personally prefer to choose the more conservative method. If NAV gives me a poorer return than XIRR, then I will use NAV. Calculating returns for both methods can be revealing about the investment styles. Investors with styles that veer towards market timing will have a higher XIRR.

When calculating returns, always take into account cash that has not been put into use. Going into cash is an investment decision that will affect the outcome. Why should it not be considered?

[smallcaps]

You have invested S$1 and you earned S$13. XIRR if entered correctly is 1290% which reflects about 13 times. Make sense ?

Here's the link on fuller sample.

XIRR


Cory

but your example is only for a counter, which is fairly simple. If there is multiple buy/sell of multiple counters, which may result the transactions just like the first table I made. But the XIRR in my first table is unbelievable.

Just did up an excel with freedom's example and confirmed that XIRR is 1290% using the portfolio approach (see attached). Hope it helps.


  Portfolio_XIRR.xls (Size: 27.5 KB / Downloads: 19)

[Musicwhiz]

Hi hyom,

Thanks for highlighting but I think my returns would be considered mediocre compared to very experienced forumers here. Moreover, I also did not use the NAV method and neither did I include the cash component, so my returns would probably be much lower.

[snowcap]

I had avoided property stocks and Reits in 2012, especially those property developers. It seems it is not a right choice on hindsight

I think hindsight for which sectors we should have gone into is useless. We cannot turn back the clock.

But hindsight on why the sector outperformed is useful. For me, I was overweight property and REITs. Property because I found many property counters undervalued, and REITs because I was looking for stable yield play backed by tangible assets. Being a value investor, I simply tried to look for price to NAV discount.

[corydorus]

hyom brings up a good point. And that's what multi-years Xirr can do.

As for smallcaps concern, Xirr function itself do not prevent you from taking cash into consideration. For this case, your exit sale cash can just enter immediately on zero interest return investment.

To repeat once more. To include cash or not is dependent on individual needs. And xirr can support both. For me because i am earning monthly salary and also because i am only reserving 30% to Sg Stk, my needs are to measure my invested sg stk returns.

When the day i need to be fully invested, i can switch mode to include cash so that will push me to invest my cash more. There is nothing wrong to exclude cash if you only defined say 1M to invest and feel you need to lock 2M with your wife or trusts etc.