This week I have had the chance to look at the longer term performance of a couple of client accounts. Compliance rules prevent me from talking about the result but I was reminded of something quite important--managing your portfolio should be a long term pursuit not short term.
In looking at the result I really don't recall off the top the result (beat or lag) quarter by quarter. It is reasonable to expect over the long term you will be ahead of the market in some time periods and lag in others but the long term result is what matters most--quick, did you beat or lag the market in Q2 2005? Even if you do remember, how has it impacted your future?
A better question might be how have you done decade to date? Are you adding value to your portfolio over a long period of time (value can also be defined as just keeping up with less volatility)? If not then you need to make a change in your approach, save more money or plan to work longer.
Even if you are adding value saving more is probably a great idea.
With all of the attention and content toward buy now, sell now, now, now, now it is unlikely that come 2012 you will remember beating or lagging the market in Q1 2008 and it won't matter.
Wikinvest Wire
9 comments:
Roger, you have a unique ability to cut through the fog. Thanks.
what is the a reasonable return since January 2002? My records are not that good prior to 2002 and reconstructing my returns prior to then would be difficult.
Can some one post S&P returns for each year and i could calculate it my self?
you can use the historical price page on Yahoo finance to get this information.
12/31/2002 SPX 879
12/31/2003 SPX 1111
12/31/2004 SPX 1211
12/30/2005 SPX 1248
12/31/2006 SPX 1418
12/31/2007 SPX 1468
Roger,
Thanks again for your excellent perspective. Here i am beating my self up and I am out performing the indexes by a county mile this century.
Unfortunately I still see a lot of turbulence a head which will not be good for most, but will give lots of opportunity to many of us.
BTW could you talk born2code into stating his perspective a little more often (HINT)
born2code has a blog you can read here.
oh and as far as being ahead for the decade, that is of course a good thing but it seems that, as you imply it is very easy to forget the forest while you ar looking at the pine needles
Thanks for the site but he seems to trade a lot at his site. I believe in trading during bear markets but much more rarely.
I guess I will have to stay here and listen to reason. It is not about what I prefer, It is about what is good for my portfolio. This is not a game after all.
Roger, Sensible article. I started investing in 2002 and was a trader most of the time, until 2006. Realized to let my gains accumulate & from that point on, I was more like a gatherer than a trader. My [only] exposure is to Indian equities [not even bonds or RE - leave forex!!] so there was a 30% reduction in gains - no loss still.
On the other hand, my friend who does regular trading & asks me for tips [I don't give] has a list of losses & gains every year. Hope he learns it fast.
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