My wife’s buying habits are beating the pants off the market, most mutual fund managers, hedge fund managers, retirement plans, pension funds and short term traders. And all at NO FEE (free here on this personal blog).
In what started as an experiment two years ago (after years of discussing the strategy), a buy-and-hold portfolio of 22 stocks was put together to see how it would perform against the market and professional traders alike. The idea of the portfolio was to buy and sit on the stocks (no active trading – ride the ups and downs of the market with high quality companies that sell goods and services that we use most often within our household).
I put the portfolio together on August 6, 2014, exactly two years ago, titled: My Wife’s Personal Mutual Fund Outperforms the Pros.
As of August 6, 2016, the 22 stocks have performed as follows:
- Total gain of 36.08% (not including dividends)
- Total gain above 40% with all dividends re-invested
- 20 of the 22 stocks are positive
- A 91% success ratio
- 18 of the 22 stocks have a double digit gain, averaging 44% (80% of portfolio)
- The leading gainer, the 2nd highest priced buy, is up 145%: Amazon $AMZN
- 2 stocks show a loss: $KORS at 36.27% and $XOM at 5.62%
- The portfolio is crushing the DOW, S&P 500 and Nasdaq
- NOTE: Dividends have not been calculated into these stats (2 years of dividends increase the gains).
Not bad for buy “quality” and hold.
I completely understand that the market has been in an up-trend for much of the past two years so all I can do is compare against the general market indexes, fund benchmarks and professional results. In all three cases, this buy-and-hold portfolio outperformed them all. And they outperformed each of them without incurring additional fees, additional time wasted for research or any time actively trading in-and-out.
I wrote an update on the 2014 blog post about six months ago (February 21, 2016), showing how the strategy was winning: My Wife’s Personal Mutual Fund Crushes the Markets, AGAIN
The portfolio of 22 stocks:
$AAPL – Apple
$SBUX – Starbucks
$GOOG – Alphabet
$AMZN – Amazon
$FB – Facebook
$COST – Costco
$TGT – Target
$COH – Coach
$KORS – Michael Kors
$CVS – CVS Health Corp
$NFLX – Netflix
$DIS – Walt Disney Co
$JNJ – Johnson & Johnson
$PG – Proctor & Gamble
$V – Visa
$MA – MasterCard
$PEP – Pepsico
$TJX – TJX Companies
$HD – Home Depot
$VZ – Verizon
$XOM – Exxon Mobile
$WFC – Wells Fargo
The older I get, the more I realize that buy and hold (over a period of time), for a retail investor, will outperform most strategies within the market. Retail investors should just buy and hold low cost index funds and not entertain an idea such as the above buy if you must trade in the market, consider buying and holding the stocks of companies that you do the most business with. Know what you invest in.
The next step will be to see how this portfolio of stocks performs during a down-turn or major correction. Of course the stocks will lose value but how will they perform compared to the major indexes and other active investing strategies and professional traders.
I think they’ll do fine.
P.S.: KORS should be replaced with $MSFT (considering we use Microsoft every day – this was an oversight and bias two years ago).