YTD Market returns...not that impressive?

[arch57]

Like most of us here I track investment returns each month and at interim points in Excel. The highs on 7/12/19 were 17.2% for DJIA and 20.2% for S&P 500 which seem eye-popping.

However, I was wondering why my total NW wasn't as impressive given these market highs. Looking back at the highs in 2018 (10/3 for DJIA and 9/20 for S&P) the returns from those highs are only 1.9% and 2.8% respectively.

So yes very thankful the markets have recovered from that bad stretch in Q4 of 2018 but it goes to show you how the "numbers" can be deceiving. Long term averages are the best way to look at markets.

 

[Dtail]

Like most of us here I track investment returns each month and at interim points in Excel. The highs on 7/12/19 were 17.2% for DJIA and 20.2% for S&P 500 which seem eye-popping.

However, I was wondering why my total NW wasn't as impressive given these market highs. Looking back at the highs in 2018 (10/3 for DJIA and 9/20 for S&P) the returns from those highs are only 1.9% and 2.8% respectively.

So yes very thankful the markets have recovered from that bad stretch in Q4 of 2018 but it goes to show you how the "numbers" can be deceiving. Long term averages are the best way to look at markets.

Exactly and the concept that if the markets drop 20% in year 1, then they need to go up 25% in year 2 to just get back to even.

 

[NW-Bound]

+1

2018 was a lousy year. The market has been making up for it.

 

[big-papa]

Like most of us here I track investment returns each month and at interim points in Excel. The highs on 7/12/19 were 17.2% for DJIA and 20.2% for S&P 500 which seem eye-popping.

However, I was wondering why my total NW wasn't as impressive given these market highs. Looking back at the highs in 2018 (10/3 for DJIA and 9/20 for S&P) the returns from those highs are only 1.9% and 2.8% respectively.

So yes very thankful the markets have recovered from that bad stretch in Q4 of 2018 but it goes to show you how the "numbers" can be deceiving. Long term averages are the best way to look at markets.

The standard of looking at total returns only on a year-by-year basis +YTD for the current year is arbitrary, but convenient since there are so many sources for that info (M*, Google, Yahoo, etc.). I disagree about looking at long term averages since that hides the volatility which is important to a retiree, especially one who had the unfortunate experience of retiring in 2008.

I track monthly growth, from that I can extract monthly volatility and then calculated an annualized version of it as well as drawdowns as well as a CAGR over any timeframe I wish. I don't think it's "best", but I think it's much better than simply long term averages which hides too much useful info.

 

[sengsational]

I find it totally unhelpful to learn how many points the market is up or down in the last day. The least the reporters should do is convert to a percentage. But even that is useless because yesterday could have been the opposite. Of course this means "no news", which doesn't attract listeners. The best reporting would be rolling averages of various lengths. Maybe 7 days for the "players", and 30 day, 90 day, 1 year, 5 year. But those long ones aren't "news". They're important to keep perspective, but not news.

 

[NW-Bound]

A single-day market movement is no big deal.

What I really do not like is when it goes down every day for a week. Or worse, most of a month.

Now, you are talking serious money.

 

[frayne]

My portfolio is back to where it was after the Q4 December downturn.

 

[The Cosmic Avenger]

My portfolio is back to where it was after the Q4 December downturn.

Yep, same here, we just hit a new NW and asset high after a big trough.

 

[Dawg52]

I don't track my returns on spreadsheets. I just use the info Fidelity gives me. And to be honest, I rarely look at that more than 3-4 times a year. I do look at my $ balance fairly often and I'm at an all time high as I imagine most are here. Is that the equivalent of a 'wheeee'?

 

[jollystomper]

Since I retired end of June 2018, I look at what my return was in the first year of my retirement, as well as the first 6 months of this year.

Even with the late 2018 meltdown, I was still up 4% in my equity/bond investments from end of June 2018 to end of June 2019. Not impressive, but My SWR is running less than 1/2 of that, so I am still coming out ahead.

I am at an all-time high now, but whenever that occurs I look at what the impact of a 10% drop in my investments would leave me with, just to keep an even keel on things.

 

[ziggy29]

I have more or less recovered in 2019 what I lost in the last three months (or so) of 2018.

YTD is +10.4% for me (about a 45/55 AA currently), which is about what was lost in the combination of October and December 2018.

 

[OldShooter]

... Long term averages are the best way to look at markets.

Yes, of course. But then why would you

... track investment returns each month and at interim points in Excel. ...

Your post got me thinking. I don't recall that DW and I have ever discussed the investment returns on our portfolio. (And she is a retired megabank SVP). We are passive investors, so we get what the market gives, which over a long investment horizon is quite acceptable to us. So in the immortal words of Alfred E. Neuman: "What? Me worry?"

I do track the returns of a couple of stock-picking portfolios against passive benchmarks. I'm sure the statisticians would say that five or even ten years of data is necessary before any conclusions can be drawn. Being impatient, my rule is that I don't look at any comparisons shorter than two years of returns.

 

[karen1972]

Good observation. Its easy to use different starting points and get wildly different numbers.

Its the withdrawal part that makes me keep tracking my returns as the chart makes it look kind of sad (as it doesn't have a way to show the massive down payment I took out), but the return is still very healthy and I have to keep reminding myself that while the chart shows I am still down, I'm actually ahead.

 

[arch57]

Your post got me thinking. I don't recall that DW and I have ever discussed the investment returns on our portfolio. (And she is a retired megabank SVP).

My DW thinks I’m nuts tracking everything and she was a finance major herself. Being an engineer I like to “play” with numbers and started our investment spreadsheet in 2006. Do all my own investing so wanted to track when we reached enough to retire. Fascinating to look back at the meltdown in 2007 and see how staying patient and not changing our portfolio out of fear paid off in the recovery.

 

[OldShooter]

... I like to “play” with numbers and started our investment spreadsheet in 2006. ...

There are certainly hobbies that are worse, though this one can get expensive if one starts reacting to the noise in the signal. Sounds like you are not one of those. Good.

 

[RxMan]

My DW thinks I’m nuts tracking everything and she was a finance major herself. Being an engineer I like to “play” with numbers and started our investment spreadsheet in 2006. Do all my own investing so wanted to track when we reached enough to retire. Fascinating to look back at the meltdown in 2007 and see how staying patient and not changing our portfolio out of fear paid off in the recovery.

Great observation! Sticking to your plan during a downturn isn’t easy but missing the recovery would have been an expensive mistake. I stuck with my plan and was pleasantly surprised by how much those accounts recovered. I just wish I had made some additional investments when valuations were really low.

 

[donheff]

Its nice to be at an all time high but when I notice that it just recently popped over my 2/2018 previous high I feel like I have been in a year long limbo. We still have a ways to go to see if 2019 will stay up at these levels.

 

[24601NoMore]

If your tool (Excel, Personal Capital, Fund Manager, etc) gives you the ability to do so easily, it's interesting to see what percentage you're up since Jan 1, *2018*. For me, excluding the cash part of my investment portfolio, it's 6.2% percent..YTD on same part of the portfolio is 12.7%..

 

[donheff]

If your tool (Excel, Personal Capital, Fund Manager, etc) gives you the ability to do so easily, it's interesting to see what percentage you're up since Jan 1, *2018*. For me, excluding the cash part of my investment portfolio, it's 6.2% percent..YTD on same part of the portfolio is 12.7%..

Look from later in January after the market rally and just before things started going south. My 2018 high point was 1/26/2018, up almost 4% from Jan 1.

 

[Andre1969]

This prompted me to check my own numbers. As of the 7/12/19 close, I'm up around 18.5% for the year. If I look back to 7/31/18 though, my return is around 4.3%. It might sound a bit lame looking at it that way, but when you factor in that little pullback we had at the end of 2018, I'll take it!

From my peak in September 2018 to the bottom on Christmas Eve, I was down around 17.5%. The comeback from then was swift, though. By New Year's Eve's close, I was only down about 13% off that high. And, while 2018 as a whole is a year I'm not going to brag about, despite the turmoil in Feb/Mar and again in Oct/Dec, I finished it with a loss of around 6.9%.

I did make a few mistakes during that downturn, at the end of the year. I sold a few stocks at a loss, to get the tax break, and had planned on buying them back after 30 days, at reduced prices. Well, damn if just about every stock I did that with didn't suddenly shoot back up! This recovery was a lot quicker than I thought it would be. It wasn't a huge amount in the overall scheme of things, though. A rough guess is that if I had just left it alone, I'd be about 0.5% better off now. So, to put that in perspective...since the Christmas Eve bottom, my return now is about 25.1%. If I had just left those stocks alone, I'd be around 25.6%. I'm not going to cry over that, though.

 

[cyber888]

I’m almost back to where I was. ... needs a few % more to go up after going down last December .. but there’s plenty of talk about recession in 2020 ...hmmm..

 

[OldShooter]

Not to pick on anyone, but this idea of "back to where I was" is of interest to the behavioral finance people. It is rooted in the fact that we humans hate losing much more than we like winning. A similar phenomenon is the situation where we hold on to losers, the psychology being that we haven't actually "lost" until we sell. If you think about it, neither of these really makes much sense. Our portfolios don't know or care what their history was and, in buying and selling, neither should we. (Tax issues excepted.)

Richard Thaler's "Misbehaving" is not really about investing at all but IMO it is valuable reading for investors. We are not so rational and calculating as we think we are but, understanding that, we can become better investors.

 

[The Cosmic Avenger]

Richard Thaler's "Misbehaving" is not really about investing at all but IMO it is valuable reading for investors. We are not so rational and calculating as we think we are but, understanding that, we can become better investors.

Oh, if you're interested in how we (mis)estimate and (mis)understand risk and probability, I can't recommend highly enough "The Drunkard's Walk: How Randomness Rules Our Lives" by Leonard Mlodinow. It also doesn't specifically address investing, but is also very valuable in understanding our assumptions more clearly.

Malcolm Gladwell's "Outliers: The Story of Success" actually does a good job of discussing managed fund performance in one chapter, though. In brief, imagine that every fund manager is flipping a coin each time they make a choice. There have to be some outlier funds that just had long runs of heads or tails simply because there are so many of them performing so many coin flips. Even performance over 10+ years may be due to luck, even though it's counterintuitive (Mlodinow addresses that part well, actually).

 

[rk911]

I track the DJIA weekly closes on Fridays. at the end of 2018 the DJ was down 7.85% and our net worth for the year dropped 4.45% compared to 1/1/18. but when in context with the gains in 2017 it was a pebble in a pond. so far in 2019 (again based on weekly Friday closes) the DJ is up 16.64% vs 1/1/19 and our net worth is up 12.37% vs the close on 12/31/18. we're pleased.

I don't look at the numbers on a daily basis as I don't see the point. market drops...i go about our business. market gains...same. I track and log the weekly closes for the DJ and, starting this year, the S&P mostly 'cause I always have (19-years now), it's fun and it shows trends.

 

[Koolau]

I glance at my quarterly statements, but haven't recently done a NW calc. recently (probably should.) Full disclosure, my AA is only about 30% stock. Honestly, the fact that the markets are still going up after 10 years is the amazing part of the story but YMMV.