A Crazy Counterpoint

[Crazyroadtodublin]

First let me wish everyone a healthy and successful 2017.  I think this forum has provided me with fantastic resource and advice that  I am eternally grateful for.  I share this post with the hope that some may gain something from my situation.  Although I am not advising this for every one I do think the most important thing we have as physicians is time, as a group I think we may be way to conservative in our investing especially in our early years.  I started investing at the age of 18 by dollar cost averaging, moved to single stocks and started heavily investing using leveraging and options over the last 10 years.  I have enclosed my returns over the last 10 years from my bogleheads spreadsheet.

 

 

Portfolio return as of		11/30/2016
1 month		7.54%
3 months		15.29%
6 months		31.79%
YTD		24.39%
1 year		8.21%
3 years*		20.00%
5 years*		41.75%
10 years*		12.15%

*compound return

Annual portfolio return (time-weighted return, comparable return)
	My return	S&P 500
2006	45.20%	15.79%
2007	24.46%	5.49%
2008	-79.70%	-37.01%
2009	247.17%	26.46%
2010	17.69%	15.06%
2011	-36.36%	2.11%
2012	98.80%	16%
2013	53.41%	32.39%
2014	34.73%	13.69%
2015	0.29%	1.40%

At the beginning of next year I plan on significantly reducing exposure after achieving UHNWI status this year.

[DMFA]

What did you do in 2011?

Are those returns adjusted for tax/inflation?

10-yr compound of 12.15% is very good, but I wouldn't call it crazy. That's roughly about where the medical equipment/systems fund (FSMEX) is that I added to my portfolio. Still better than the indices have done. Strong work

[Gas_Doc]

Congrats, but the real question is are you "that good" or did you get lucky? If you are in fact that good, why not do it full time? People would be lining up to give you their money if you beat the S&P 500 by 5+% annualized over a 10 year period. There's a heck of a lot more money in being a fund manager than there is in being a physician.

 

And if you were lucky, it easily could have gone the other way and you could have trailed the market by 5-10% (or more) annualized. You say you got into leverage over the last 10 years. I'm not sure how much leverage you were using during the crash of 2008, but overall overall leverage strategy seems to be quite fortuitous given that we've had perhaps the best 7-8 year bull market in US economic history starting in 2009. So if it was luck, and you are using your entire portfolio this way, why do it at all and risk your future?

[Crazyroadtodublin]

Thats the question?  Probably a combination of both, more luck than talent.  My 20 year history runs about 6.2 pct higher than the S&P... Thought about running the hedge game of 2 and 20 but its actually more regulated than medicine.  Most importantly at the end of the year I will be moving to a 60/40 S&P and Total Bond fund for my portfolio. In 2008 was 40 leveraged,  have gone as high as 65 pct for short periods. The other point that I should make here is my margin rate is exceedingly low 0.5 pct so I have had a lot of preferred shares, currently carrying 20 on margin.

[The White Coat Investor]

Crazyroadtodublin wrote:

First let me wish everyone a healthy and successful 2017.  I think this forum has provided me with fantastic resource and advice that  I am eternally grateful for.  I share this post with the hope that some may gain something from my situation.  Although I am not advising this for every one I do think the most important thing we have as physicians is time, as a group I think we may be way to conservative in our investing especially in our early years.  I started investing at the age of 18 by dollar cost averaging, moved to single stocks and started heavily investing using leveraging and options over the last 10 years.  I have enclosed my returns over the last 10 years from my bogleheads spreadsheet.

 

 

Portfolio return as of		11/30/2016
1 month		7.54%
3 months		15.29%
6 months		31.79%
YTD		24.39%
1 year		8.21%
3 years*		20.00%
5 years*		41.75%
10 years*		12.15%

*compound return

Annual portfolio return (time-weighted return, comparable return)
	My return	S&P 500
today(),"",date(Portfolio!R[-33]C[1]+1,12,31)))">2006	45.20%	15.79%
today(),"",date(year(R[-1]C[0])+1,12,31)))">2007	24.46%	5.49%
today(),"",date(year(R[-1]C[0])+1,12,31)))">2008	-79.70%	-37.01%
today(),"",date(year(R[-1]C[0])+1,12,31)))">2009	247.17%	26.46%
today(),"",date(year(R[-1]C[0])+1,12,31)))">2010	17.69%	15.06%
today(),"",date(year(R[-1]C[0])+1,12,31)))">2011	-36.36%	2.11%
today(),"",date(year(R[-1]C[0])+1,12,31)))">2012	98.80%	16%
today(),"",date(year(R[-1]C[0])+1,12,31)))">2013	53.41%	32.39%
today(),"",date(year(R[-1]C[0])+1,12,31)))">2014	34.73%	13.69%
today(),"",date(year(R[-1]C[0])+1,12,31)))">2015	0.29%	1.40%

At the beginning of next year I plan on significantly reducing exposure after achieving UHNWI status this year.

Click to expand...

Glad it has worked out well for you. I wish that was the case for most individual stock pickers using leverage and options. That takes some serious risk tolerance to lose 80% in 2008, but it has been well rewarded.

[Zaphod]

2011 was very volatile, a single month that year IIRC wiped out many solid gains for options traders.

Where do you get a 0.5 percent margin from? I thought my brokers rates were good but those are fantastic.

[KidneyBoy]

Just for my learning, how are you calculating your return/that of the S&P 500? Are you including dividend reinvestment?

[Crazyroadtodublin]

Exactly very painful

 

[Crazyroadtodublin]

The returns do include dividends> I use the the bogleheads spread sheet which I find more accurate than other sites.

[Crazyroadtodublin]

I would get margin from IBD if you carry a high enough balance on Margin the rates are insane.