First Quarter, 2007 Investment Returns

[audreyh1]

I'm amazed (and confused) that year after year the majority of the posters manage to beat the S&P 500 by a sizeable margin. Even professional money managers have a tough time doing that. Just what is the deal here? Do you guys really do that good? I'm not calling anybody here a cheater... But if it's true, I just want to get in on the action!

The S&P500 is dominated by large cap growth stocks. Large cap growth did rather poorly compared to other asset classes in Q1 2007, making the S&P500 easy to beat.

And this situation has been true most years since 2000.

Audrey

 

[wabmester]

The S&P500 is dominated by large cap growth stocks.

Growth stocks? Here are the top 10 holdings in the S&P 500:

ALTRIA GROUP INC
AT&T INC.
BK OF AMERICA CP
CITIGROUP INC
EXXON MOBIL CP
GEN ELECTRIC CO
JOHNSON AND JOHNS DC
MICROSOFT CP
PFIZER INC
PROCTER GAMBLE CO

I think all would be considered value stocks except for MSFT.

For comparison, here are the top 10 holdings in Vanguard's (large) value index:

EXXON MOBIL CP
GEN ELECTRIC CO
CITIGROUP INC
BK OF AMERICA CP
PFIZER INC
JP MORGAN CHASE CO
ALTRIA GROUP INC
CHEVRON CORP
AT&T INC.
WELLS FARGO & CO

 

[audreyh1]

OK, so I just should have said large cap. Large cap value did pretty miserably in Q1 2007 too.

Audrey

 

[wabmester]

OK, so I just should have said large cap. Large cap value did pretty miserably in Q1 2007 too.

Yup, not a great quarter for energy and financials.

 

[dmpi]

The S&P500 is dominated by large cap growth stocks. Large cap growth did rather poorly compared to other asset classes in Q1 2007, making the S&P500 easy to beat.

And this situation has been true most years since 2000.

Audrey

If you look at the poll done at the close of 2006, most people beat the S&P 500 for the year of 2006. And that year the S&P 500 returned better than 13%! I can understand that if you hold some international that can supercharge your return, but if you hold any bonds or fixed income that's going to knock it way down.

 

[wabmester]

If you look at the poll done at the close of 2006, most people beat the S&P 500 for the year of 2006. And that year the S&P 500 returned better than 13%! I can understand that if you hold some international that can supercharge your return, but if you hold any bonds or fixed income that's going to knock it way down.

What strategy became popular in recent years? Slice and dice, right? Overweight small value, right? What happens when a lot of money rushes into small and value? Small gets big, value gets growthy.

The recent outperformance of small and value relative to the S&P 500 is the largest since WWII. Many believe the time has come for that to change.

 

[dmpi]

What strategy became popular in recent years? Slice and dice, right? Overweight small value, right? What happens when a lot of money rushes into small and value? Small gets big, value gets growthy.

The recent outperformance of small and value relative to the S&P 500 is the largest since WWII. Many believe the time has come for that to change.

I'm just going to have start doing what you guys are doing.
If you can't beat'em... join'em.

 

[justin]

I can't speak for everyone else, but I established a target asset allocation and have been investing based on that target asset allocation. I'll be the first to admit that when the large caps (as represented by the SP500) outperform small caps and value and international, I'll experience some "tracking error". I like that term better than underperform the market!

 

[mickeyd]

1st Qy returns? Don't know for sure. I only check once a year around the end of the year. I'll get back to you in late December if that's ok.

 

[audreyh1]

If you look at the poll done at the close of 2006, most people beat the S&P 500 for the year of 2006. And that year the S&P 500 returned better than 13%! I can understand that if you hold some international that can supercharge your return, but if you hold any bonds or fixed income that's going to knock it way down.

Well, I matched the S&P500 in 2006, and with only 57% in equities! Reason? I had international, small cap, medium cap, and REITs in addition to large cap funds in my equity portion, and so the equity portion of my portfolio WAY outperformed the S&P500. These funds made up for any drag from bonds. I basically got the same performance as the S&P500 with significantly less risk/volatilty - a great deal IMO.

Even DODBX beat the S&P500 in 2006! It did 13.9%, and it generally holds a 60%/40% equities/bonds ratio.

Until large cap comes back in fashion - and it will one day - it won't be so hard to beat the S&P500.

Audrey

 

[JustCurious]

I can understand that if you hold some international that can supercharge your return, but if you hold any bonds or fixed income that's going to knock it way down.

Not true. Modern Portfolio Theory states that a diversified mix of non-correlated assets actually has a HIGHER risk adjusted return than a single class of assets. Likewise, studies have shown that an 80/20 mix of equities/bonds returns almost the same as 100% equities. (I think the difference in return over time is less than .5 percent, with a dramatic decrease in volatility)

As an example, Vanguard's total stock market index fund (VTSMX) returned 15.5% in 2006, while the lifestrategy growth fund (VASGX, approx 84/16 equities/fixed income) had a HIGHER return of 16.13%.

 

[FinanceDude]

3.11%...................

 

[dgalbraith100]

As of 4/1 I'm up 2.1%

I'm amazed (and confused) that year after year the majority of the posters manage to beat the S&P 500 by a sizeable margin. Even professional money managers have a tough time doing that. Just what is the deal here? Do you guys really do that good? I'm not calling anybody here a cheater... But if it's true, I just want to get in on the action!

Your seeing a "self reporting" problem. Those who do better, tell you to brag, those who do worse say nothing . Of course thats not 100% true, but close.

Laters,
-d.

 

[Ed_The_Gypsy]

...What is going on? Maybe I should move 50% of my portfolio into other global markets.

That is where I am. Of course that means I am not on John Greaney's Christmas card list.

By the way, 2007 has been up and down for my portfolio and until about 1 April I think it was at about +1.6% (had been up ~4+ % earlier). Lesson: All the gains are in a few days, so stay invested or you will miss them.

This mix has been good to us so far. No complaints. We rode out 1987 and 2000-2003 fully invested and we are doubling the pot about every 5 years. Will this continue? Will I live to enjoy retirement? Will we have to live in a piano crate under a bridge? Beats me. Gummy won't let me borrow his crystal ball.

 

[SecondCor521]

Quicken says 2.89%, but it puts an asterisk on that by pointing out that one of my kids' 529 accounts doesn't have a 1/1/07 valuation, so it is guessing for me. Take that data point out and I'm tracking the S&P/TSM pretty much.

2Cor521

 

[Finance Dave]

Up 3.2% for my 401k, my wife is up 4.1%

90% of our savings is in 401ks.

 

[teejayevans]

Your seeing a "self reporting" problem. Those who do better, tell you to brag, those who do worse say nothing . Of course thats not 100% true, but close.

Say it ain't so!!
Next you will tell me that people on the internet aren't always truthful
TJ

 

[rw86347]

Good thing I keep records. I thought I was doing much better.

I was up 3.8%

Over the past 6 months I am up 15%.

I have almost 50% international stocks.

 

[ScaredtoQuit]

My 401K is up 2.0% (not counting additional capital contributions as I suspect some people are!!) : : :

 

[rickier55]

Well, not so good here. 1.3 %. But that works for me.

Rick

 

[mishtone]

+88% as of today

USD 450k all equity portfolio, in an Eastern European country. No leverage, no derivatives, only straight common stocks.

 

[Texas Proud]

I'm amazed (and confused) that year after year the majority of the posters manage to beat the S&P 500 by a sizeable margin. Even professional money managers have a tough time doing that. Just what is the deal here? Do you guys really do that good? I'm not calling anybody here a cheater... But if it's true, I just want to get in on the action!

I don't beat the S&P year after year.. but my international has been doing great the last few... and I have about 10% of my portfolio in the company I work for which also has done well...

 

[unclemick]

3.21% - It's whatever the 65/35ish Target Retirement 2015 does. I don't check/rebalance my putz stocks since I'm going to putter with them anyway. Plus I often get 'offers I can't refuse':

KSE(the old Long Island Light), Bandag, New Plan Excel, and possibly Dow Chemical may get bought out - that's happened a lot with my dividend stocks the last 15 years - mergers/buyouts seem to hit in spurts.

heh heh heh - .

 

[Alan]

2.55%
40% stocks, 55% bonds 5% cash at start of year when I re-balanced. VG portfolio analyzer now shows 41.5%, 54.2%, 4.3%

 

[Alex]

I'm not being flippant, but I don't know and I really don't care.