samedi 4 janvier 2020

Performance for 2019

I've seen that a loooooot of people had a great performance in 2019. Many had a 30% return. Some even had a 40% return.

Those who worship me (they are countless) will be disappointed to learn that I've only had a 27% return, which is equivalent to the performance of the S&P. I've beaten the TSX/S&P by about 9% though, which is my benchmark. And I've beaten all those people who only put their money at the bank (they had less than a 1% return).

But, I'm a bit puzzled by the fact that I own great businesses and they did only as good as the S&P500 which includes a lot of very average businesses.

Which one of my stocks did the best? The Trade Desk (up 118%), however, I didn't own it for all the year, so the real answer would be Boyd Group (up 84%).

Which one of my stocks did the worst? MTY Food Group (down 12%).

What is great to me is that most of stocks had a performance between 20 and 40%. I haven't known the joy of owning Shopify and getting a 181% return or the sadness of owning Canopy growth and getting a -27% performance. My portfolio is steady and I like that way. When stocks go up or down like crazy, it usually indicates that they're too much linked to the excitation or consternation of the market.

I only write that because I haven't beaten the S&P by a wide margin. Otherwise, I would just say that I'm very satisfied and I deserve a blow job from all of you.

3 commentaires:

  1. For performance, the long-term results matter the most. One year is a fluke. I suck at investing even though I had 40% return in 2019. In fact, I had such high performance since I sucked so much in 2018 and prior years. I much rather have Penetrator's performance than mine...

    2015 = +3.05
    2016 = +23.31 [averaging down on HCG]
    2017 = -11.96 [run on HCG]
    2018 = -18.18 [winter panic]
    2019 = +45.1

    2015 = -11.4 [averaging down during oil collapse
    2016 = +22.2 [averaging down on HCG + EQB]
    2017 = +8.94 [run on banks]
    2018 = -16.18 [winter panic]
    2019 = +37.86

    2015 = -18.37 [averaging down on oil collapse and health care]
    2016 = -54.34 [CXR and VRX collapse]
    2017 = +2.07
    2018 = +0.46
    2019 = +34.94

    [sell RBC mutual funds at end of 2014; start my own investing]
    2015 = -11.06 [immediately get slapped by oil and market panic]
    2016 = +7.41 [slapped in face by health care]
    2017 = +3.16 [slapped in face by run-on-banks]
    2018 = -15.36 [slapped in face by market panic]
    2019 = +40.28 [smaller slaps from lassonde, mty, and industrials but saved by bank recovery]

    2015 = -8.32
    2016 = +21.08
    2017 = +9.1
    2018 = -8.89
    2019 = +22.32

    I am hoping 2020 will be finally a better year when I will no longer suck. I finally broke even in second half of 2019 on the portfolio as a whole but I still lag the benchmark by a wide margin. As mentioned earlier, my annualized performance is half of index (3.19%/a vs 6.18%/a)... but hopefully I am learning from my mistakes. One of my past stocks went bankrupt and several had 90+% losses and most never recovered... these losses hurt my portfolio with RRSP being down 2/3 of book value at one point and still around 1/2. It is very difficult climbing out of such a hole (2/3 loss over a few months requires tripling the value just to break even, which might take many years especially when climbing from one hole to another). The Canadian index is a minefield, especially for small companies and naive investors. I also have my reservations about "research" that my broker (RBC) provides to its poor retail clients that I used to trust. The fault is nonetheless all mine. Because I am tired and too stupid to deal with broken stories and untrustworthy management, I am gradually trying to transition from naive "value" investing (ie catching falling knives) to more growth oriented investing (hopefully more steady-eddy type cash flow compounders). After getting burnt on adjusted earnings in health care, however, I am quite reserved about most of the high growth stories with no earnings or almost no earnings out there (amazon, lightspeed, many US companies etc.). I am too stupid to understand why these high growth companies are so great even though everyone around me seems to be getting rich from buying the next big "story" without even understanding basic financial statements or what is the actual business model of their holdings. I do not understand why unreasonably generous stock compensation is not considered an expense or why mature companies need to continue subsidizing their customers (isn't Uber like 10 years old)... and how outrageous price hikes they will need to incur in the future to justify they stratospheric and rapidly climbing multi-billion market caps if they are ever to be actually profitable and return capital to shareholders. I am very confused by the markets. I know that I suck and that what I do does not work, but I do not know why. Even after going through my past decisions, I still frustratingly do not know why many of them blew up. I wish all of you prosperous 2020 and that you will not make similar mistakes to mine.

    PS: Regarding Penetrator's last sentence... Not that there is anything wrong with such orientation or personal desires... but I hope that Penetrator realizes that most of his readers are probably middle aged men with prickly beards, sharp teeth, and no similar experiences, lol.

  2. From the other thread, you have 27% of your portfolio into Home Capital Group & Equitable Group, which in general will be highly correlated - both on the upside and downside.

    I would suggest you consolidate into 1 of the 2 only and reinvest your proceed into different industry to balance your portfolio.

    1. Dear Jon1980,
      Thank you for the thoughtful tip. I am keeping an eye on both. EQB is one of a few companies, where I was able to reach out to the management and speak to the CFO several times, even though I am a nobody. They both have favourable near term and mid-term outlook which is not fully recognized by the markets. Even though they represent together 27% of my portfolio, they also help to subsidize other holdings like CSU etc, by providing 43% of TTM earnings with mid teen underlying earnings growth outlook and potential for multiple expansion. Once they will be fully valued, better opportunities will present, or will reach my longer term portfolio "full position" [requiring about 50% appreciation], I will divest or trim the holdings. I am still a student and am only in the early accumulation stages and so far neither of the trim targets have been reached. In the meantime, I have been adding new money to other positions in other industries to help diversify (but I don't really see any non-cyclical screaming buys out there). I have a shortlist of about 15 Canadian companies with long-term ROE 15%+, ROIC 10%+, growing per share earnings, and strong financial position towards which I am gradually transitioning my portfolio (I already own 6 and have an open order on 1 more). Despite of my portfolio's volatility, its underlying normalized earnings / cash flow has been growing over the years. Right now, my portfolio is trading at about 7.21% cash flow yield, 6.16% earnings yield, with 14.97% projected EPS growth (as investors we are buying future NOT past income), 17.14 TTM ROE which should be climbing closer to 19.36% 5-year average ROE, and about 16.62% net margin (debt etc is a little tricky because of banks etc.). It is not great but it should be fairly reasonable - fo reference, TSX index has an earnings yield of about 6.90% and TTM ROE of about 11. My personal target is to try to grow my net worth by about 1% a month or slightly less than 13%/a. Hopefully, the porfolio will help me achieve this goal or at least manage to grow its underlying cash flow by this ambitious target.

      I might also be leaving Canada in the next six months to a year, depending on employment opportunities (I live in AB and lost 2 consulting/part time jobs I had for the local government since the elections and resultant budget cuts). This might also trigger a more substantial re-evaluation of my portfolio since I am only invested in Canadian stocks so far, even though Canada represents only about 3% of global equity markets.

      Have a nice evening!