Bogle, Buffett and Me

July 8, 2013

 

In my post of January 14, 2013 I chose my 2013 ” Fantasy Portfolio ” of  nine ETFs and one equity ( Verizon ).  ( See entire list in my January 14, 2013  Archive shown to the right of this article.)

I imagined having a storefront where I could advise  ” investors ” who were converting from 401K accounts  to brokerage IRA accounts

With all due respect to John Bogle ( Vanguard ) and Warren Buffett  ( Berkshire Hathaway ),  I thought I could  obtain performance superior  to their repeated suggestions that the only way for the average man to beat Wall Street is Buy and Hold investing in Index Funds..

I supposed I could come up with a 10 name portfolio which represented a group of sectors and sub-sectors which largely eliminate specific risk while  simultaneously possessing better performance characteristics than SPY or VTI .  ( I should say here that SPY is the ETF that represents the 500 largest USA companies as per Standard & Poors. and that VTI is Vanguard’s total USA stock market index and contains 3300 names ).  Plain vanilla, right ?

So, how am I doing so far in 2013 ? 

I updated my January 13 list ( See January Archive – Amended ) and based on July 6, 2013  closing prices here are the year to date results:

( My Fantasy Portfolio average profit…….  13.58% )      ( VTI profit……  15.01% )      (  SPY profit……  14.5% )

So, there I am, bringing up the rear, with more risk, more commissions and more internal fees.

If it were true that all my clients needed were investments in SPY or VTI, what would that do to my role as an advisor ?  My clients wouldn’t need me beyond the first visit !!

Except for one thing…….I remain convinced that ” tampered ” timing   via the use of  a  200 day moving average (  month end ) strategy , as opposed to ultra sensitive 20 day timing and 50 day timing methods is superior to the Buy and Hold strategy,   unless you have both  the courage and patience to Buy at the right price, (  blood in the street ),  and then,  have a strong enough stomach to Hold , by withstanding the gut wrenching sensation of  what could become  a  56% drawdown !   ( October 9, 2007  to  March 9, 2009 )…17 months of agony with  absolutely no certainty the closing price of March 9, 2009 was going to hold.  

At this point it looks as though  my fantasy storefront will never be occupied by me…..unless I can find a way to sell the notion of charging  just one fee for just one lesson that will totally  immunize an investor  for life against all the surprises lurking in the Wall Street’s  jungle…. hmmmm !

 

 Richard Maurice Gore

 

 

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