Comparing Saul Performance to FDN

Foodles:

Your figures show FDN grew by 250% whereas Saul’s p/f grew by 65%, both over ten years. If this is correct, then all the stocks and ETFs I mentioned, including IJS (which grew by 85%), did better. Please check your figures for Saul.

BTW, I used ten year performance as of today, 1/26/2017.

Cheers.
alpha

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Apologies for not reading all the messages before writing.
My query has already been answered.

Two notes:

Any N year comparison can make one alternative look good versus another, while a different time depth might show the reverse. There is an amusing correlation over this period, but that is all that it is, not a metric. If one wants a metric, then one should be comparing one’s own performance over this period with alternatives. If one’s own performance was much better than Saul’s, please be as generous as Saul and share your magic sauce. If worse, then what is your point? For any given time period, one can pick an alternate investment that would have done better … AMZN providing an obvious example … but for this to be relevant one would have had to have the insight and chutzpah to put 100% of one’s money in AMZN at the relevant point and the conviction to leave it there. If you did this, you can crow, but only with the recognition that it was an enormously high risk strategy.

Moreover, Saul’s actual returns are not the point of this board. Sure, we are attracted here because he seems to have done well … probably better than we have done. But then, something like 80% of investors won’t do as well as just sticking their money in an S&P500 index fund, so that is hardly surprising. But, the real reason we stick around here is because Saul is uncommonly good at communicating his thought process and from that we can learn to improve our own thought processes. Better yet, this has attracted a bunch of other people who are also good at such communication and the result is a very rich learning environment.

Who precisely did better than whom over such and such a time period is irrelevant. What we learn about what we do in the future is the whole point.

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I have added below to the 10 year figures the 5 year and 2 year growth figures to provide a more complete picture:

FDN : 270.16% / 157.11% / 40.18%

VGT : 142.34% / 94.31% /22.63%

VOOG: 122.54% /79.84% / 11.78%

IJS : 85.05% /85.39% /21.43%

DIS : 213.32% / 174.61% /13.78%

GOOGL: 245.33% /201.41% /59.67%

AMZN : 2,177.2% /334.08% /170.99%

I don’t have the Saul figures but thought the above table may be interesting on its own. The SP500 Growth ETF VOOG seems to have a smoother performance over the years than IJS, the Small Cap value ETF.

Cheers.
alpha

Foodles:

Your figures show FDN grew by 250% whereas Saul’s p/f grew by 65%, both over ten years. If this is correct, then all the stocks and ETFs I mentioned, including IJS (which grew by 85%), did better. Please check your figures for Saul.

The numbers are correct. It came as a shocker to me as well but the numbers don’t lie. In the last 10 years all those indices have beaten Saul performance and some of them by a wide margin.

Just as an added data point, the S&P 500 index also did better in the last 10 years, averaging 6.9% vs Saul at 5.2%.

#6

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You are comparing the results of one ETF to a person who over the same period of time analyzed and selected many stocks which comprised his portfolio. I think comparing one ETF to Saul’s selections or any other successful investor’s portfolio is faulty because no one puts all their money in one ETF.

The numbers are correct. It came as a shocker to me as well but the numbers don’t lie. In the last 10 years all those indices have beaten Saul performance and some of them by a wide margin.

Do those index results include commissions, fees and taxes? Do Saul’s?

Denny Schlesinger

Why is this thread dragging on for 25 posts? We are all guests here and Saul has volunteered to open his portfolio and method of operation for all to learn. The ulterior goal for each participant while learning is to make money investing. Everyone here is using saul’s knowledge and it appears a number of you are digging into 10 year old numbers to prove you each know how to dig up dirt. The fact remains Saul made the money to satisfy his goals all these years while some here are digging up rocks looking for dirt that have no bearing on the future of the market and how each of you can earn money here.

I would look forward to make money not back.

That’s My opinion

b&w

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But lung cancer could be induced in laboratory animals. So the scientific method was used to prove tobacco smoke was carcinogenic.
I remember Dr Alton Oschner of New Orleans presenting smoking as the main cause of lung cancer in the early 1960’s…

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The numbers are correct. It came as a shocker to me as well but the numbers don’t lie. In the last 10 years all those indices have beaten Saul performance and some of them by a wide margin.

Do those index results include commissions, fees and taxes? Do Saul’s?

Who cares—SAUL LIVED OFF OF HIS PORTFOLIO ALL THOSE 10 YEARS and about 20 more. -nobody lived off of the index fund because nobody had a major portion of their portfolio in it for the 10 years The people who constructed the index didn’t invest their portfolio money in it either because they didn’t trust it or probably didn’t have money to invest and live off their investments.
Its hard to live off your investments, because you have to make the money first and then HAVE THE COURAGE TO INVEST IT TO LIVE OFF OF with no help from anyone if you fail. A word of advise to those investing—Don’t fail
b&w

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I’m not sure why many feel this thread is somehow a “hit piece” on Saul?

I consider myself one of Saul’s biggest supporters, this is my favorite, most frequented board, I read every post. I feel I’ve learned more here than on any other board (paid or free) on the Fool. I’m grateful and indebted to Saul for all he has shared. I’m invested in many “Saul stocks” that I think will be big winners down the road that I never would have gotten in without this board. I also have quite a few winners already that I’m in only because of this board (ABMD, BOFI, ESNT, LGIH, SBNY, SHOP, SWKS, UBNT). Obviously some others are down, but that comes with the investing territory.

But I do find the fact that the FDN practically mirrored Saul’s results for 10 YEARS fascinating! Especially when I realized they’re not the same stocks, but they gave very similar results. Tamhas said it is an “amusing correlation”, 10 years is more than an amusing correlation. You saying that, is saying there is nothing to it, it is random luck. To say that is like saying Saul’s 30 years of earning a CAGR of 25-30% was just dumb luck. A couple, 3, 4, maybe 5 years can be luck, but I think for it to happen for 10 years, that there is a correlation there that we just don’t recognize, something about the types of stocks even though they’re not the same stocks, yet they move in the same way in the market.

I’m not saying it’s a bad thing, I like it, as I’m considering putting much of what I have currently in cash in the FDN instead. I think it will continue to mirror Saul’s returns, which I think have been and will continue to be great. Even if they don’t look like it over a relatively randomly selected time frame of the last 10 years (how long the FDN has been around). There was no nefarious reason that time frame was selected by #6 (at least in my mind), that’s just all the FDN has been around.

I’ve never looked into it, but it seems to me that it would have been pretty hard to select 2 portfolios with completely different stocks and have them correlate as closely as these did. Maybe I’m wrong…maybe any growth stocks would correlate as closely as the earlier posted graphs showed FDN and SAUL stocks correlating. If that’s the case, then you can say there’s nothing to see here, and maybe macro effects have more to do with a portfolio’s returns than the individual stocks selected. I don’t believe that, though, they obviously have something to do with it, but I think the individual stocks picked have more to do with it, which is what makes the correlation interesting.

B&W asks why this post has gone on for so long. I like b&w’s posts, even though they’re usually about income stocks and REITS, but I don’t see a long thread as a problem, it usually means it’s an interesting thread. If you don’t like this thread, ignore it. There is nothing political about this thread. We’re talking about growth stocks, Saul stocks even, and why his returns have mirrored a growth internet stock ETF. B&W also states how hard it is to live off your investments and how he and Saul are the only 2 doing it here. I’ll give you that, I think that’s awesome and why I’m trying to learn all I can here, because I would like to do it to! I’m in my early 50’s and have had some success in investing, although I’ll be the first to admit, that my big payouts in the past were a lot of luck (and a lot of risk!). But that success has also put me in a position now, that I think in 5 years (once I get my youngest through college) that I’ll be able to retire and live off my investments, too. At least that’s the plan.

One thing I have noticed about this thread is, I don’t think Saul has made one comment on it. I suppose that means he either disapproves of it (I hope not), is insulted by it (I really hope not), or just doesn’t find it interesting or worthy of discussion. If that’s the case, Saul, please let us know and I’m happy to drop it. But I would like to hear your thoughts on why it looks like your portfolio returns of constantly changing individual stock picks has correlated so closely to the FDN. If you would care to share any thoughts you have, I’d find it most interesting.

If not, sorry for the waste of bandwidth on my part.

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Hi Foodles,

I, too, enjoy reading this board and it influences how I think about my investments. I, too, am wondering if I wouldn’t be better off with ETFs. I have a lot of money in the MSCI world and BRK-B and fared reasonably well with it. I have a smaller allocation of money in Foolish stocks. So far I’m beating the S&P500 but just barely. Therefore I started wondering why bother, why not buy e.g. a Russell 2000 or another ETF on a more aggressive index to spice up the returns?

But before you jump the shark and buy FDN, please have a look at the link from one of the post above:
http://www.investopedia.com/articles/investing/091615/one-et…

The last 10 years cover the period of tremendous success of FANG (AMZN, FB, NFLX, GOOGL) and other internet stocks. I’m not sure you will get an encore in the next 10 years. The chart shows that performance hasn’t always been like in the last 10 years. If you look at a longer time frame (15 years), the underlying index is under water - it is still below its peak in 2000.

I look at the charts and can’t help to think that we are due for a bear market sooner rather than later so I wouldn’t extrapolate the last 10 years.

LNS

Having said this, I have been buying constantly in the past years and haven’t sold yet myself…

I’m not sure why many feel this thread is somehow a “hit piece” on Saul?

I don’t get it either. My post simply stated some facts and numbers that are publicly available and their accuracy had not been challenged.

I don’t understand the angry responses I’m getting. In the last 10 years Saul’s returns have trailed the S&P 500. Why is it wrong to point this out?

Saul’s 30 years of earning a CAGR of 25-30%…

When I joined the group, I also got the impression that Saul is cranking gains of 35% a year. I did not bother to run the numbers and verify. Saul posted his returns since 1993 in the knowledgebase article. Since 1993, he is averaging 20% a year.

#6

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The last 10 years cover the period of tremendous success of FANG (AMZN, FB, NFLX, GOOGL) and other internet stocks. I’m not sure you will get an encore in the next 10 years.

That’s a good point. Maybe the FDN is a tough comparison as it is one of the best performing ETFs of the last 10 years. But Saul’s performance of the last 10 years (5.2%) has not kept pace with even mediocre index funds like the S&P 500 (6.9%) not to mention the Russel 2000 (7.1%) and S&P Small Cap Value (8.0%).

#6

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I’d like to also chime in and suggest that 34 posts (now 35) is filling up the board, and is enough on this topic, and unless you have something new and brilliant to add, let’s move on to talking about stocks again!

Saul

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Why is this thread dragging on for 25 posts?

Because people operate on the assumption that Saul makes 35% a year and are surprised by the stats of the last 10 years.

The ulterior goal for each participant while learning is to make money investing.

Right.

The fact remains Saul made the money to satisfy his goals all these years

Right. That fact had not been contested.

while some here are digging up rocks looking for dirt

Dirt? When an index fund posts its historical performance, you call that “dirt”?

dirt that have no bearing on the future of the market and how each of you can earn money here.

You are here because Saul had made money in the past. So you too are extrapolating from the past forward. The stock market is not a sequence of stochastically independent coin flips. The past is very important.

#6

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Who cares?

I do. I want to make sure it’s a fair comparison. Is the difference in the power of compounding or in differences in data collection?

One important point this thread has revealed to me is that small differences add up to big differences over the long run (if the issue is not data collection). Although I knew of the power compounding I hadn’t realized the awesome power of compounding. I value this lesson and in no way does it diminish Saul’s results.

If Saul has a problem with this thread I’m absolutely sure he would let us know.

Denny Schlesinger

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I consider myself one of Saul’s biggest supporters, this is my favorite, most frequented board, I read every post. I feel I’ve learned more here than on any other board (paid or free) on the Fool. I’m grateful and indebted to Saul for all he has shared. I’m invested in many “Saul stocks” that I think will be big winners down the road that I never would have gotten in without this board. I also have quite a few winners already that I’m in only because of this board (ABMD, BOFI, ESNT, LGIH, SBNY, SHOP, SWKS, UBNT). Obviously some others are down, but that comes with the investing territory.

Are you here to be one of Saul’s supporters, or are you here to make money in the market to support you and your family?

That’s an important question for you to think about because what is next in your game plan, if Saul decides to close the web site down .

b&w

Tamhas said it is an “amusing correlation”, 10 years is more than an amusing correlation.

One must remember that any two collections of stocks are likely to have significant correlation because they go up and down with the market.

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Pigskin, I think the question you need to ask yourself is what do you want to learn in the next 10 years in order to manage my full portfolio. I stated in a previous thread that I felt that taking the time and energy to learn about REIT investments would not benefit me better than spending the same amount of time to improve in the investment arena I am already somewhat comfortable investing in (BTW, I hope I never feel completely comfortable, that would indicate that I already knew everything I needed to know. Ask Saul or Denny or any other regular visitors to this board with a good investment record if they’re done learning).

If your goal is that in 10 years you feel comfortable selecting ETFs and index or mutual funds you have a different learning curve than if you want to manage a portfolio of stocks issued by individual companies.

You mentioned that you would like to own FANG, but you didn’t say why. I would think (i.e. It is my opinion) that at this point your focus would be more on why you would like to own FANG. Is there something about owning these stocks as a group which is more beneficial than owning them individually? If not, why are you better invested in all four (or five depending on how you want to own Google) than putting all your money in the “best” one? And so forth . . .