Thursday, January 1, 2015

Preliminary 2014 Investment Results

Results are preliminary, since Quicken has not updated some of the 12/31 trades and distributions. These should not be large enough to affect much. Also Fidelity does not have their calculation of yearly results yet and won't have them for couple weeks at least.

Other caveats: rates are from Quicken/IRR which I still believe is buggy/not reliable. Couple positions are wide spread micro caps that trade on appointment, so their prices are sometimes misprinted and therefore misaccounted. Couple positions are foreign stocks that may have incorrect final prices. Some results include 401(k) accounts where I cannot invest into my selection of stocks and ESPP accounts where return accounting by Quicken is suspect. So reader beware.

Executive summary: 8.7% return which underperformed market. I am selling my investment portfolios and winding down active investing.

Longer version: Total IRR across all accounts is 8.05%. After removing ESPP and 401(k) accounts, the return is 8.7%. Both of these undeperformed market a lot (benchmarking against SP500 13.7% return). These returns are even worse considering that BRK stock return was 28% and Fairfax return was 31%. Both of these were positions in my portfolios.

Even considering ~16% cash position and ~16% fixed income position, the results are bad. The fact that other active managers did not do well this year is of little solace.

As an aside 401(k) portfolios underperformed SP500 because of: 30%+ bond fund allocation, 30%+ international allocation (VTIAX and FDIKX are both negative for year) and some small cap allocation.

So my plan is to liquidate my investing portfolios in orderly fashion and convert to mostly passive investing. I have some concern that funds that I passively allocated performed worse than my active investments last year. However, there are two solutions to this: 1. Passively invest in BRK/FRFHF/etc. mix. 2. Longer term the non-ideal allocation might even out.

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