2/26/2006 newsletter
*** Market
SP500 is hovering around high, 1290 (+4% YTD). My portfolio is at $12.9 (+9.6% YTD). I actually use a per-share price to track portfolio performance, just like mutual funds and stocks. I found this is the only way you can acurately track financial performance. My base is $10 at 12/1/2004. It has been 15 months. If you want to double the price in 5 years, the easiest way to remember is that you need 20% gain every 15 months (1.2^2^2 = 2, 15*2*2 = 60). This is a conservative goal to a more speculative mind, yet agressive enough compared to SP500. Some people like to hit 50% or 100% in a year. Then you can rest a couple years (you need to not lose money during those years) and prepare to hit another 100%. I do not profess to know how to do that without bearing a much larger volatility. It would be nice if that stuff can be figured out ( g=50-100% in one of X years, X > 0% for all other years). The first implication however seems to be 100% turnover rate, or a very concentrated portfolio...
The early benchmark (2 months into the year) still shows small-cap and international stocks outperform SP500 by a large margin. Gold continues to stretch amid international unrest. However, oil seems to be reaching its peak influence. Bill Miller believes all the risk around oil has been generously discounted at $70. (He is not a believer of owning energy stocks) He also thinks SP500 owes us a rally like its international counterparts. SP500 is the only underperforming asset class in last year's global rally (but 14% dollar appreciation compensated foreign owners). Of course, this is assuming the underlying uncertainties (such as interest rate, energy, Iraq/HLS spending) have to be removed (or discounted enough).
--Steve
SP500 is hovering around high, 1290 (+4% YTD). My portfolio is at $12.9 (+9.6% YTD). I actually use a per-share price to track portfolio performance, just like mutual funds and stocks. I found this is the only way you can acurately track financial performance. My base is $10 at 12/1/2004. It has been 15 months. If you want to double the price in 5 years, the easiest way to remember is that you need 20% gain every 15 months (1.2^2^2 = 2, 15*2*2 = 60). This is a conservative goal to a more speculative mind, yet agressive enough compared to SP500. Some people like to hit 50% or 100% in a year. Then you can rest a couple years (you need to not lose money during those years) and prepare to hit another 100%. I do not profess to know how to do that without bearing a much larger volatility. It would be nice if that stuff can be figured out ( g=50-100% in one of X years, X > 0% for all other years). The first implication however seems to be 100% turnover rate, or a very concentrated portfolio...
The early benchmark (2 months into the year) still shows small-cap and international stocks outperform SP500 by a large margin. Gold continues to stretch amid international unrest. However, oil seems to be reaching its peak influence. Bill Miller believes all the risk around oil has been generously discounted at $70. (He is not a believer of owning energy stocks) He also thinks SP500 owes us a rally like its international counterparts. SP500 is the only underperforming asset class in last year's global rally (but 14% dollar appreciation compensated foreign owners). Of course, this is assuming the underlying uncertainties (such as interest rate, energy, Iraq/HLS spending) have to be removed (or discounted enough).
--Steve
posted by Steve at 4:42 PM
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