“67% of actively managed U.S. equity funds underperformed the S&P Composite 1500 index, which comprises 90% of all U.S. publicly traded companies, over three years; 72.8% of funds fell short over five years, 83.2% fell short over 10 years and 86% over 20 years”
My performance so far against the global index with currently 40% alpha. What do you guys tell yourselves when reading the above about professionals failing to beat the market and wondering if its your ego or your head is telling you to actively invest? Do you think my 'strategy' could actually work over 10+ years?
My 'strategy' thus far:
- Being young and comfortable with volatility I've gone for a tech/contrarian heavily concentrated approach of just 3 holdings at any one time. At times having 60%+ in just one holding.
- One of my first three picks was Tesla which certainly gave my portfolio a leg up. My only mistake in hindsight was constantly taking profit for the year or so I held it. I work in Green energy so felt I understood the sea change about to take place in 2019/2020.
- I've done some pretty dumb stuff too- buying Carnival Cruise shares when covid hadn't even left Wuhan yet, swing trading, dabbling in the meme stock madness, had a large cash allocation in early 2021 convinced I could time the market.
- Over time read a lot of Peter Lynch and have tried to take a more passive value investing approach.
Currently my holdings are:
- 44% GOOGL – I view this as a tech index in itself. I trust them to make smarter small cap acquisitions than I could and I think the online ads business will be stable. YT is a sleeping beast IMO.
- 42% BABA – even if their cloud growth projections are only half-right they'll beat the market long term. Lot of fear in this stock which I think will recede over time.
- 13% VWRL – I use this as a cash instrument and massively drew down on this to shore up BABA over the last 6 months- I'm aware that's the sorta BS Cathie Wood does but *shrug*.
- 1% 3X leveraged Nasdaq 100 – been slowly accumulating after the underlying fell -15% to -20% recently. Basically a bet that big tech is only going to only get bigger. Weighted according to its astronomical risk.
Source to quote: https://www.latimes.com/business/story/2021-12-08/peter-lynch-index-fund-investing#:~:text=More%20than%2067%25%20of%20actively,and%2086%25%20over%2020%20years.
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