No. of Recommendations: 27
As a follow up to the discussion "at what point are you pretty darned sure your MI is working", I thought I'd start a thread where I'd post the results of my recent MI reboot.
My intent is to just keep adding to this thread, if I remember, rather than starting a new thread for each periodic snapshot.
A quick recap: I'd been out of traditional MI for a while, so I set up a new account and will track results using the total portfolio balance.
The portfolio is heavy on large caps and (oddly for me) relatively heavy on dividend payers. I pay 30% tax on US source dividends withheld at source, so that is baked into the result of the portfolio balance. Because of the emphasis on large caps, I'll use the S&P 500 equal weight index as the benchmark, tracked by RSP total return *without* a dividend tax. My bogey is "a monkey with a dartboard filled mostly with US large caps".
Since it's a real world portfolio, it's never quite 100% allocated, so there will also be a small cash drag. Of course all trading costs accounted for in the account balance.
It's a mix of screens, about 3/4 very conservative "about the same as the market but hoping for a bit better", and about 1/4 more zoomy/growth/momentum stuff for leavening. All stocks equally weighted, at least at the moment. Duplicate picks are only bought once, same weight as everything else. All stocks chosen from the VL 1700 universe.
Anyway, this is the result from the first three months.
Average about 4.0% cash to date. The portfolio has had cash taxes deducted equal to 0.10% of initial portfolio value.
Portfolio: Up 3.23% (13.09%/year annualized linearly)
S&P equal weight: Up 1.13% (4.44%/year annualized linearly)
Advantage relative to market: +2.20% (+8.65%/year annualized linearly)
If I do this for a few years, at some point maybe someone will figure it's time to chime in and say "OK, it's now pretty definite to me that your portfolio [is/is not] really adding value".
One quirky metric I will keep my eye on: divide the history into N equal-length time periods--what is the largest value of N for which the portfolio beat the benchmark in N-1 of the sub periods? Or all of the N sub periods. Ideally this exercise would require a history of daily balances which I don't really have a simple way to maintain, but I'll have monthly.
Jim
