That raises an interesting question. Suppose I told you that someone had an annualized return of 21% over the last 22 years? Putting aside risk for a moment, how would you rate their performance? Before you answer that, suppose I also told you it was the same person who had the 7.5% annualized return over the last five years and 5.7% over the last ten years? How would that make a difference in your answer?
Hi earslookin, apparently you are snarkily referring to me without ever saying. I’ve made no secret of getting killed in 2008, and have referred to it over and over again. I’ve been careful to point out when I’ve had a bad year.
It makes a lot of difference where you take your endpoints when looking at short periods. You take 5 years, for instance, but if you’d taken 6 years, you would have had to include 2009 when I was up 110.7%, which would have changed all your figures. But taking 7 years would have included 2008, and it would have changed it back. Short periods are easy to manipulate.
Let’s look at a long one, this century, starting with the close on Dec 31, 1999 and going to the close on Friday, when I posted my up to date results. The S&P 500 started at 1469.25 and finished Friday at 2061.0. Thus the S&P 500 was up just 40.3% in 15 years and three months. That comes out to be a tiny bit over 2% per year over that period. Not very good at all.
My results over that exact same period (if you multiply it out), come to to up about 1110.0% from where I started, or about a 11 bagger on my entire portfolio, in spite of the bursting of the internet bubble, and in spite of the great recession of 2008-2009. Compare up 40% and up 1110%… Longer range gives a different picture, doesn’t it?
apparently you are snarkily referring to me without ever saying
Hi Saul,
As Michael Corleone said, it’s not personal, it’s strictly business. Your results happen to make an excellent case study. That’s because (a) you’ve been so open about them, and (b) they’re unusual. However, I understood going in that any direct reference to your results likely would be interpreted as an attack – my questions would get lost in the melee that followed. So I walked a fine line to make sure the numbers I used were realistic but also numbers that your readers likely would not be familiar with – you had never posted them, and they would be difficult for someone to come up with unless they had done a lot of digging on their own. I purposely did not post the detail.
My questions are an honest attempt to understand unusual results like yours, and not directed at you personally: (1) if someone had a return of 21% over the last 22 years, 5.7% over the last 10 years, and 7.5% over the last 5 years, how would you rate their performance; (2) Would you model your investing approach on that person’s approach?
In your response I hear you when you say that short periods are easy to manipulate by cherry picking the start and end dates. True. But so are long periods in the sense that more recent performance – say the 5.7% annualized return in the last ten years (the average business cycle is around 5 years, so that’s roughly two cycles)-- may be more relevant than the 21% annualized long term performance. So how do we get to a meaningful measure?
Your results are fascinating because they are so unusual. It would be instructive to have some further discussion about the meaning of those results, while separating as much as possible the person from the performance. If I were you I would find that difficult because it is basic human nature to defend your own performance and take any questioning of that performance as an attack.
Yeah, because it would really take a lot of personal bias inherent in our own human nature to defend one’s own track record of … +20% annual returns!
Come on, you can’t just pick arbitrary start/stop times when evaluating someone’s record. It’s not fair and can easily be manipulated - as Saul already pointed out.
We could do it all day.
What if I told you someone had an approximate negative 10% return last year? Would you mirror that person’s investing philosophy? If that’s all you had to go by, probably not.
What if I told you someone was beating the market by 15% YTD? Would you want to mirror their investing philosophy? If that’s all you had to go by, I would probably have your attention.
But we can’t just cherry pick times periods to suit our own agendas. Saul is sharing his expertise and time out of his own generosity. I, for one, am extremely grateful. His track record is remarkably successful and his advice has apparently saved a lot of people from deep losses over the years.
I’ve learned a lot being a lurker here (and on other boards).
Oops, and I meant to reveal in my post above that both of my examples, a negative 10% return last year and beating the market by about 15% this year, were both Saul too.
Yeah, Saul has had his down years, but even Michael Jordan missed shots.
It doesn’t mean I wouldn’t take shooting lessons from Jordan if he was offering them for free.
Ears,
Most on this board knew who you were talking about. After all the board is called Saul’s Investing Discussions. But most of us do not want to be dragged down a rabbit hole without all the cards on the table. While I can understand why you wouldn’t want to start a fight, after all Anurag can attest to that (lol), but in the end it all became sorted out. Most of us are fine with discussing investing topics as long as everyone is being respectful and everything is above board without hidden agendas. I can see that you are intelligent and would understand why some of us will not be drawn into conversations where there seems to be an obscured point to the conversation.
I understand you and others are grateful to Saul. He deserves it – he has been extremely generous with his time and advice. Consider this, though: do these feelings help or hinder your ability to dispassionately evaluate his investing performance?
Let’s try to separate the performance from the person. Microsoft has grown revenues over the last 22 years at an annualized rate of 17%. Is that enough for us to go on? If I told you that Microsoft’s revenues for the last 10 years have grown at a 9% annualized rate, would that be unfair cherry picking?
Sh*t, Ears! Of course my results weren’t as good in the last 10 years. I was down 62% in 2008!!! How could they have been? We all know that. You’ve made that point over and over and over!
That still leaves the fact that from the beginning of 2000, the S&P was up 40%, and I was up 1110%! Enough said!
Ears, this is what I know. I’ve learned a lot from reading this board. Saul has obviously helped many people here avoid investing mistakes. The advice I’ve gotten here has been an immense help. But I actually don’t own one single stock that Saul currently owns. So I feel like I can dispassionately evaluate his and mine investing performance just fine thank you. I don’t need a mom looking after me as if I’m a sheep.
-Matt
PS: I actually don’t think Microsoft is such a bad investment now either.
You may want to welcome some input from ears. I have seen his posts over many years on MF. He brings a healthy skepticism that everyone can learn from. Sometimes that skepticism may cause him to miss some opportunities. He missed one of my best ideas (Valley National Gas), but he also avoids many pitfalls with his approach.
He seems to be posting more of late, something I welcome.
If you have strong ideas, it is good to test them vs. others, they will survive and you will learn from the experience.
By the way I am new to Saul and this board, I have seen some good wisdom already in some of his posts.
I would welcome investing advice from anyone. Shoot, I probably know less about investing than anyone here. I’m new to investing and have a lot to learn.
What I don’t need, and nor does probably anyone else here, is someone coming here telling me and the contributors here that we’re blindly following Saul as if we’re sheeple and incapable of independent thought. I don’t see how that contributes to the awesome conversations and lessons that take place on this board.
If Ears or anyone else disagrees with Saul’s approach or stock selection, why don’t they just contribute to the board by telling us why they disagree? That would be more than welcome. There has been a lot of healthy debate here over lots of stocks that has been immensely valuable to me.
Nobody here is a child. We’re grown-ups. We don’t deserve that. And Saul certainly doesn’t deserve his record to be questioned every time he turns around. He has demonstrated his investing savvy for years on Motley Fool and has been more than open with his failures too.
I can’t speak for others but I can say why I like to post here more than at other boards. (Okay, there’s one other board where I like to post and that’s the Stock Advisor options board.)
I spend time here because I see a bunch of smart and savvy investors talking about stocks. I can discuss a stock here and get good insights. I learn how to analyse stocks and how to analyse earnings. My guess is – many folks here are just out to discuss stocks and investing; I don’t think people would be blindly following others … after all, everyone has a different set of circumstances to deal with, different risk/reward tradeoff profiles, different investment temperaments, different time horizons etc.
I think people follow this board for the ‘value’ it offers … Saul is extremely generous with his time, but I find many others here who have been extremely generous with their time. It’s the investing discussions that make this a great board. There’s probably no board like this in the entire TMF and the number of ‘Posts of the day’ from this board certainly speaks to the quality of the posts here.
My humble suggestion would be to leave Saul’s record aside and let’s talk investing (stocks, approaches etc).
I don’t know about everyone else, but for me Sauls record is impressive yet not why I continue to follow this board. I don’t think Saul has ever said “Do as I do.” What I appreciate about him is his willingness to share how he makes the choices. He always provides realistic and easy to ununderstand analysis of the companies and then welcomes analysis from all the other posters on the board. If you want to do an analysis of his results, feel free to do so. Anurag is already doing so, so perhaps you can collaborate. I, however, plan to continue learning how to choose companies that are growing rapidly while being reasonably priced.
Just to beat a dead horse, the lesson from performance for those periods is simply that if you invest in high growth companies and are always fully invested, when you have a dot.com or a subprime meltdown you are going to get crushed. Instead of being down 50%, you’ll be down 70%.
KC, who has the crush scars from both but is still comfortably retired on a tropical seashore because the market did recover, thank you very much.
My feelings of gratefulness for Saul creating this board have nothing to do with his returns, which are extraordinary indeed by anyone’s measure.
But rather, I am extremely grateful for Saul’s documented and patient stock analysis teaching which has enabled me to be oh so much wiser in choosing stocks. However, this involves some real digging and hard work…something few are willing to attempt. For a wonderful succinct analysis of Saul’s stock evaluation method read GauchoChris’s post #6593. It is a brilliant post.
My old method was to blindly buy the SA and RB recommendations month after month and rarely ever selling anything. My returns could not keep up with index funds year after year…. less than satisfying, to say the least.
I agree with a previous poster who said we should be discussing specific stock ideas and why we like them and what analysis we’ve used to reach that conclusion. I now have the tools for evaluating stocks. NO OTHER INVESTOR HAS EVER LAID OUT SUCH A CLEAR PATH FOR OBJECTIVELY BUYING AND SELLING STOCKS as Saul has been doing on this board for the past 3 years.
This has nothing to do with my feelings for Saul. I do love that warm fuzzy feeling that comes from much better returns year over year.
I hope you will feel free to share your own stock analysis method with us. This board is all about learning from one another.
It’s like that question, “if your friends jumped off a bridge, would you do it too?”
To which I’d likely sarcastically respond “probably, because they are pretty smart rational people, and if they are jumping off the bridge there is probably a reason I am not aware of that I should also get off the bridge.”
…but in reality, I’d still look before leaping just to make sure.
That is like this board. Lots of good stock ideas AND analysis and discussion about why they are good ideas… but the crux of it is the rational process for finding those good ideas.
Some of the better parts of those for me were actually selling out of some positions that were cluttering my portfolio and not growing as fast as I want. Some others like SWKS have grown from one I was still learning about to currently the name I am most bullish on and I wish I had bought more.
So I really think the goal is for people to learn how to improve their process than it is to put of a list of good stocks and performance numbers. The latter is just what happens when you do.