Investment Returns: Home Runs and Strike Outs - What Kind of Hitter is Geoff?Pop3628 views 2010-10-04 11:23 Tags: Hitter Home Investment Strike Kind
A reader sent me this email:
I'd assume you must either hit home runs or strike out, what's your long term ROI?
Going back 10 years: my compound annual growth is about 15%. That’s misleading. I was down 38% in 2008, up 41% in 2009, and up 39% this year.
I don’t just hit home runs and strike out. I could say why in words, but you’d have to trust my interpretation of what a “home run” and a “single” is.
Instead: I went back and took the non-annualized returns on positions I closed in 2009 and 2010. Here’s the breakdown:
Arithmetic Mean: 27.45%
Geometric Mean: 22.82%
Harmonic Mean: 18.72%
Standard Deviation: 16.31%
Coefficient of Variation: 0.59
I haven’t closed a “strike out” position in two years unless you count +7.57% as a strike out. Considering how far the market’s bounced from early 2009, maybe we should count 7.57% as a strike out. I don’t see any home runs either. I mean up 61.10% is nice, but individual stocks have moved way more than that since 2009.
I didn’t count open positions. But it wouldn’t change things much. None of my open positions have unrealized losses. Some are close. For example: Barnes & Noble (BKS) is at $16. My cost is $15.36.
I get a lot of doubles and walks. I’m not a home run hitter. 100% returns in a single stock are rare for me. I sell too soon.