It seems like we could have just as well closed the stock market for nine months. Sure, we would have missed a lot of volatility, but the end result would have been about the same. The performance of my portfolio, as well as of the AEX index, was within +/- 1% of the start of this year. What did change however, was the composition of my portfolio (something that couldn’t have been achieved without an open market, of course). Skagen Global continued to disappoint, so I got rid of it. The result of this fund was a 12,5% profit in 14 months.
Most of the proceeds of this sale was kept in cash. Only a fraction is reinvested in iShares Core MSCI World UCITS ETF (quite a mouthful). This ETF tracks the MSCI World index. Trackers are extremely suitable for investors who just don’t have the time to study companies or don’t have the capacity to do so. They are very cheap compared to mutual funds, and although they don’t beat the index (neither do most of the mutual funds), they will consistently come close to the returns of the index they follow. One thing I made sure of was that the ETF I invested in really owns the stocks and doesn’t replicate the index returns using derivatives. By using derivatives an ETF could bring risks you don’t want to have or don’t even realize you have.
Why did I only invest a fraction of my money in the ETF some might ask? Well, I really would like to put the rest of my cash holdings in it, but in my opinion would that not be a wise move. At the moment the price to earnings ratio of the S&P 500 based on trailing twelve months is high, quite high. When you take a look at the past you’ll find a mean of 15.55, a median of 14.60 and a current p/e of ± 20, see the following website. Therefore, I’ll wait to commit a lot more money to the ETF but will in the meantime use a by Warren Buffett advised strategy. I will “accumulate shares over a long period and never sell when the news is bad and stocks are well off their highs“. This can be achieved by letting the computer buy trackers monthly through Binck Fundcoach (or another suitable bank/broker). Only the amount of euros will be fixed. The rest will be out of my control so that I can’t make dumb decisions like buying high and selling low.
To conclude this post I have added the page from the Berkshire Hathaway’s 2013 annual report wherein Buffett gives some advise to the average investor. Read it.
Or just watch this:
The tables below show the portfolio as of 30 September 2015 and the performance of the portfolio until 30 September 2015.
Click on table for larger view
The Portfolio (1) is denominated in Euros. Transaction costs, custody fees (bewaarloon) and dividends are when necessary included in the Annual Percentage Change. (Dividend tax is included in full years (2010 to 2013)).
The AEX (2) is a stock market index composed of Dutch companies that trade on Euronext Amsterdam. The Annual Percentage Change is calculated without taking the dividends of the current year in account.
The S&P 500 (3) is a stock market index based on the market capitalizations of 500 large companies whose common stock is publicly traded on the NYSE. The Annual Percentage Change is calculated without taking the dividends of the current year in account.
In calculating the Compounded Annual Gain is the current year considered as completed.
Since 14 May 2012 the currency risk isn’t hedged anymore. This means that currency fluctuations can significantly influence the performance in the short term. To show how the currency fluctuated during a certain period, an extra column is added with the fluctuations since 14 May 2012. A decline indicates that the US dollar has become stronger against the Euro and vice versa.