So here’s the new and improved scorecard from Patrick Johnson. If you click the link, it should download an Excel spreadsheet to your computer.
The spreadsheet shows the 196 investment suggestions Patrick identified, in reading back through all 4,300 or so archived columns, and imagines that you had put $1,000 into each one . . . selling when I suggested you might sell or holding on to the present if I never did.
The average holding period has been about four and a half years, so you wouldn’t have had to tie up $196,000 to make these 196 investments; you’d have sold some and reinvested the proceeds in others.
Had you done what Patrick imagined (and ignoring taxes), you would have had $378,673 as of last night — compared to $282,388 if you had done the exact same trades but with the S&P 500 index instead. In other words, in this very theoretical exercise, you’d be $96,285 ahead. The internal rate of return would have been 14.7% versus 7.3% with the S&P 500 (or quite a bit less still just keeping your money in the bank).
Friday I whimpered about counting my Amazon posts against me as short sales. Would anyone really have shorted Amazon — twice, no less, as per lines 22 and 24 of Patrick’s spreadsheet — based on the two columns I posted?
Because this spreadsheet is “dynamic,” it takes just a second to see that if you eliminated Amazon from the tally (by setting the “investment results” to a neutral $1,000 for each of those two suggestions, neither a gain nor a loss) the Internal Rate of Return over the 17 years jumps from 14.7% to 16.8%.
Or to take an opposite example, should Borealis really count only twice as heavily as those Amazon shorts? Patrick has the theoretical investor shorting Amazon twice and buying Borealis four times. Yet one might argue that — given the frequency with which I’ve enthused over Borealis over the past 14 years — it should count for more than 4/196ths of all the suggestions. Which would also have boosted the internal rate of return.
That said, unlike these two examples, there are likely other places where a reasonable observer would say I got off easy — for example, in only getting dinged for my disastrous First Marblehead suggestion once.
All I know for sure is that Patrick used his own judgment in what to include or exclude — I did not participate in any of that — and that’s fine with me.
(If you find places where it appears Patrick just out and out goofed — being human — by all means let us know.)
One col thing about this spreadsheet is that it’s dynamic. If you save it to your hard drive and then open it in Excel, you can update it on your own by pressing Ctrl-Alt-F5 (or selecting the “refresh all” option from the DATA tab menu). If you’re connected to the Internet, Excel will retrieve the previous day’s closing prices — you’ll see a little progress report in the bottom left corner of the screen as the screen flickers several times over perhaps 30 seconds, as each new gulp of data is retrieved.
It won’t adjust for dividends or stock splits, let alone know when to add a new suggestion or sell an old one — that’s why God invented Patrick. But it’s still kind of fun.
If you’re a Democrat or a moderate Republican, please give that extra $96,285 to the DNC. If you’re a Republican, please enjoy a nice trip around the world.
Quote of the Day
Governments are necessarily continuing concerns. They have to keep going in good times and bad. They therefore need a wide margin of safety. If taxes and debt are made all the people can bear when times are good, there will be certain disaster when times are bad.~Calvin Coolidge
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