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Old 10-12-2015, 02:10 PM   #441
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Wild markets from week to week.

Just on my investment account roughly +10% right now. Few weeks ago it was +5%.

Mind you this is in Euros (all my expenses are in Euro, live in Amsterdam). In USD I've had two poor years.
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Old 10-12-2015, 04:46 PM   #442
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The OP here. As the thread title says, it's "YTD investment performance," not to be confused with increase in asset, value of portfolio.
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Old 10-12-2015, 06:49 PM   #443
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Quote:
Originally Posted by robnplunder View Post
The OP here. As the thread title says, it's "YTD investment performance," not to be confused with increase in asset, value of portfolio.
+1

I think most posters understand this, though.

Quote:
Originally Posted by papadad111 View Post
Ok. Got me thinking. With such a wide range here how are you computing your YTD market return and how are you considering it against your benchmark ?

For me,

Current total balance of account
Less
Beginning balance jan 1 2015
Less
all contributions made by me if any
Less
all dividend income paid YTD
=
Adjusted market gain or loss YTD

As for benchmark, I'm using the ETF SPY...trading price now vs Jan 1
(excludes dividends)

Others ?
The above is similar to what I do, except that there's no contribution for me, and I need to adjust for withdrawals. Also, I include all dividends received YTD. Dividends are part of investment returns, so why exclude them?

Strictly speaking, the simple method above is not as accurate as an IRR method, which takes into account the time when a deposit or withdrawal is made in the year. But when the amount added or subtracted is small relative to the total portfolio, and the return is also small, the difference can be neglected.

Here's an example. Suppose you have $1M, and also make a $1M deposit. The market returns 20%. If you make the deposit at the beginning of year, you would have($1M+$1M) x 1.20 = $2.4M. If you make the deposit at the end of year, you would have only $1M x 1.20 + $1M = $2.2M. The $200K difference in return is huge relative to the initial portfolio of $1M.

If the deposit/withdrawal is small, say 5% of the portfolio, and the return is also 5%, then whether the deposit/withdrawal is made at beginning of year or year end will make a difference of only 0.05 x 0.05 = 0.25%.

Finally, for benchmarking I have been using Wellington which has the same 60% stock AA. It is not quite correct because much of my remaining 40% is not in bonds, and the 60% stock has a lot of international. However, I still want to see how I do as an active investor against a stalwart MF that would require no work from me.
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Old 10-12-2015, 07:58 PM   #444
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Originally Posted by NW-Bound View Post
The above is similar to what I do, except that there's no contribution for me, and I need to adjust for withdrawals. Also, I include all dividends received YTD. Dividends are part of investment returns, so why exclude them?

Yes. Good point on the contributions and withdrawals. I should have stayed it as such.

In a total return analysis, I fully agree ! Should not exclude dividends from total investment returns.

The only reason i exclude them is for ease when doing the quick back of envelope "how am I doing vs benchmark"

When comparing to a benchmark, say, SPY which is just a beginning of year price and end of period price and the delta is the "gain or loss"...

Typically that's a little easier than going in and adding up the dividends paid by the benchmark and adjusting price by those payments. And doing same for stock portfolio. It's just an easy way to get a quick apples to apples. Could do it the other way too.

Also If the comparison is against,say, a mutual fund instead of an index, the dividends may not be paid out at the same timings as a personal portfolio.

Lots of ways to assess the market vs personal portfolio return. Was curious what others do ...

To take it a step further, do you compute any short and long term taxable impacts to your investing "gain" value along the way or just take out a chunk at year end to pay the gains ? How about for losses or prior tax year loss carry forwards ?

To me tax is an important aspect. - the buy and hold guy has gains that are not taxable. The trader guy has gains that may be taxable at ordinary income rates leaving "net portfolio return" a lot lower than his " I beat the market". benchmark.
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Old 10-12-2015, 09:28 PM   #445
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It is true that if including dividends, then that must be done on both your portfolio and the benchmark.

For my portfolio, including dividends is easy because the total value reported by Quicken already includes all reported dividends of individual stocks. For the benchmark, if one uses just the S&P index, then dividends are not included. One can estimate by prorating the 2%/yr dividend of the S&P, or by going to Morningstar Web site to look at the YTD growth of a $10,000 deposit in VFINX (Vanguard flagship index fund), or SPY (S&P index ETF). Morningstar includes dividend reinvestment in both.

Note that both VFINX and SPY pay quarterly dividends, but the timing of the dividend payout is not important. As a fund or stock goes ex-dividend, its price drops by that much, so the effect would not be shown in the "growth" plot by Morningstar.

About the tax effect, yes, it can mean you actually have less than what your computer shows you if you face a big tax bill on April 15. I got around this by trading more in my tax-deferred accounts. And now that I no longer have earned income, the level of tax-free capital gain is plenty high for me to work with ($74,900 AGI for married joint return). No way I can exceed that, while I am living off my after-tax savings and not drawing from IRA and 401k.

I still have several hundred $K of unrealized cap gains, but they are sitting in tax-deferred accounts. My taxable account is smaller, and I have been "washing" its cap gain by trading each year to realize gains within the above AGI level.

When I start to draw from IRA and 401k in a few years, it is not going to be fun at tax time.
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Old 10-13-2015, 06:53 AM   #446
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Quote:
Originally Posted by papadad111 View Post
Ok. Got me thinking. With such a wide range here how are you computing your YTD market return and how are you considering it against your benchmark ?

For me,

Current total balance of account
Less
Beginning balance jan 1 2015
Less
all contributions made by me if any
Less
all dividend income paid YTD
=
Adjusted market gain or loss YTD

As for benchmark, I'm using the ETF SPY...trading price now vs Jan 1
(excludes dividends)

Others ?
Quote:
Originally Posted by robnplunder View Post
The OP here. As the thread title says, it's "YTD investment performance," not to be confused with increase in asset, value of portfolio.
I would not think it appropriate to exclude dividends as papadad suggests.

For example, let's say the beginning is 100, dividends are 3 and appreciation is 10 and ending balance is 113. The return is 13%. Papadad would only get 10%. IOW, return includes dividends.

As for me, I get the annualized total return per a Quicken Investment performance report and then adjust it to a YTD amount by adjusting it to the power of n. IOW, a 3% annual return for 9 months would be [(1+3%)^(9/12)]-1 or 2.24% or a reasonable approximation would be 3/4 of the 3%.
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Old 10-13-2015, 07:14 AM   #447
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Quote:
Originally Posted by pb4uski View Post
I would not think it appropriate to exclude dividends as papadad suggests.

For example, let's say the beginning is 100, dividends are 3 and appreciation is 10 and ending balance is 113. The return is 13%. Papadad would only get 10%. IOW, return includes dividends.

As for me, I get the annualized total return per a Quicken Investment performance report and then adjust it to a YTD amount by adjusting it to the power of n. IOW, a 3% annual return for 9 months would be [(1+3%)^(9/12)]-1 or 2.24% or a reasonable approximation would be 3/4 of the 3%.
I agree. The Quicken investment performance report includes dividends.

I normally change the date of the report from YTD to 12/31/2015 to get the actual annual return.
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Old 10-13-2015, 07:49 AM   #448
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Quote:
Originally Posted by utrecht View Post
All the research shows that rebalancing to the under performing sectors works. It forces you to buy low and sell high. The easy part is sitting back rationally and making that plan. The hard part is sticking to the plan when you are right in the middle of it. If it was easy to buy low, everyone would do it. Who wants to buy something that sucks right now? Stick to your plan.
Quote:
Originally Posted by simple girl View Post
That's what I was thinking, just good to hear it from others. Thanks! Now to discuss with DH.
All the research?

Rebalancing sounds good, but it not only has you buy low, sell high (good), but it also has you selling on the way up during a long bull run, and then you don't fully participate (not so good).

From one 2010 study I saved on my computer, the link has an updated version.

Evanson Asset Management - Rebalancing

Quote:
Another way of looking at the rebalancing issue is to compare
the effect of different rebalancing frequencies on compound
total returns. Let's take a portfolio which is 70% in equities and
30% in fixed income, a 70/30 mix, with six different equity asset
classes including growth and value, large and small, Reits, and
U.S. and international asset classes. For the period of
January, 1975 through December, 2000, monthly rebalancing
produced a compound total return of 3923%, quarterly, 3959%,
yearly, 3971%, and every other year, 4233%. This period was
chosen because it allowed the inclusion of Reits and other
equity asset classes where data wasn't available back to 1973.
Thus, for this 26 year time*frame, more frequent rebalancing
actually reduced long*term returns.

We then reran the original 60/40 portfolio data using Jan. 1972
through Dec. 2000, since that goes as far back as the data for
this asset class mix was available, and adds in the record
speculative markets of 1999 and 2000. Once again, portfolio
returns and volatility differed very little as a function of
rebalancing frequency. In this case, frequent rebalancing
actually increased volatility (standard deviation) slightly for the
29 year period, 10.71% for quarterly rebalancing compared to
10.31% for biyearly rebalancing. ...
-ERD50
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Old 10-13-2015, 08:30 AM   #449
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Are you guys talking about rebalancing between asset classes (stocks, bonds, etc) or rebalancing sectors within domestic equities? utrecht's post where he refers to sectors has me confused.
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Old 10-13-2015, 08:34 AM   #450
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Up 5.81% but I'm all in cash for now.


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Just curious how you are up almost 6% being all in on cash. Does that include some contributions/savings? If not, I would live to know the secret.
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Old 10-13-2015, 08:54 AM   #451
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Are you guys talking about rebalancing between asset classes (stocks, bonds, etc) or rebalancing sectors within domestic equities? utrecht's post where he refers to sectors has me confused.
My personal portfolio is made up of some index funds and some managed funds. I have a few sector funds that I believe in (health care, Consumer Staples and REITS) that increase returns and lower volatility at the same time, but mostly I have large, medium and small cap funds. I've held this AA for a long time with some very slight adjustments and my portfolio has outperformed my benchmarks.

I haven't always rebalanced between funds but I did a lot of back testing this AA and the returns of my portfolio are higher when I rebalance my portfolio each year between all of my funds.

From 1/1/2005 to present

SP500..6.1%
Wellington...7.8%
My rebalanced 60/40 portfolio...8.2%
My un-rebalanced portfolio...7.4%
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Old 10-13-2015, 12:40 PM   #452
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Originally Posted by pb4uski View Post
I would not think it appropriate to exclude dividends as papadad suggests.
Dividend is part of investment return.

Tax payout is not included in my return.

The recent market surge put me in positive territory. I hope to stay that way by the year's end.
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Old 10-16-2015, 07:00 PM   #453
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Finally got back in the black today, and it feels good.

YTD 0.014% positive!
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Old 10-16-2015, 08:16 PM   #454
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Finally got back in the black today, and it feels good.

YTD 0.014% positive!
Right there with you, turned positive yesterday, YTD .06% positive today.. YEH

(though did notice that my tax deferred (which are my lazy target date type funds) was still in the RED and my by taxable accounts were GREEN which I actively manage.
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Old 10-24-2015, 03:53 PM   #455
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1.3% including my div's for the year.
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FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
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Old 10-24-2015, 03:56 PM   #456
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Slightly above flat YTD after considering withdrawals (ie; beginning balance - withdrawls ~ yesterday's balance).
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Old 10-24-2015, 04:45 PM   #457
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Riding the rollercoaster.... back to about +2% YTD.
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Old 10-24-2015, 05:56 PM   #458
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Wow - up 0.78% YTD!
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Old 10-24-2015, 08:04 PM   #459
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I was in cash after June or July, not the whole year. I'm preparing to transfer my 401k money to Vanguard so that's why.


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Old 10-24-2015, 09:43 PM   #460
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I just checked yesterday and including all accounts I am up almost 7%. Sounds good and it is for this year, but it is mostly a mirage. Most of my money is in illiquid preferred stocks that have really jumped recently selling 3 and 4 dividends above par and past call. That is crazy to buy at those prices. But it would be next to impossible to sell all of my issues at last quoted price and even if I could, I couldn't ever get back in at a dignified price. They will drop again, but the dividends will still continue.


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