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Investment Returns: Home Runs and Strike Outs - What Kind of Hitter is Geoff?

Pop3595 views  2010-10-04 11:23   TagsHitter  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?

-   Fred

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:

Minimum: 7.57%

Maximum: 61.10%

Median: 22.61%

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.

Talk to Geoff about Investing Home Runs and Strike Outs

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