Portfolios
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Portfolios - Risk Adjusted Real Returns are Paramount
- In an attempt to prove that my commentary is useful (and to use as a basis to eventually manage money in
a separate account or pooled format - long-term goal) I have been tracking performance of a stock portfolio
since 08/04/03 and a mutual fund portfolio (the all-weather portfolio) since 12/29/06.
- As far as performance, since it inception, (08/04/03), through 12/31/07 the stock portfolio is up 92.21%
including a 20.92% Total Return for 2007 (versus 5.49% for the S&P 500). This works out to be a 15.96%
annualized return, versus a total return from the S&P 500 of 62.01% (11.55% annualized). Just as
importantly, the stock portfolio has achieved its outperformance with lower risk compared to its benchmarks
as measured by both its standard deviation and its risk adjusted return metrics.
- The stock portfolio is currently heavily weighted in energy (30%) and materials (gold, silver, industrial
materials, base metals, etc) which make up an additional 27%. Additionally, the portfolio does have an
emphasis on int'l securities. I feel that these sectors will continue to benefit from strong global
growth/demand and a continued expansion of money supply and credit growth (see market outlook), though
the contracting housing market has caused me to put an increased focus on defensive securities with
higher dividend payouts.
- Through 12/31/07, the all weather portfolio (inception 12/29/06) is up 17.27% for 2007. This is well ahead
of the S&P 500's gain (5.49%), and a 60/40 blended benchmark, which is a better benchmark since this
portfolio has fixed income and market neutral exposure. Of specific note, this portfolio's 10%+
outperformance has been achieved with lower risk than its benchmarks as measured by daily standard
deviation.
- Similar to the equity portfolio I manage (see above), this portfolio has a large weighting to int'l securities,
energy, materials, as well as non-correlated assets (including market neutral strategies and bonds).