# Tracking my investment strategies and rate of return



## Nerd Investor (Nov 3, 2015)

Hi all, 

I am starting this thread as a means of tracking the combination of strategies that I run (or plan to run) in managing my portfolio, as well as my overall actual return. I'm hoping this will keep me honest and on track in terms of sticking to my process. This will be a bit different than some of the other diaries, as rather than tracking net worth, income or any other hard dollar figures etc. this will focus more on investment holdings and returns. My goal is to have an overall annualized return greater than 12% over the next 12-15 years. 

I am working towards a portfolio that will consist of the following components: 

*Canadian Dividend Paying Stocks:* 15 stocks, long-term target weighting = _30% of porfolio_
*US Large Cap Stocks:* 20 stocks, long-term target weighting = _25% of portfolio_
*US Mid/Small Cap Stocks:* 10 stocks, long-term target weighting = _10% of portfolio_
*Tactical Asset Allocation:* 1-3 ETFs, long-term target weighting = _30% of portfolio_
*Cash for Options:* Some cash on hand to facilitate writing/buying options, including a hedging rule for the US Large Caps: long-term target weighting = _5% of portfolio_

All strategies follow a rules based system using a screener, with the exception of my options plays. In the coming weeks I will outline the details and rules of each aforementioned component. 

I will start tracking progress in January 2018 and will provide the following: 

1) At the beginning of the year, list all the stocks and ETFs selected for each strategy as per the screens 
2) At the end of every month: 
- The year to date _theoretical_ return of each strategy (if implemented perfectly with no regard for commissions, foreign exchange etc) 
- The year to date _actual_ return of my entire portfolio (includes commissions, effects of currency fluctuations, money in and out etc)
- Any changes to the holdings
- Some commentary on the "tracking error" between my actual returns and the strategy returns. 

I will also post any options trades as they occur.


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## Jaberwock (Aug 22, 2012)

12% is a very ambitious target. I have held a similar portfolio during this record bull market, tracking over the last four years, I have averaged just over 12% compounded, including all dividends, fees etc., before tax.
I do not expect to keep that up for 12-15 years, there will at some time be a market downturn


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## Nerd Investor (Nov 3, 2015)

Jaberwock said:


> *12% is a very ambitious target.* I have held a similar portfolio during this record bull market, tracking over the last four years, I have averaged just over 12% compounded, including all dividends, fees etc., before tax.
> I do not expect to keep that up for 12-15 years, there will at some time be a market downturn


Yes it is. Especially with expected future returns as low as they are at the moment. But go big or go home . Backtested results for all strategies from 1999 - 2016 far exceed 12% individually, but as we all know past results do not = future returns. Still, I wanted a tangible long-term target.


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## BoringInvestor (Sep 12, 2013)

Good luck!
As a point of reference, my couch potato portfolio's average over the past five years has been 10% (money-weighted) to 11% (time-weighted).


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## Nerd Investor (Nov 3, 2015)

BoringInvestor said:


> Good luck!
> As a point of reference, my couch potato portfolio's average over the past five years has been 10% (money-weighted) to 11% (time-weighted).


Good to know, thanks for sharing!

It will be interesting to see how everything stacks up vs indexing. I'll be using time-weighted which I believe offers a better measure of performance and apples to apples comparison vs benchmarks.


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## Nerd Investor (Nov 3, 2015)

As the new year is approaching, as a reference point here are the rules/criteria for each strategy I'll be tracking: 

*Canadian Dividend Paying Stocks:* Select the 15 cheapest stocks sorted by P/E from the following Universe:
1) TSX Canadian stocks with a market cap > 250M
2) Excludes REITs
3) Excludes the 25% of stocks in any given sector with the highest short interest
4) Excludes the 20% of stocks in the market with the highest accrual ratio
5) Dividend yield > 1%, payout ratio < 100%, 5 year average dividend growth rate > 0%
6) Less than 8 stocks in any given sector 

*US Stocks:* Select the cheapest 20 (Large Cap) and cheapest 10 (Small/mid cap) stocks sorted by EBIT/EV from the following Universe: 
1) Russel 1000 (Large Cap) and Russel 2000 (Small/Mid Cap)
2) Excludes Financials and Utilities
3) Excludes the 25% of stocks in any given sector with the highest short interest
4) Excludes the 20% of stocks in the market with the highest accrual ratio

*Tactical Asset Allocation:* Every month, select the top 3 ETFs based on the previous 3 months returns from the following list:
SPY (US Large Cap) 
MDY (US Mid Cap) 
VB (US Small Cap) 
GLD (Gold) 
IEV (Europ) 
ILF (Latin America) 
EPP (Pacific excl Japan) 
EEM (Emerging Markets) 
TLT (Long-term treasuries) 
*If the selected ETF's price is below it's 6 month Simple Moving Average, replace with IEF (7-10 Year Treasury Bonds)


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## Nerd Investor (Nov 3, 2015)

Here are the stock picks for 2018 based on the aforementioned criteria: 

*US Large Cap (20 stocks)*
1 MU - Micron Technology Inc.	
2 ALK - Alaska Air Group Inc.	
3 JBLU - JetBlue Airways Corp	
4 HUM - Humana Inc.	
5 WCG - WellCare Health Plans Inc	
6 UAL - United Continental Holdings Inc	
7 LEA - Lear Corp
8 TGNA - TEGNA Inc
9 ANTM - Anthem Inc	
10 HPQ - HP Inc	
11 BBY - Best Buy Co Inc	
12 CVS - CVS Health Corp
13 JNPR -	Juniper Networks Inc	
14 ESRX -	Express Scripts Holding Co
15 BC - Brunswick Corp
16 TGT - Target Corp
17 GNTX - Gentex Corp
18 WDC - Western Digital Corp
19 OMC - Omnicom Group Inc.	
20 GHC - Graham Holdings Co

*US Small/Mid Cap (10 Stocks)*
1 MGI - MoneyGram International Inc	
2 EVC - Entravision Communications Corp.	
3 CNCE - Concert Pharmaceuticals Inc	
4 ODP - Office Depot Inc
5 IDCC - InterDigital Inc
6 PDLI - PDL BioPharma Inc
7 DHX - DHI Group Inc
8 HLTH - Nobilis Health Corp
9 TRNC - tronc inc
10 GTS - Triple-S Management Corp

*Canadian Dividend (15 stocks)*
1 EQB - Equitable Group Inc	
2 FN	- First National Financial Corp	
3 MIC - Genworth MI Canada Inc	
4 TCL.A - Transcontinental Inc
5 MG - Magna International Inc.	
6 POW - Power Corp Of Canada
7 XTC - Exco Technologies Ltd
8 LB - Laurentian Bank Of Canada	
9 WJA - WestJet Airlines Ltd
10 MKP - MCAN Mortgage Corp
11 ACQ - Autocanada Inc
12 NA - National Bank of Canada
13 CJR.B Corus Entertainment Inc
14 GSY - goeasy Ltd
15 RME - Rocky Mountain Dealerships Inc


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## Nerd Investor (Nov 3, 2015)

*Tactical Asset Allocation*

The 3 ETFs for January:
SPY (US Large Cap)
MDM (US Mid Cap)
EEM (Emerging Markets)


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## Nerd Investor (Nov 3, 2015)

*January 2018 Update*

US Large Cap YTD return: 5.12%
US Small/Mid YTD return: -3.59%
Canadian Div YTD return: -3.69%
Tactical AA YTD return: 5.57%

My Portfolio YTD return: 0.76%

_Comments:_ Tremendous start to the year for my US Large Cap portfolio (and US Large Caps in general) even after giving quite a bit back in the last few days. Unfortunately the strengthening of the Canadian dollar has had a dampening effect on my real returns, particularly since the vast majority of my portfolio is in $US at the moment. I still also hold a few stocks outside of what I'm tracking above, and am shy of the position totals I'm aiming for, but am hoping to have almost my entire portfolio following these rule based strategies by year end.


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## Nerd Investor (Nov 3, 2015)

*Tactical Asset Allocation*

Updated positions for February:

SPY (US Large Cap)
EEM (Emerging Markets)
ILF (Latin America)


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## Nerd Investor (Nov 3, 2015)

I had purchased 3 Sept SPY $255 puts back in October when the VIX was extremely low and the market was higher. Just sold those today for a nice profit and purchased 4 new puts but moved my duration up (as I want to own gamma rather than vega with this kind of volatility). Puts purchased were the March 29 235 puts. Still leaves me with a chunk of cash from the difference in cost.


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## Nerd Investor (Nov 3, 2015)

February 2018 Update

US Large Cap YTD return: 2.06%
US Small/Mid YTD return: -10.47%
Canadian Div YTD return: -6.31%
Tactical AA YTD return: 1.08%

My Portfolio YTD return: 1.14%

Comments: Pretty well every strategy gave something back this month, not surprising due to the spike in volatility and sell off across many sectors. Two main factors kept my own portfolio slightly positive overall for the month: the strengthening of the US dollar and the appreciation and subsequent sale of the long-dated SPY puts I was holding. I made a nice profit on the volatility spike and value drop and was able to take on a new position with the proceeds, even after rolling out new shorter duration SPY puts. The fact I am quite overweight US large caps (which has been the best performing strategy) also helps, along with a few positions I still hold outside of the strategies I'm tracking which have done fairly well. 

I will be making a few whole sale changes as I need to make a large temporary withdrawal for construction on my home. I will be almost all US equities for the next couple of months as a result but will continue to track all strategies.


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## Nerd Investor (Nov 3, 2015)

*Tactical Asset Allocation*

Updated positions for March:

GLD (Gold)
EEM (Emerging Markets)
ILF (Latin America)


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