The price you pay for those high quality businesses is important. If you bought Microsoft at it's peak in 1999 you would have to wait 16 years just to break even...
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I don’t think that is quite right because they started paying dividends in 2003.
And I think younger just made my point.
If MSFT was a business you liked and understood, you bought MSFT in 1999 at what was then the peak SP of around US$40 a share, and then just forgot about it…never bothered with the Willy measuring contest etc…
Well, 25 years later those shares would be worth US$369 today plus all of the dividends you received since 2003.
That ain’t bad. About 9 doubles.
So about 8% CAGR in terms of SP plus dividends. Total return north of 10% CAGR.
I think that is pretty solid for a stress free approach personally and you would do just fine.
Of course completely correct and correct on Microsoft, takes a lot of dividends to make up a 75% price decline. The subsequent recovery wasn't of course certain and the base rates for companies that then go on to perform like Microsoft did are practically non existent.
misaTea strategy would still work perfectly fine but how hard is it for most people to pick ONE high quality durable business that they understand let alone 10 or 20 and then in doing so if you don't outperform the index then you might well have just indexed. The idea of measuring against an index is that's the cheap easy option anyone can do with the click of a button, no thought required.
Yes all correct.
But I just wonder if the constant measuring would perhaps run the risk of you doing something that turns out to be sub optimal.
Most people here seem to have picked a basket of stocks.
You measure year 1, 2 and 3… and find you lagged the index. Oh no! I am really sh1te at this…better sell out and just index…
Nothing wrong with that…but I think there is every chance that if the companies you bought were solid businesses (even if you paid a little too much for then) if you just sat on your ass for decades you would come out on top of the index.
I have not back tested any of this before you ask, but it is just a ‘hunch’ I have. I think activity is what ultimately ruins people’s returns.
You are absolutely right and there is a lot of data out there to back up what you say.
There are some amazing statistics out there from the various investing platforms that the highest performing portfolios belong to the dead!
Another incredible thought exercise is that you could start out as an investor after having studied for 10 years - and studied all the real stuff. You could then randomly buy the same stocks in similar proportions to David Einhorn (without even knowing who he was) and by coincidence you could mirror him for 5 or 6 years.
After this time, you realise that you are rubbish and sell everything and index. Where the reality was that you were actually up there with the very best in the world. You just never knew it.
This is why process beats outcome, and why you need a full cycle plus before you can really measure. 15 years.
What data are you using to calculate the total returns for the respective indexes?
A couple of percentage points over a quarter century....
That's the difference between turning 100k into 677k in 24 years
vs
1.1 million.
A couple of percentage points is absolutely massive.
A fair bit of the NZX returns have been from our semi emergence from Communism - state assets sold cheaply, but to think that NZ will perform anything like the US going forward the next quarter century....
Good luck.
I have read every post Winner has made for many years
How is this not a personal attack??
The reason I deride you is for your constant crying and immature posts on OCA thread where you make childish comments in reply to many incredible posts. You contribute absolutely nothing but scoff at anyone who has anything positive to say. You are clearly a massive bag holder and for someone who doesn't care about returns as they have so much money it doesn't add up... You also constantly post ridiculous things about the macroeconomic future that you are desperately trying to predict, but you have so much money you dont even bother to measure if you are going forwards or backwards...