(Written on 5/17/2018 to be published while on vacation)
It's good to review your holdings from time to time to see how you're doing. Re-evaluate your thesis of investment and either hold, re-up, or sell. If you're not doing better than an S&P 500 ETF you should probably just go with that from now on.
I have an 81% hit rate, but the amount I beat the S&P500 by varies. More about that latter, here's my scorecard. Of note, these returns don't include dividends as that would be significantly more complicated than just looking at my last statement and a graph of the S&P500. There's a known small error rate included which comes from date truncation in the graph and, similarly, mouse position.
I've had more than 30 positions (not including some calls & puts) from this 8 year time frame which is mostly since 2011. This table doesn't show the sale of some of my winners which financed my first home, Facebook & Visa (acquired in the flash crash after I proposed a thesis that Visa is overbought) being most notable but also included CCH. I bought the benchmark ETFs forseeing an evaluation of this kind.
So most holdings started at around 0.5% of my portfolio, the benchmarks closer to 0.2%. Notable exceptions were Amazon, Disney, main, Twitter, and UNH started at 10-20% while OLED & Walmart were 5%. I'm good at buying dips, but haven't flipped much. I should stick to the dip & flip thesis merely because of alpha. I flipped Visa, I should have flipped Walmart, and I should've had the sense to buy and flip Netflix during the "Quickster" debacle as it perfectly fit the news with a high impact on the stock but not the fundamentals. That case may illustrate how difficult it is to sus out good buys in your presence without the benefit of foresight and hindsight.
So what did I take from this exercise?
I've decided that Bond Ladders are for me and plan to put 50 to 75% of my cash on hand into them as there is seldom enough market errors to justify my cash position, and since I have a margin account I'll never really be in the position that I can't buy something and by redeeming a ladder investment I can quickly close the margin value.
I need to commit to selling when a stock I acquire on a dip and flip, recognize them as trades, and not slip them into long-term investments.
Even with all the time I spend on stocks, and the significant value I can extract from it, I'm beating the market by less than I'd like on a dollar weighted basis, on a regular enough basis, not to bring my portfolio toward a 30% position in SPY by dollar cost averaging and dip buys. I'll maintain that ability with my new friend the Bond Ladder.
It's good to review your holdings from time to time to see how you're doing. Re-evaluate your thesis of investment and either hold, re-up, or sell. If you're not doing better than an S&P 500 ETF you should probably just go with that from now on.
I have an 81% hit rate, but the amount I beat the S&P500 by varies. More about that latter, here's my scorecard. Of note, these returns don't include dividends as that would be significantly more complicated than just looking at my last statement and a graph of the S&P500. There's a known small error rate included which comes from date truncation in the graph and, similarly, mouse position.
| Ticker | Purchase date | Return | S&P | Alpha | Thesis |
|---|---|---|---|---|---|
| AMZN | 2/2018 | 19% | 3.9% | 15.4% | Expected the dip was short-term and Amazon is good. |
| DIS | 10/2014 | 11.22% | 37.3% | -26% | The dividend isn't bad. Lucas Film, Marvel, ESPN, and Disney. I still believe in the future, but people are doubting ESPN and the Netflix competitor. |
| EXC | 1/2012 | 13.69% | 106.97 | -93% | I acted on questionable advice, energy utility. Dividend helped here again but I've been hanging onto it too long and it wasn't a good pick up, but I learned a lot by owning it so long. |
| GLD | 12/2011 | 4% | 123% | -120 | "It might keep going higher" It didn't, but it did make my monthly balance more even. This and other reasons did convince me of the merits of holding gold in a down market. |
| HYD | 12/2012 | -8% | 92% | -100% | Another case of looking for someone to pick bonds for me, an error. In 2007 it did do quite well however and it's how I ended up with it, a shadow investment then. |
| IVV | 6/2015 | 4% | 30% | -25% | Diversification, hard to beat the blue chips but a negative alfa off an ETF that's supposed to replicate it? |
| IWO | 6/2015 | 30% | 30% | 0% | Interested in the growth prospects of the Russel 2000, could be worse. |
| KO | 2/2013 | 12% | 79% | -68% | It's Coca-cola. |
| Main | 4/2013 | 132% | 72% | 60% | Leveraged buy-outs & restructuring, high returns, high dividends (not included in alpha). I'm proud of this one (and it's been a major holding) so it needs another in-depth. |
| OLED | 10/2014 | 250% | 37% | 213% | OLED is the truth and the light! |
| PYPL | 7/2015 | 204% | 28% | 176% | Where the real value of Ebay is, digital currency. The kind that works. |
| RWO | 5/2013 | 105.9% | 66.64 | 39% | Another benchmark buy. Nothing teaches quite like following something over time. |
| SPY | 10/2013 | 64% | 56% | 8% | If you can't be the S&P . . . dollar cost average into it. |
| TWTR | 5/2014 | 30% | 45% | -15% | Brilliant product that isn't well monetized. They should be able to as FB did a great job. Bought on DIP when insiders were released from the obligation to hold, probably should have flipped it by now. |
| UNH | 10/2015 | 119% | 34% | 85% | A complex thesis that included: Healthcare play, dividends, market presence. |
| VUG | 6/2015 | 36.97% | 29% | 8% | ETFs can be hard to beat, let's compare me to others. This one is a growth index. |
| WMT | 4/2012 | 46% | 97% | -52% | While accused of corruption in Mexico, those cases take 7 years+ to resolve it rebounded 30% within weeks and I should have sold it then. |
I've had more than 30 positions (not including some calls & puts) from this 8 year time frame which is mostly since 2011. This table doesn't show the sale of some of my winners which financed my first home, Facebook & Visa (acquired in the flash crash after I proposed a thesis that Visa is overbought) being most notable but also included CCH. I bought the benchmark ETFs forseeing an evaluation of this kind.
So most holdings started at around 0.5% of my portfolio, the benchmarks closer to 0.2%. Notable exceptions were Amazon, Disney, main, Twitter, and UNH started at 10-20% while OLED & Walmart were 5%. I'm good at buying dips, but haven't flipped much. I should stick to the dip & flip thesis merely because of alpha. I flipped Visa, I should have flipped Walmart, and I should've had the sense to buy and flip Netflix during the "Quickster" debacle as it perfectly fit the news with a high impact on the stock but not the fundamentals. That case may illustrate how difficult it is to sus out good buys in your presence without the benefit of foresight and hindsight.
So what did I take from this exercise?
I've decided that Bond Ladders are for me and plan to put 50 to 75% of my cash on hand into them as there is seldom enough market errors to justify my cash position, and since I have a margin account I'll never really be in the position that I can't buy something and by redeeming a ladder investment I can quickly close the margin value.
I need to commit to selling when a stock I acquire on a dip and flip, recognize them as trades, and not slip them into long-term investments.
Even with all the time I spend on stocks, and the significant value I can extract from it, I'm beating the market by less than I'd like on a dollar weighted basis, on a regular enough basis, not to bring my portfolio toward a 30% position in SPY by dollar cost averaging and dip buys. I'll maintain that ability with my new friend the Bond Ladder.