To conclude my mini-series reviewing my investing winners & losers, here's a final tally of my results for 2012 and then lifetime (to include the disastrous half of 2011 I began investing in). Current positions are valued to bid prices and none of this includes taxes although all stamp duty, dealing costs, spread costs etc are included:
2012
- Total portfolio gain: 59.4%
- Internal Rate of Return: 97.07%
Lifetime
- Total portfolio gain: 36.59%
- Internal Rate of Return: 39.50%
It's worth clarifying these numbers quite a lot. I added a lot to my portfolio throughout 2012 as cash became available so this skews the IRR a lot - most of my out-performance came at the latter half of 2012, just after I'd added a lot of extra cash to my portfolio. This both flatters the IRR and makes the damage I did in 2011 look less significant (I ended 2011 26.66% down, with a negative IRR of -43.47%! This is significantly under performing both the FTSE All share & Small cap indices IRR of -8.44% and -24.95% respectively). I'd love to be able to say this was a genius act of market timing but it really wasn't, I've just got exceptionally lucky due to circumstance. I had no idea what direction the stock market would go in 2012 and I have no idea what direction the market will go in 2013; I just try and buy good companies at sensible prices then sit back and wait.
Two other significant factors also make this data next to useless for judging my investment ability. First, a year and a half is far too short a time period to judge investment results (especially when so heavily skewed by the timing of my cash allocation). I'm personally looking to judge myself over 5 year rolling periods, if I can't beat the market over that time period I'm probably not good enough and should just stick to index trackers (even if it is really fun trying all the same!). Secondly, I'm fairly concentrated, and for a large part of this year I had up to 20% of my total portfolio in a single stock (Judges Scientific) and currently have a bit over 50% of my portfolio in my top four positions. This style will naturally bring an extra degree of price volatility, although I disagree with the notion that this necessarily equates to increased risk.
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