2023 Returns

[ValueNZ]

What would happen if you just picked 10 - 20 high quality businesses that you understand, dollar cost averaged into them and then just held then forever, never looking up the quoted value (because it is of no interest given you are holding forever) or measuring ‘progress’ over arbitrary timeframes against arbitrary benchmarks (or indeed against other people’s portfolios).

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...

[mistaTea]

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...

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.

[SailorRob]

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...

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.

[mistaTea]

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.

[SailorRob]

From another thread - Rob was kind enough to put this in big bold letters

Disingenuous Winner? I put it in the same font and size as your message I was replying to about economists predictions for 2024...

Rob, I’d love to praticipate in this discussion but as I have no idea of my net worth (or even $ value of shares) at the beginning and end of 2023 even if I was inclined to I can’t calculate my ‘2023 Return’ but I’m sure it’s a positive number

It would certainly be very easy to calculate as you know, to state that it's beyond your ability is not honest. But you are 'sure' it's a positive number? Ok. I don't buy it Winner.

I gave up counting such things years ago and that makes me feel good…..and guite honestly I don’t really care. Leave that to the accountant to sort out.

Why then do you focus so much on trying to desperately predict the near term future for your stocks and the economy, you seem incredibly interested in what is going to move your portfolio, more than perhaps anyone? You seem to be extremely distressed by your bag holding in OCA? This just does not add up...

My Mum always kept reminding me that the love of money can be the root of evil ….and that while recognising the role that money can play in our lives it is important to use it wisely and keep focusing on what is truly important and avoiding the trap of greed and materialism etc

The love of money is what drives innovation and productivity. While it can sometimes lead to 'evil' more generally as Adam Smith taught us all in 1776, it is the individuals self interest and love for money that creates all wealth. Someones love for money drove them and others to develop the technology that allows a woman in her 80's to be gardening a week after a major knee operation where in the 70's she would have been crippled for the rest of her life. Every single thing you enjoy in your standard of living was due to someone's self interested love for money.

Suppose some would say I’m lucky to be one of those ‘boomer’ generation of accidental millionaires …..starting with very little except loving parents and family to where I’m at today …but would modestly say I have to a some extent have had a say in my destiny.

Who knows peoples individual circumstances. If you can honestly say that you have not had any money from inheritance and have got to where you are from saving and investing your own capital then good on you.

So Rob …all I can say is the ‘2023 Return’ for me has been another satisfying and rewarding year….and with that I hope that you respect me for that and don’t hassle / deride me any more

Having a satisfying and rewarding year and the financial performance this thread is about are of course two very different things. I can certainly respect you for that.

​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...

Post of the bloody year, well I am glad it's only the 3rd.

[SailorRob]

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.

[SailorRob]

I am quite prepared to receive a slightly lower return from investing in my own country not only for the administrative ease. In any case the returns over the longer term (10+ yrs) from NZ shares have exceeded returns from Europe. This century the per annum gross returns from NZX50 have only been a couple of percentage points below the gross returns from the s&p500. Allowing for imputation credits, the after tax return would be closer. Have a handful of mega-performing companies skewed the S&P500?

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.

[RupertBear]

Post of the bloody year, well I am glad it's only the 3rd.

WOW did you really need to attack everything Winner said?

Did it make you feel better?

Worst post of the year so far IMO

[SailorRob]

WOW did you really need to attack everything Winner said?

Did it make you feel better?

Worst post of the year so far IMO

Not an attack, just a quest for the truth.

Go read the last 100 posts made by winner and then come back.

[RupertBear]

Not an attack, just a quest for the truth.

Go read the last 100 posts made by winner and then come back.

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...