The key question for any investment is "What is the performance"?

Most of the time equity investment performance is compared to the returns of the S&P500 (or global stock indexes). That makes a lot of sense for a  large-cap fund manager trying to attract capital by beating the market. However, an individual investor's objectives may be different.  Many investors are looking for a smoother ride which consistently generates some income.  Perhaps their goals should be something more like
  • lose less when the market falls a lot (i.e. rule 1 of many investors "don't lose money")
  • make something when the market goes sideways
  • make less when the market surges
Over the longer term this type of performance will likely yield better pure mathematical returns.  Also these type of returns will be less emotional stressful. It is very, very often excessive emotional investment stress that pushes investors into the major errors (i.e. panic selling, performance chasing, etc) that really lead to bad long term results. These are the goals that CCI hopes to achieve.

In 2011, CCI's 175 posts discussed numerous stocks and options with a large number of lots and trades.  Each post tried to summarize the performance results of that transaction.   However, in full disclosure, CCI did not have a very robust infrastructure in place to monitor the performance of the trades in aggregate.   However, based on my cobbled together, unaudited, approximate review of 2011 posts the performance has been good. Specifically:

  • All domestic stock and options discussed on this blog had just over a 5% gain. The S&P500 had a 2% gain (all from dividends). Hence, it seems CCI performed 2.5 times better than the market.!!! Of course, past performance is no indication of future results. However, this type of performance is consistent with the objective of the type of investing discussed in the blog. My expectations would be to under perform in big up markets, lose less in down markets, and out perform in sideways markets. Over the long-term, I think that will provide a better, more stable return.

  • The two international portfolio's (GSPY and EEM2)  both lost about 11.5%. It is a little more challenging to determine the right benchmark for these portfolios. My understanding is emerging market were down about 16% and developed markets down about 11% in 2012. Blending those two numbers based on the asset allocation that was used in these portfolios results in benchmark down 12.5%. I guess 11.5% is over-performance, but I would have hoped to lose less than that amount in a down market. CCI will be re-examining the approach in this area in 2012.