24 Oct2012

A four year update to the hypothetical stock portfolio we bought in October 2008. If you missed the history of this, you may wish to start with this first post, here, that outlined the hypothetical $200,000 investment, placed evenly in $20,000 blocks of stock in ten companies: Apple, Coca-Cola, Goldman Sachs, Boeing, CVS Drugstores, General Electric, PLDT, Amazon, Hershey’s and Microsoft. The first five stocks I picked, the last five selected by the Teen and Mrs. MM.

I did a follow-up post after a week, and the portfolio was up 6.9%, here. I then wrote another follow-up post, and after six months the portfolio was up 11%. It was a volatile time, and I don’t think the portfolio was always up, it may definitely have dipped into negative territory during that period. After a year, the portfolio was up a whopping 43%, spectacular by any measure, and had one actually purchased all those stocks, they would be in clover. I even suggested that a conservative person might cash out and just stick their money in safer securities if they prefered. But in case they were in it for the longer term, let’s see how it fared down the road… At the 18 month mark, when I last wrote about this, in April 2010, almost two years ago, the portfolio was up 68%! Wow, you say. That was a lucky call, a good streak, whatever. :) But 39 months later, in February 2012, It was up a very nice 110%!

If you had kept going with the same portfolio, left untouched, it would now be worth a stunning $537,853 (including $30,000 in dividends but no reinvestment) or an increase of 154% in 4 years (more or less — I estimated dividends rather than carefully calculating them, but they aren’t far off. I just hope I didn’t miss any other stock splits, which would only improve the numbers. And Apple started giving cash dividends a few months ago, to reduce its cash pile). That is an amazing return, period. An average of 38.5% per year, not compounded. And yes, we all could have had it if we followed that hypothetical portfolio. I did buy Apple, but sold it for a large profit and long ago, before today’s dizzying heights. But it’s a great company and I should have known better than to bail out too soon..but when the stocks rise, I don’t get greedy. :(

For the curious here are the purchase prices and current prices of the stocks:

Apple $88 to $634 — Fabulous returns
Coca Cola $36 to $75 (with stock split) — Must be all that Diet Coke I consume!
Goldman Sachs $90 to $123 — Not bad despite the financial uncertainty.
Boeing $42 to $74 — People are still flying in droves it seems.
CVS $30 to $46 — Drugs weren’t as attractive as they might have seemed then.
GE $19 to $22 — Total lemon if you ask me.
PLDT $48 to $64 — Pretty poor showing for a Pinoy stock in a market that has otherwise skyrocketed.
Hershey’s $35 to $71 — The Teen knew a sweet thing when she tasted it.
Amazon $56 to $234 — Finally, some spectacular growth in the last few months on this stock. The Teen picked this stock too. :)
Microsoft $22 to $28 — A bit of a “boo” but maybe their new operating system will buoy prospects.

 

COMMENTS:

  1. anonymous paul says:

    I think timing of purchase was key as well. Crash was still fresh that time, everyone was spooked and you probably needed balls of steel to go in..if you didn’t already lose a good sum during. But this is a great example of intelligent investing!

    Oct 24, 2012 | 11:29 am

     
  2. Joel says:

    Great performance! Apple stocks are insane. The new line of products announced yesterday will probably push the stock price even higher.

    Oct 24, 2012 | 4:21 pm

     
  3. ck says:

    Great returns indeed. However, the peso strengthened by around 13-14% for the same period. Comparatively, if one invested in a PSE Index fund in 31 October 2008 (1951.09) it would have resulted to an unrealized return of 178.4% as of yesterday’s closing price (5432.32). The wonders of diversification!

    Oct 24, 2012 | 4:35 pm

     
  4. Lei says:

    Thanks MM for the follow-up post. I am investing though locally only, but your message is very clear and inspiring. Invest wisely, save, save, save for a very comfortable nest egg later on.

    Thanks again for sharing your financial expertise and experience. Being a regular reader, I know what field you came from before you started this blog so I know that this your area of expertise, finance. =)

    Oct 24, 2012 | 4:41 pm

     
  5. Marketman says:

    ck, yes, the Philippine market has been crazy insane as well. But I have to admit, I was less confident about putting PHP10million into local stocks at that point in time. But if you did, fantastic returns to be had… :)

    Oct 24, 2012 | 5:06 pm

     
  6. Jesse says:

    This could very well be the greatest regret of my life.

    Oct 25, 2012 | 9:54 am

     
  7. Joseph L says:

    Could have, would have. Sayang. Thanks for sharing.

    Oct 27, 2012 | 4:18 am

     
 

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