mispoken

You are correct. Roughly 300% since 2008 over 12 years is an average of 25% per year. But, this does not take into account the compounding you mention. My returns are annualized using modified internal rate of return (XIRR function in excel). This takes into your starting balance, your ending balance, cash flow in and cash flow out. The number it gives you takes into account the compounding of your returns year over year.

Long answer longer; without doing the math, yes; my returns have probably come closer to the 8,000 you give.

GucciBoy

How about I give you $100K & you give me a guaranteed 15% return for 10 years? You can keep the rest. You can collateralize the deal with your portfolio.

mispoken

I think investing other peoples money is where it goes from “fun”, to “not fun”. Truth is, it’s not as hard as “Wall Street” wants us to believe. I’m no genius, I just followed The Motley Fool religiously, bought great companies and rarely sold anything. A handful of these great companies will provide outsized returns (1000-2000%) and voila, market beating performance! The hard part is sitting on your hands and not “taking profits”.

It’s working for me; but as is it’s so frequently pointed out here, got to find what works for you!

Trip7

This times a million. Famed value investor Joel Greenblatt stated this. He says he had to screen who his clients were as most people want to question his performance every week rather than look long term. And he averaged 50% annual returns for 10 years. Imagine the compounding on that!

Sent from my SM-N986U using Tapatalk

mispoken

A good friend of mine is an RIA, and he interviews his clients, not the other way around! Imagine that! He just turned away someone a week or so ago, he could tell they weren’t cut out for his style of investing, despite his incredible track record. They would most certainly be the daily or weekly called asking why the market is down and if they should get out or the market is up, should we take the profits and get out; type of person. It would be incredibly difficult to manage someone’s emotions AND their money.

TegridyFarms

Food for thought: https://www.cnbc.com/2018/05/07/warren-buffett-10000-invested-in-an-index-fund-when-i-bought-my-first-stock-in-1942-would-be-worth-51-million-today.html

This guy can’t beat the S&P. He’s the GOAT of investing.

Jim Cramer who is a prophet to some, and a fraud to others, he can’t beat the S&P.

Investing in the S&P is investing in America. Is it 100% of my portfolio? No. It’s 100% of my 401k though. Outside of that I have had some incredible luck since the market crash of 2008. You guys can compare percentages and strategies all day, bottom line is S&P with DRIP (dividend reinvestment program) is tough to beat over time.

Interesting side note is that the S&P is basically turning into a tech fund now. Will be interesting to see what happens over time... but I wouldn’t bet against American companies.

Jiggawatt

This is the problem with historical data. You cherry picked 2009... the very bottom of the market. If you instead started just one year earlier, and bought the S and P at the start of 2008 (it was at 1447), you’d have a much more normal return of about 12% between then and now. Or if you lost your nerve and took your money out in 2012 you would have minimal profit (and you would’ve lost money if you had started in January 2007 or Jan 2008).

It’s historical market timing to compare someone’s performance to the market’s performance during one of the longest bull markets in history.

Gunfighter

15% is pretty steep ask for a loan collateralized by a portfolio. 4-7% in a margin account would be a much better deal.

Fidelity Margin Rates
Tradestation Margin Rates
Tastyworks Margin Rates

Amen to that! The "not fun" aspect of investing other people's money is what kept me from accepting partners in any of my real estate deals. Explaining my decisions on distributions vs reinvested earnings didn't sound all that appealing.

At some point there may be a place for passive investors in syndications, but that day isn't here yet. If it does happen, there will be very clearly spelled out expectations about management, distributions and capital events. Aw crap, I think I just talked myself out of it again...

Gunfighter

Excellent point, the same holds true in real estate. Lots of us were "real estate geniuses" just by virtue of the fact we started buying in 2007. When analyzing portfolio performance, the income from the properties is the most important metric. Equity can fluctuate by a huge amount with a small movement in cap rates on commercial property. The net operating income is what pays the bills and keeps you solvent.

TED74

Problem is... that doesn't sell systems, or software, or memberships, or subscriptions or clicks or books. Sure, you can make great money without thinking or regularly tracking the market, but where's the fun in that?

I have always been perplexed by the stock-picking sections of personal investing magazines that went to print weeks or months before I'm reading them. Having read the diversification advice in the preceding articles of that same magazine, I'm certainly not going pick individual stocks with any significant portion of my savings and if I were, it wouldn't be based on advice in an old school magazine.

To each their own, I guess.