38% Growth in 12 Months
5 November '09
The following graph displays my stock portfolio's returns for the twelve month period from 6 November '08 to today. Considering the year that was in it, I'm delighted with 38% gains versus the general market's 7% rise. I'll admit up front this is not my average annual return over the past fifteen years -- had this been the case I'd have Warren Buffett as an understudy -- nonetheless, in the words of Gary Player, one of the greatest players in the history of golf, the more I practice, the luckier I get.
So how did I five-fold out-perform the S&P500 over the last year? If I had to boil everything down to a single word answer I'd say temperament. Years of practice has taught me to never panic -- no matter what the market hands me I simply assess what's on offer at the day's prices. In March of this year media reports were shouting that the end was nigh; the global financial debacle was in full swing, consumer spending was at all-time lows, General Motors and friends were going under, the list goes on and on. Against this backdrop there were countless businesses with plenty of cash, no debt, great products and motivated management -- selling at never-to-be-repeated prices. Consequently I threw cash and the kitchen sink into a basket of well chosen stocks, which have since rewarded me handsomely.
Every day media hands out more information than one could meaningfully digest; both macro economic and company-specific news streams at us 24/7. By sticking to what has been proven to work by the world's wealthiest investors, you'll quickly learn that media reports add almost no value to an individual investor faced with a simple decision: buy more or sell out. A cool temperament will detach you from the noise and ultimately lead you to better decisions in a world obsessed with the irrelevant.
