Day 149: We're #2
The Mother's Little Helper portfolio was up today +1,204.33 (+0.17%). Overall GAIN YTD: +$119,593.56 (+20.48%).
According to CNN Money our benchmark index, the S&P 500 is up +7.39% Year To Date (http://money.cnn.com/data/markets/sandp/).
Recently I was talking with a friend about the MLH Portfolio and I just happened to mention, very proudly, that it is up over 20% year-to-date. Much to my surprise my friends response was simply a blank stare, "Is that good?" he said. Well it turns out that my friend is one of the millions of people in the U.S. that is not invested outside of a small 401K plan at work. He has no idea that the market is up, or that we've had one of the biggest bull markets in history. And sadly he has no idea what's in that 401K. He's been un-invested and uninterested for so long that he had no frame of reference for what a good return is vs. a bad return.
This got me to thinking, what's a comparison that would put the performance of the MLH Portfolio in a context that would help visualize how we've done. When I was a kid I had trouble with math, but fractions, addition and subtraction made perfect sense on a ruler in the wood shop. It takes about 935,064,935 gallons of water to fill the Superdome. The plastic bottles thrown away each year can circle the earth four times. The number of all cotton crew socks required to reach the moon is 1,261,000,000. You get the idea, so I thought I would compare MLH to the best hedge funds and mutual funds and see how we're doing. Granted this isn't a totally fair comparison since these funds have been around for a long time, have professionals with massive resources on tap to get at all the information they need. Also the best way to evaluate the performance of a fund is by it's 'Risk Adjusted' return over 3 years and 5 years. Since MLH is not even 6 months old the only comparison that makes sense is current year-to-date performance.
I went to TheStreet.com (Jim Cramer's shop, the Mad Money guy) and researched "Best Mutual Funds" and "Best Hedge Funds" for 2017. The results here were much the same as I found at Barron's, Morningstar and others. You can look at the complete list here (TheStreet.com).
Compared to The Best Mutual Funds on a YTD return the Mother's Little Helper Portfolio would rank #2 overall. And #1 since inception (yes I'm being sarcastic), but let's see how we do by the end of the year.
When compared against the best hedge funds MLH ranks #8. These are those billionaire hedge fund managers you hear about in the news. The smartest people in the investing world. Yet with minimal effort and the patience of a snail crossing a football field we made it on the 10 best list and may improve this ranking by years end.
None of this ranking really means anything to the MLH portfolio, we're not competing against those investments. And certainly this doesn't proclaim that I'm a stock market guru! The point is very simple, this is a logical frame of reference to compare the MLH Portfolio. Well...more logical than socks to the moon. And compared to what the 'Smart Money' is doing, the average investor can do better than the overall market and can even do better than the professionals.
The big question is, can we do it consistently over long periods of time? Looking at the Since Inception returns compared to the YTD returns of the Best Mutual Funds, the answer is no, none of them are consistent, so why would we be consistent. This is further illustrated by looking at the 1,3 and 5 year returns of the best hedge funds; those numbers are the antithesis of consistent. I would expect that the MLH Portfolio would also have big swings from one year to the next, but only time will tell.
Disclosure: I am personally invested long in these stocks that appear in the MLH portfolio and may purchase or sell share withing the next 72 hours. I am also invested in other stocks that do not appear in the MLH portfolio: BA, BRK.B, CELG, CSCO, CTXS, CVX, DOW, DVAX, FB, IBM, NTES, NVDA, OMER, PFE, PG, RDHL, SCHW, THO, TWX, VEEV, VZ, XLNX, XOM
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.