“I hope this finds you both well and prospering! I am really looking forward to the April Chart Seminar in San Francisco... and especially to seeing you again, Eoin.
“Last year in August a friend of mine told me that her financial advisor had expressed the view that it was nearly impossible to beat investing in the S&P 500 index tracking funds -- I told her that she should take the Chart Seminar (still hoping)... :) I created a simple spreadsheet for her at that time which clearly demonstrated that stock picking using the Fullermoney principles would yield a much higher return - I have now updated that spreadsheet and attach it for the collective.
“In August of last year, I built the original portfolio of 25 stocks using the principle that I would pick 24 companies plus gold (GLD), and invest an equal amount in all but 3 of those, and overweight the 3. I chose those companies largely from Fullermoney-theme companies, with a strong emphasis on the autonomies and Dividend Aristocrats. I also biased the list with companies whose fundamentals I had studied previously. I limited the list to US companies listed on US Exchanges since it was simpler. I did not assume dividend reinvestment, though that would improve the results, but simply "kept" the dividends assuming no interest on them (pretty close to reality anyway). I used the SPY as the vehicle for investing in the S&P 500, as it is a very low cost way to do so. I made no changes in the portfolio. I wanted to keep it really simple.
“The bottom line:
“In August of 2011, the portfolio was up 31.8% over 1 year, versus 9.0% for the SPY.
“In March of 2012, the portfolio is up 61.1% over 1 year plus almost 8 months, versus 28.8% for the SPY.
“While not a thorough scientific study, I thought the analysis would be at least interesting to many subscribers.”
Eoin Treacy's view Thank you for this inspiring email and for taking the time to collate the information. I'm also looking forward to seeing you and your son at The Chart Seminar in San Francisco.
Congratulations on combining our undiminished enthusiasm for the Autonomies with your own considerable knowledge of the companies concerned, to create such an impressive portfolio. Let us remember, however, that when performance looks too good to be true it is often unsustainable.
As you will be aware an increasing number of our favourite companies have developed short-term overbought conditions. The risk of a medium-term correction is increasing for the most overextended. (Also see my review of Autonomies in yesterday's Comment of the Day).