Sunday, January 12, 2014

Performance Review 2013



A pretty good year overall with a return on 17.3%. Remember folks that I am leveraged and hedged. Don't try this at home, and remind yourself that an absolute return strategy shouldn't be benchmarked against the main indices (even though I'm going to do that below), because I should be able to generate these numbers even if the market is negative. Well that's the theory anyway.

Interested readers can see exactly what I am holding via my Motley Fool profile. I update it regularly.

http://my.fool.com/profile/SaintGermain/info.aspx

As usual the graph of total return since inception in November 2009. The blue line is me, the red line is the S & P 500.  The NAV starts at a 100 so I am up 187% while the S & P 500 is up 79%.

 


I'm pleased with this performance. It works out to around 30% per annum, and that's not bad for a hedged portfolio in a bull market. Needless to say, I have lost a small fortune in shorting the index, but I have put myself in a psychological framework to make a smaller fortune on the long side by doing so. And I believe I am preparing myself for the possibility of a bear market and how to make money in it. Theoretically at least!

It's bizarre. I have a good set of academic and professional qualifications, an IQ of 147, a genuine hunger for achievement, a love and passion for investing, and-at the very least- some demonstrable ability at it. However, I find myself bereft of any social support or backing, and in truth, it has always been thus. I'd like to say that this has more to do with the investment industry than it does with me, but who knows? Maybe, I was just born as a maverick.

I no longer care to argue the toss, my path is set. I'm lucky enough to get to travel in Eastern Europe, meeting interesting people, having adventures and catching up on so much of the life I missed out on while I was desperately trying to break into the financial services industry in London. I failed in London. Or maybe, London failed me. No matter, the end result is the same.

However, I do care to dispute the notion that the financial services industry is populated by people who are being tested, and toughened up, by having skin in the game. It is not. And it is definitely not the survival of the fittest, because I'm still standing and earning money while toughing it out. Meanwhile the halfwits without skin in the game, and who demonstrably do not know anything about managing risk or generating returns, are earning millions.

And trust me, I tough it out. I operate alone. Me, foreign countries, a netbook, a coffee shop, and that's it. No social support network, no research team, no big fat salary at the end of the month. Nothing.

I digress.

The greatest piece of investment advice that anyone receive is to enquire of a potential investment manager, how much he has invested in what he is peddling? This will wheedle out the charlatans soon enough. You wouldn't hire a plumber if you go to his house, and find pipes leaking everywhere. So why should you give money to a collection of kids-in-suits just because they operate out of an impressive building?

Apologies for the stream of consciousness. Sometimes it's nice to let this stuff out.







For those that know and care....