COBF 2020 Returns (pre-tax, after fees, etc)

[SharperDingaan]

2020:  14%

Historical
2020: 14%
2019: 31%
2018: 11%
2017: 10%
2016: 22%

Largest positive 2020 impact on portfolio:  Griffin Industrial, Charter, IES Holdings, Rosetta Stone, Parkit, Williams, IAC
Largest negative 2020 impact on portfolio:  Black Stone Minerals, Wells Fargo, Hill International

After a good 2019, I was fat, lazy, and unprepared in March, which led to some poor investment decisions, poor portfolio management, and missed opportunities.  Hopefully I've learned a few lessons.

The distribution of returns in the voting is interesting.  If the S&P is down, say, 15% next year, will we have the opposite negative skew to returns (a fat tail with -50% returns), or have board members mastered catching big upside while avoiding big downside?

To deal with exactly this issue - we have an adjustable target total equity cost (adjusted for dividends since day-1), and a maximum market value forcing a capital repatriation. Within limits, as our MV rises, so does our target equity cost. Proceeds typically not repatriated until 3-6 months after they were raised.

As we prefer concentrated positions, our downside is exposure to multi-year STRINGS of losses of 25-50%+/yr; hence, you aren't selling this to OPM. Our upside is that repatriated capital  (as and when it occurs) pays off mortgages, funds education, capitalizes new opportunities, etc. Immediate benefits, that show up as incremental discretionary cash flow every month.

Works for us, but everyone needs to evolve their own process.
Good luck.

SD

[Gregmal]

Ive read in a few places that like 85% of the markets returns occur during something like 10% of its trading days.

This is kind of besides the point, but I believe that quote you always see from CNBC about "you gotta be in the market because the 10 best days account for all of the return in any given year". It's such a cherry-picked fact. When did those trading days occur? Probably during periods of heightened volatility where the market was swinging up and down wildly. So in order to get the best trading days you had to stomach the worst trading days too.

I've never actually looked at this before, but it confirms my suspicion about the "best trading days" garbage CNBC feeds retail investors.

The attachment shows the 2020 trading days ranked in order (by absolute value of returns) and shows you that the best and worst days were clustered around March and April with a few exceptions outside that time.

If you state how much of the market return occurs in a few best days, you also need to state how much of a decline you could have avoided being out of the market for the few worst days to make this assessment more symmetrical.,

yea Im not totally sure and while I find it interesting, I dont totally think its something to read too much into. Just something perhaps to consider. I am almost always 100% or more long and I am almost always positioning my available cash/liquidity to capitalize(market timing I suppose some will call it) on short term opportunity. Can do both I guess. Being out of the market is stupid, as this year showed. In fact, every market downturn has ended up showing this. But its also showed that you need to have liquidity available to really T-up a fat pitch.

[cherzeca]

@writser. "This whole work-from-home situation led me to being frustrated and tired too often, which led to some unforced errors and sloppy due diligence."

I have found it harder to do the kind of DD I need to do to satisfy myself on an individual name. could be that I am getting old and tired. or lazy.  there is one situation that I have followed closely for awhile, and working on that name is easy for me...but to start up with another name and do what I should do seems like too much of a chore, and I dont want to do it half-assed.  your comment resonates. why I am mostly equity indexing and going with jockeys that I like.

[perulv]

up 79% (in my local currency, NOK). The biggest positive contributors were SEDG (up over 300%, trimmed it multiple times) FSLR (77%) SQM (83%) WAF (81% since I bought in april), biggest negative Aggreko (down 24%).

Right now, it looks like my effort to find renewable-related companies that also fit the quality-company metrics (actually making money, not too much debt, good ROA, decent EV/EBITDA) have paid off. But then again, everything remotely "green" have gone way up, quality or not. While I still believe that decarbonization and all that comes with it (EV, power production, power grid management, storage etc) is "the future", I have not bought any stocks in companies related to that lately because of the crazy pricing. And I must probably realize that a fair part of this years gains are luck, or at least not very reproducible. The gains are mostly due to multiple expansion, not increased earnings.

edit: my strategy for 2021 is pretty much sit on my hands for now. I bought several stocks in the last few months that are not in the "renewable-field", including CIEN, SIMO, INTC (which I have very mixed feelings about). I will buy if (I think) opportunities arise, but some of my worst decisions seems to be immature selling.

[Spekulatius]

2020:  14%

Historical
2020: 14%
2019: 31%
2018: 11%
2017: 10%
2016: 22%

Largest positive 2020 impact on portfolio:  Griffin Industrial, Charter, IES Holdings, Rosetta Stone, Parkit, Williams, IAC
Largest negative 2020 impact on portfolio:  Black Stone Minerals, Wells Fargo, Hill International

After a good 2019, I was fat, lazy, and unprepared in March, which led to some poor investment decisions, poor portfolio management, and missed opportunities.  Hopefully I've learned a few lessons.

The distribution of returns in the voting is interesting.  If the S&P is down, say, 15% next year, will we have the opposite negative skew to returns (a fat tail with -50% returns), or have board members mastered catching big upside while avoiding big downside?

To deal with exactly this issue - we have an adjustable target total equity cost (adjusted for dividends since day-1), and a maximum market value forcing a capital repatriation. Within limits, as our MV rises, so does our target equity cost. Proceeds typically not repatriated until 3-6 months after they were raised.

As we prefer concentrated positions, our downside is exposure to multi-year STRINGS of losses of 25-50%+/yr; hence, you aren't selling this to OPM. Our upside is that repatriated capital  (as and when it occurs) pays off mortgages, funds education, capitalizes new opportunities, etc. Immediate benefits, that show up as incremental discretionary cash flow every month.

Works for us, but everyone needs to evolve their own process.
Good luck.

SD

On that end, after refinancing my mortgage at 2.75%, I don’t think prepaying is a good use of capital right now. I did end up prepaying some of mine at the end of 2019 (we were paying close to 4% back then) because my wife insisted.

I guess it’s like everything else - mortgage is a form of leverage (one of the best forms of leverage) and one need to take this in account when considering the overall financial situation. As things stand currently, i just think there are a lot of ways to make better use of capital taking some short term, but little long term risk.

[mattee2264]

 Pretty much a round trip for me. Went into the market crash with too much economic exposure via financials/energy and minimal exposure to Big Tech. Luckily I had quite a bit of dry powder so was able to average down.

 Big winners: JD.com, Freeport McMoMoran, Barrick Gold, EasyJet, Melia
 Big losers: Alliance Data Systems, Liberty Latin America

 Definitely a year of thumbsucking. I was tempted to take a flyer on Bitcoin and Tesla but didn't pull the trigger. I was gearing up to put some money in a broad market index fund but the speed of the rally caught me off balance. And with the cyclicals I wanted to leave some more room to average down in case the winter got really nasty (which it did) but the vaccine developments screwed that up.

 Still have a lot of dry powder so hoping there will be more volatility in 2021.

[JRM]

Adjusting for one time mistakes that I don't plan on repeating my (adjusted) returns were well in excess of 100%. 

[james22]

~10%

I "managed to produce" minus 32.9 percent in about a month [the period February 19^th - March 23^rd] while being actually mentally incapacitated, not fit & proper and ill, & doing nothing, mostly staying away from the keyboard and my monitors.

Biggest crisis of the decade but for me it was basically impossible to get into the right frame of mind and find the time to do some serious work.

All returns this year should be considered within context.

I spent a week in the hospital (Corona) and another two quarantined away from my computer in early April - made it impossible to invest my dry powder then.

That's my excuse, anyway.


Sorry for your loss, John. And congrats, writser.

[writser]

Adjusting for one time mistakes that I don't plan on repeating my (adjusted) returns were well in excess of 100%.

But even in that case you didn't outperform the MSCI World Mistake Adjusted index. It was up 743.4% last year, as determined on December, 31, after the close. The mistake adjustment committee determined that everybody who was not 100% long Tesla in 2020 made a one-time mistake.

[boilermaker75]

John,

I am so sorry to hear about your younger brother. Way too young.

Mike

Sorry to hear that John. I wish you peace.

Not totally precise calculations yet, but around minus 3 percent for 2020 pre-tax & after fees etc. [, & took the poll accordingly].

I'm tempted to quote Greg and SharperDingaan from the "Happy New Year"-topic here :

Happy New Year to everyone. 2020 wasnt a bad year, it was just a life experience. What doesnt kill you, makes you stronger and wiser. Hopefully 2021 is the start of the Roaring 20s. Cheers

Happy New Year  ..... and fortune and glory to all!
And the end to a rubbish 2020!!

SD

I "managed to produce" minus 32.9 percent in about a month [the period February 19^th - March 23^rd] while being actually mentally incapacitated, not fit & proper and ill, & doing nothing, mostly staying away from the keyboard and my monitors.

On that backdrop, there's no need to complain about minus 3 percent.

- - - o 0 o - - -

Off topic :

Ended the year with a once-in-a-lifetime experience. R.I.P., Little Brother [Passed away December 31^st early in the morning, & way too early].

So here, also a huge thank you to Broeb for picking up the baton on this yearly recurring topic.