When the stock markets crashed in 2008, I/we picked a “hypothetical” portfolio of 10 stocks, and placed a hypothetical $20,000 in each name, and tracked the portfolio over the years on this blog… I stuck to the original 10 stocks and NEVER bought or sold any of the stocks, regardless of their performance, just to make the tracking simpler to follow.
These were real companies like Apple and Hershey’s and Goldman Sachs, and we picked the stocks as a family, even the 13-year old daughter picked a couple, her Amazon becoming the best performer in the portfolio over the years. We had some real lemons, like GE which, despite their tag line that “We bring good things to life,” that attracted Mrs.MM, it was the absolute worst performer. PLDT was the second worst stock. So how did the portfolio do over the years? I updated the story periodically, and here is summary of performance (click on year to see article):
2008 : $200,000 (Oct 14, 2008)
2009 : $222,000 (Apr 9, 2009) UP 11% in 6 months
2009 : $286,000 (Oct 10, 2009) UP 43% in 12 months
2010 : $336,000 (Apr 12, 2010) UP 68% in 18 months
2012 : $420,000 (Feb 2, 2012) UP 110% in 39 months
2013 : $640,000 (Jan 2, 3014) UP 220% in 63 months
2020 : $1,928,000 (Feb 1, 2020) UP 964% in 136 months (Just before 2020 Pandemic crash)
2021 : $2,976,000 (Aug 9, 2021) UP 1,488% in 154 months (The portfolio increased by $1 million in the last 18 months alone!)
The Bottom Line? A CAGR (Compound Annual Growth Rate) of 23.1% per year for 13 years!!
That return beats an S&P Index Fund with a CAGR of 12.39% for the same 13 year period.
The Philippines Stock Exchange Index managed a CAGR of roughly 10% for the same 13 year period.
What does the exercise illustrate?
Stock markets can and often do have reasonably good returns over LONG investment horizons. You don’t have to have a super complicated approach to picking stocks. Yes, maybe part of it was sheer luck, or a particularly good run for stocks in the past decade… The average return of the S&P Index for the last 30 years through 2020 was a slightly lower 9.87% vs. the 12.39% for the last 13 years alone.
There are a few readers of the blog/Instagram who would have read that original post in 2008, one who recently escaped Afghanistan safely, a lovely lady from the Florida panhandle who likes to garden, and others from Canada, Australia and the Philippines who will confirm I didn’t make this all up…
Another great time to have bought into the the markets? When the stock markets crashed last year at the start of the pandemic. If you bought a few good stocks then, many of them would be up some 40-50% by now.:)
WARNING/CAVEAT. I am not a financial adviser or professional stock picker. I just wrote these blog posts as an illustrative exercise. And if there is any moral to the story, it is perhaps to make sure your offspring do something to improve their financial literacy early on, so that they can prudently plan their financial affairs as they grow older.
This is the original list of stocks we “invested” $20,000 in each in 2008 and what they worth today (August 2021); there were adjustments for stock splits, and dividends are separate:
Apple – $928,548!
Coca-Cola – $62,882
Goldman Sachs – $88,773
Boeing – $110,560
CVS – $53,726
GE – $14,001
PLDT – $20,416
Amazon – $1,194,094!!
Hershey’s – $102,441
Microsoft – $262,092
Image is not mine, sourced from Amazon. Stock certificate is of the company that owned The Titanic. :(