Day 321: Achieving Average?


Mother's Little Helper portfolio was DOWN today -$4,836.72 (-0.58%)

Overall GAIN YTD: +$248,068.63 (+42.48%).

Our benchmark index, the S&P 500 is up +15.45% Year To Date.

http://money.cnn.com/data/markets/sandp/

Making a Reporting Change

I have been using Google Finance's Portfolio feature to track the Mother's Little Helper portfolio in real time but we're about to lose that tool. Google is in the process of making some changes to the portfolios feature which means I won't be able to get the updates to stock prices linked between Google Finance and the blog the way I have been. To resolve this I've downloaded the portfolio from Google Finance and will simply update the closing prices manually at the end of each day.

Achieving Average

The portfolio had a tough week last week as we're down 3.48% from our high water mark of 45.96%. Still we can be very happy that we are bashing the S&P 500 by 2.75 times in a market where investment advisers are still telling clients to expect lower returns over the long term. The numbers I hear these days are 7%-7.5%. Interesting because just two years ago mom was being told to expect 3%-4% returns. Any investor who is told to expect a return that's lower than the S&P 500 long term average is paying too much for that advice. Since 1928 the S&P 500 has an average annualized return of 9.8%; but that average can be hard to achieve in any given year. See this article on CNBC.com

In an increasingly globalized market, and especially a market where US stocks are reaching some lofty valuations it's prudent to look for value and growth outside of our own borders. Just investing in an S&P 500 index fund and expecting 9.8% returns year-after-year isn't going to happen. You'll see that return over 10 years or more but not year-to-year. The problem with diversifying globally is an average investor doesn't want to go looking for foreign stocks when selecting US stocks is already hard enough. Besides what if you buy a foreign stock that turns out to be hard to sell, or the company gets nationalized by an unfriendly government. The solution to this diversification and liquidity problem is simple, buy an exchange traded fund (ETF's) that gives you exposure to foreign markets without the risk of owning individual stocks. I've discussed these funds in previous posts and will write about them again before the year ends.

2nd Half Update

In a previous post on August 31, 2017 I selected four companies as my best bets for the second half of the year (see post here). So far those picks are up over 19%.

Company Cost Current Price Clay's YE target

Progenics Pharmaceuticals (PGNX) $6.73 $5.42 $10.00

United Rentals (URI) $118.06 $144.16 $135.00

Synaptics (SYNA) $41.57 $39.26 $55.00

Nvidia (NVDA) $169.44 $212.94 $200.00

Total Gain/Loss +19.58%

Stay Invested

Clay Baker

Disclosure: I am personally invested long in these stocks that appear in the MLH portfolio and may purchase or sell shares within 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, TBT, 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.

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This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice.
This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.

© 2016 by Clay Baker all rights reserved