Portfolio Performance – 1 October 2010

TDAmeritrade came out with the September statements this afternoon so I was able to update many of the portfolios in greater detail that expected. In nearly every case, we made progress either by gaining on the benchmarks or reducing portfolio risk. Only in the case of the Schrodinger Portfolio, where we switched to the ITA Index benchmark for our SR and RR calculations, did we see significant negative changes. Those were to be expected as we switch measuring instruments.

Portfolio Performance - 10/1/2010

Portfolio Last Update Launch Date Tracking Tool Port. IRR ITA Index Diff Port. vs. ITA Index VTSMX IRR Diff. Port. vs. VTSMX Index IR SR RR
AA-Mosaic 08/31/2010 07/21/1999 Captool 1.39% NA NA -0.42% 1.8% 0.05 NA NA
Curie 10/01/2010 12/26/2007 TLH SS 2.8% -3.3% 6.1% -4.1% 6.9% NA 9.9 1.0
Mosaic2 08/31/2010 07/19/1999 Captool 3.8% NA NA -0.62% 4.3% 0.15 NA NA
Newton 10/01/2010 06/02/2008 TLH SS 7.5% 2.2% 5.3% 3.0% 4.5% NA 11.4 11.1
Passive Port. 08/31/2010 12/01/2000 Captool 4.31% NA NA 0.02% 4.29% 0.68 NA NA
Schrodinger 10/01/2010 12/01/2000 TLH SS 4.7% 13.0% -8.3% 1.6% 3.1% NA 0.4 -1.0
Jane 08/31/2010 02/14/1997 Captool 8.08% NA NA 3.09% 4.99% 0.53 NA NA
Einstein 10/01/2010 06/30/2008 TLH SS 12.8% 22.6% -9.8% 6.9% 5.9% NA 6.2 6.2
Gauss 08/31/2010 02/19/1997 Captool 8.35% NA NA 3.06% 5.29% 0.22 NA NA
Kepler 10/01/2010 11/01/2008 TLH SS 21.6% 31.9% -10.3% 17.5% 4.1% NA 3.7* 3.7*
Scrappy 08/31/2010 08/14/2008 Captool 7.00% NA NA -4.28% 11.28% NA NA NA
Bohr 10/01/2010 08/14/2008 TLH SS 10.8% 14.2% -3.4% -0.1% 10.9% NA 11.0 7.8
Kenilworth 10/01/2010 08/18/2010 TLH SS 38.1% 25.0% 13.1% 48.7% -10.6% NA -1.4* -1.4*
Projects 08/31/2010 12/01/2000 Captool 4.42% NA NA 0.02% 4.40% 1.33 NA NA
Washington 08/31/2010 06/18/1999 Captool 2.40% NA NA -0.19% 2.59% 0.27 NA NA
Maxwell 10/01/2010 12/25/2000 TLH SS 0.0% 1.3% -1.3% 2.6% -2.6% NA -1.3 -1.3
Adams 08/31/2010 06/18/1999 Captool 2.39% NA NA -0.19% 2.58% 0.70 NA NA
Euclid 10/01/2010 06/30/1999 TLH SS -2.1% 0.0% -2.1% 2.5% -4.6% NA -1.6 -1.6
Jefferson 08/31/2010 03/13/2008 Captool 4.23% NA NA -3.75% 7.98% NA NA NA
Madison 10/01/2010 03/13/2008 TLH SS 5.4% 0.4% 5.0% 5.1% 0.3% NA 0.4 0.4

SR = Sortino Ratio

RR = Retirement Ratio

* Insufficient data to be significant.

Active, Index, Passive or Mosaic Investing

Investing Styles

Are you an Active, Index, Passive or Mosaic investor? Answer this question and one focuses at the heart of investing. Rather than answer this question with one blog post, I will strive to define and explain the different styles over a series of entries spanning into next week.

While I've written on the subject of investing styles before, I'm sure there are new readers who missed the information. Further, I want to refine some of the subtle differences, particularly when differentiating between passive and index investing. Let's tackle the easiest to define and understand – active investing.

Active money management is the "science" or art of selecting securities to build a portfolio. A security is defined in this context as stocks, bonds, cash, mutual funds, ETFs, etc. Active management is the belief by the investor that they have the ability to consistently and accurately make security selections that gives them the edge over the broad market or an appropriate benchmark. Active management rests on the philosophy that by hard work, security analysis, technical analysis, market timing, or other insights, one will, over time and net of costs, beat the market.  Market timing and asset allocation are subsets of active management. It should be noted that approximately 80% to 85% of all investors follow an active management style. While I cannot lay my hands on the source of those percentages, I've read of these high percentages in several books, academic papers, or articles.  Ask your friends how they go about building their portfolios and I posit most will answer that they pick individual stocks or select specific mutual fund managers. These are both active management decisions.

Look for explanations of passive, index, and mosaic investing in later posts. In addition, the "Creme List" will be posted at the end of the day and I hope to have the Portfolio Performance data available sometime tomorrow. This table will be somewhat out of date even when published as all the portfolios will not have the third quarter dividends posted.  I hope to have all that data available by October 9th.

As always, questions are most welcome. Just post in the comments section.

 

Photograph: La Seu Cathedral on the island of Mallorca