As NZX50 is down 11.8% YTD so majority wud have been better off in NZG index fund then trying to be fund mangers like SR says ...stock picking is much more difficult and luck needed investment methodology then Index fund investing ...:)
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As NZX50 is down 11.8% YTD so majority wud have been better off in NZG index fund then trying to be fund mangers like SR says ...stock picking is much more difficult and luck needed investment methodology then Index fund investing ...:)
The problem is though that a year is nowhere near long enough to draw a conclusion. Absolutely no shame underperforming an index over 12 Months.
One of the crazy things about investing is as follows;
You could do a bunch of work and then finally start investing say in 2015 and through a massive coincidence (for the sake of this thought experiment) you could buy the exact same stocks in the same proportions as David Einhorn (even though you had never heard of him), you then bought and sold exactly along with Einhorn for the next 7 years. After which you realised you had underperformed the market for so long that it was obvious you were crap and you gave up and indexed.
But in fact you were one of the greatest investors of all time, you just didn't know it.
This is why process beats outcome.
Watch Einhorn over the next decade folks.
For the purpose of building an investment portfolio, I agree, The performance over 12 months is of no real concern, provided you stick to your Buffett style investment strategy. I have often wondered if fund managers, who work on an annual bonus for single year outperformance, are taking a less than optimal investment path when you consider a multi-year time frame.
However, the competition is for one year. So I think stacking one's performance up against the index would be a reasonable benchmark, provided you did not get upset if you fell below the index return, provided you still stayed faithful to your investment strategy.
SNOOPY
That's why the competition is largely meaningless, albeit a bit of fun, imo. It implies an investment strategy of buy and hold for exactly one year, which no one does. Traders will react and shift their positions during the year, while investors will add or reduce or do nothing during the same timeframe. It's fun though, but not a realistic investment strategy to time-box investing to a 12-month horizon.
It is realistic enough for me. My strategy goal is to own twelve NZX companies in equal amounts, but each member of my portfolio has a 'pair' in the same industry. So my portfolio consists of: Gentailers (CEN/MCY), Telecommunications (SPK/CNU), Finance (HGH, TRA), High Tech Manufacturing (SCT/SKL), Food (PGW/RBD) and Tourism (SKC) and Domestic Service Industry (AGL). O.K. some of the pairing is a bit ropey, particularly the last two that aren't really a 'pair'. But I did say my strategy was a goal, which I am still working to achieve.
The purpose of 'pairing' my investments is so that I do not get emotionally attached to a 'single company view'. It forces me to take a wider industry perspective, and hopefully decouples me from 'purchase execution bias' while continuing to hold a share through thick and thin (which might happen if my investments were not paired). I ignore the 12 month time box horizon when making my competition entry choices, because I don't invest in that way.
So even though I have twelve NZX investments, I think of myself as having six. It is a delicate balance, because I back myself to beat the index over the long term (many years). But the more individual investments you have, the closer your investment portfolio gets to mirror the index. For competition purposes I pick a representative investment from five of my six pairs, and that becomes my 'sharetrader competition entry'. It doesn't exactly mirror my actual investment performance over the year. But it is close enough for me not to bother working out what my actual investment performance was.
SNOOPY
OK I will bite. A recent update on Einhorn's investments is here:
https://seekingalpha.com/article/456...q3-2022-update
with a list of current holdings here:
https://www.gurufocus.com/guru/david...lio?view=table
What is David Einhorn's 'process'?
SNOOPY