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May 11 2010

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Can we beat the market 8 years in a row?


Investors, our 12 month return, according to our Bivio portfolio tracker, has us ahead of the S&P 500 index by 4.2%.  *(using prices from market close for 05/10/2010)

 

IRR

Portfolio Value

Maniacle Members of the Mausoleum

33.1%

535,761.33

Vanguard 500 Index Fund (VFINX)

28.9%

519,835.80

We’re also ahead of the first world international index by 14.1% over the past 12 months.  Below, you can see the blue line representing the U.S. S&P 500 and the green line representing the first world international stock index.

 

If we can keep our advantage over the U.S. market by December 31, 2010, it will be the 8th year in a row that we would have beaten the S&P 500.

Ironically, we could afford to lose 40% more than the S&P 500 this year, and still come out with a better 10 year track record than if we had invested in the S&P 500 instead.

I call that luck.

If you know any actively managed mutual funds that have beaten the index 8 years in a row, (May 2002 to May, 2010) let me know so we can properly salute them.

Of course, I’ll call them lucky too—at the same time.

About the author

andrew hallam

I'm a freelance finance writer, lucky enough to have been nominated as a finalist for two Canadian National Publishing Awards. I'm also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School, a book explaining how I became a millionaire on a teacher's salary, while still in my 30s. Working to empower people financially, I'm available to motivate and inspire people on basic retirement planning and index investing. I'm happy to comment on your questions, first, please read the Terms of Use.

Permanent link to this article: http://andrewhallam.com/2010/05/can-we-beat-the-market-8-years-in-a-row/

2 comments

  1. avatar
    The Passive Income E

    Well done! That's impressive. Out of curiosity, are your investment approximately the same between 2002-2010? Has your strategy been buy and hold or do you do some changes by taking profits and buying bargains?

  2. avatar
    Andrew Hallam

    Hey Passive Income Earner:

    Ironically, we do have many of the same investments today that we had back in 2002. We put a lot of faith in what we bought, and when the stocks we liked took beatings, we loaded up on them, buying more of them. Ian McGugan asked me to write about the club's results in a MoneySense article that you can link to at the top of my homepage. It describes the basic philosophy we have.

    I've done very little "selling". I was forced to sell Anheuser Busch when Inbev bought them out two years ago, and we ended up making a cracking profit on that one. But we couldn't have held on, even if we wanted to. Inbev just swept it from us, albeit, at a nice profit.

    We did buy USG for the club in its darkest hour, back in 2003. We paid $4.35 per share, sold half of it at $12.50, and then sold the other half at $35.

    We sold Mens Wearhouse at a nice profit after buying a load of it in 2003.

    Oh, and we also sold Schering Plough at $28 a few years ago, after paying about $15 per share.

    The rest of our holdings have been the same for ages, but as I mentioned, we averaged down on them when we could. Most recently, we bought some building material companies that took a real beating last year, and we are going to hold them for years if we can. We've made a very nice profit on them as well.

    I'm keen on selling only if prices get silly, but I would prefer that the prices of our stocks just flowed along nicely with the intrinsic value of the businesses. But of course, the stock market, as you know, can be pretty irrational, short term. In one sense, we have really profitted from that, so I can't complain.

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