02 Jan2014

It’s a new year and I have been clearing up files and doing personal finances and budgets and I noticed a recent news report that common stocks in the U.S. had a wonderful year in 2013. So naturally, I wondered whatever happened to the “hypothetical” Marketman stock portfolio that I “purchased” in October 2008 after world stock markets crashed dramatically. I had not checked on results for nearly two years since this last update when the portfolio was up 110% at 39 months, so I too, was curious. I knew 2012 wasn’t a great year for stocks, but did 2013’s performance make up for it? If you missed this interesting set of financial/stock purchase posts, 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 four years ago, the portfolio was up 68%! Wow, you say. That was a lucky call, a good streak, whatever. :) Even 39 months later, in February 2012, after all the financial market turmoil, the portfolio had weathered the worst storms admirably. And now, some five years and three months later, THE PORTFOLIO IS UP 220% (give or take a few percent for dividend payouts and brokers fees which I didn’t calculate to the cent).

Of the 10 original stocks, and assuming no buying and selling out of each stock (highly unusual and restrictive behavior), 10 out of 10 stocks went up, some like Apple and Amazon, rising 6-7x in value. Even, GE (the only stock to fall in my last update nearly 2 years ago) has gone up slightly. The bottom line? The hypothetical portfolio of $200,000 would now be worth roughly $640,000 (including substantial annual dividends and less hypothetical broker’s fees), or a total return of 220% for 63 months, a compound annual growth rate of 24% for 5.4 years!… That’s utterly stunning, if you ask me! Bummer, I should have purchased more than a couple of those stocks! :( And yes, whilst this is merely a small sample, one can indeed make significantly more in stocks (or lose their hats) than in bonds or bank deposits. Bank deposits over the past five years would have yielded say 2-4% per annum if you were lucky. I am not encouraging any of you to risk their money in stock investments, I just wanted to illustrate, and over time, how it could have fared. It’s nice that with this blog going on its 10th year, we can track things like this and long-time readers can see how things turn out.

For the curious here are the purchase prices and current prices of the stocks (note, Amazon has no annual dividend payouts, but all the rest do, some as high as 5% plus):

Apple $88 to $561 (with good dividends declared the past 2 years)
Coca Cola $36 to $82 (2 for 1 stock split actually)
Goldman Sachs $90 to $177
Boeing $42 to $137
CVS $30 to $72
GE $19 to $28
PLDT $48 to $60 (One of the worst performing, a Philippine company, but very high annual dividends of 4%+)
Amazon $56 to $399
Hershey’s $35 to $97
Microsoft $22 to $37

And in case those prone to nitpicking are out there, yes, the peso strengthened a bit during this period from PHP47 to $1 in October 2008 to roughly PHP44 to $1 today, but that only changes peso returns minimally. The $200,000 in 2008 was worth PHP9.4 million then, and the stock portfolio is worth PHP28.2 million today, at current exchange rates, so the total return would be roughly 200% in peso terms, compared with 220% in US Dollar terms.

 

COMMENTS:

  1. chupacabra says:

    Hi! Marketman,

    my mom and i have been a longtime reader, though we don’t comment much. i know you have background on banking/finance, can you do a similar post with pinoy stocks? and also how can we do business with stocks in the Philippines. Thanks in advance, and belated happy new year!

    Jan 2, 2014 | 9:41 pm

     
  2. Faust says:

    you missed the google stocks.

    Jan 3, 2014 | 3:55 am

     
  3. Marketman says:

    Faust, you win some, you loose some… :) Google went public 2004, just as I started this blog… most of the stocks on my list were more established with perhaps the exception of Amazon…

    Jan 3, 2014 | 6:59 am

     
  4. ellen parpana says:

    I am so impress on how you do your stocks. Mine didn’t fare like you do, lost half of my principal. Now I am satisfied with the 2% interest certificate of deposits. At least I know my hard earned savings are safe. I know that with all the inflation and everything , it’s not practical but I sleep well at night and no regrets. It was so nice of you to give an overview to those people who would like to try stocks. You gave them idea what companies to start with.

    Jan 3, 2014 | 7:55 am

     
  5. shane says:

    Hi MM…happy new year to you and your family…am somewhat new here but i regularly visit your blog for good reads…

    i have been toying with the idea of investing in stocks but tend to put things off because

    1) am not really familiar with it…though i try reading about stocks and investments whenever possible…
    2) am not sure where to start or rather which investment co./group to consult re investing…and if they are trustworthy…
    3) some said i should do online since it’s convenient…but my gut instinct tells me that i should talk to a broker (which leads me back to no. 2) and let him/her do the work first while i familiarize myself with stock investment…sort of the broker being my tutor…
    4) how much is a relatively safe amount as start up investment…

    there were some IPO last year, which i thought were viable, but a few of them were continually postponing or moving at a later date…and some i missed because of my issues mentioned above…i would be truly grateful if you can give me some advice regarding stock investments…thanks a lot MM…have a wonderful year…

    Jan 3, 2014 | 9:11 am

     
  6. Bubut says:

    just my two cents… for those locally who wants to invest in online stockmarket, i recommend the Citiseconline.com. I have an account there and the system is very user friendly as anyone would be able to navigate aside from the lowest fees that they are applying.

    Jan 3, 2014 | 5:04 pm

     
  7. Thel from Florida says:

    I am very happy and grateful with my Berkshire Hathaway stock. In 1996, I bought 48K worth now it is worth 188+K. Someday I plan to give these to my favorite girl :)

    Jan 3, 2014 | 11:25 pm

     
  8. Jody says:

    Very enjoyable post. I am an index man but I am always interested in what other people like to buy. I do think PHI was a sweet stock back in the day, and it still sports a hefty dividend. I also am a big fan of dividend payouts. I know, I know, I am a boring investor, but it is very consoling to have the dividends come in when you find yourself in the bottom of a trough.(enormous grin)

    Jody

    Jan 4, 2014 | 5:23 am

     
 

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