How much did your portfolio return this year?

It never ceases to amaze me when I speak to friends, colleagues and acquaintances about investing how little many of them know about their portfolio’s performance.

Often people are quite willing to share with me their latest strategy, tactic, analytical approach or hot tip (that is if they are interested in investing at all).  Typically this includes focusing on one or two examples of how their preferred approach has paid off for them (seasonal investing, technical analysis, momentum buying and selling, day trading, etc.).

Often, when probing a bit, folks will admit they don’t apply these ideas to all of their portfolio.  Instead they use them on their “bucket” of assets that they’re willing to either risk or experiment with.

So usually I let the discussion run unfettered to hear a description of the preferred approach.  Then, always the spoiler, I ask: “So how much money did you make this year using this approach?”  Usually there isn’t a clear answer.  Often it is qualified with either one or two times it worked really well, or with terms like “it depends.”

Then my follow up question is often: “How much did your total portfolio make this year?” That usually catches people off guard. The usual response is to focus on one account (my wife’s TFSA is up X%, or my high risk investments have done really well).  It is rare indeed that anyone can give me an idea of the percentage rate of return on their total portfolio so far in the current year.

I find that a bit alarming.

It would be less so if the person said I don’t have the rate of return handy but I do track total portfolio performance.  Or maybe some figure its none of my business.  But I try to explain I know exactly what my rate of return is year-to-date once I’ve asked.  It’s not about bragging or one-upmanship, or even comparing, because rates of return are only relevant to the owner of the portfolio; it’s about having a clear picture of how your portfolio is actually doing at any point in time.

And not just a piece of the portfolio – the whole enchilada.  To me it is vital to know how your overall personal finances are doing and how well your strategy, tactics, analytics, plan and processes are contributing to that performance.

Maybe some of these tactics, hot tips and techniques people often like to talk about are useful and profitable. But unless the overall portfolio performance is tracked, and a clear understanding of how these approaches contribute to overall returns is assessed, it’s kind of like just playing in the sandbox.

Focusing on a segment of your financial picture without having a handle on the big picture is risky.  Probably much riskier than the market as a whole.


New poll on how often OSC fantasy portfolios should be reviewed in meetings

One of the discussion topics at our December 8, 2015 meeting was how often to put the fantasy portfolios on the agenda.  This correlates with how often trades should be considered/made.

Here is a poll to get your feedback.

Ottawa Share Club voting results are now available

The OSC voting results for the growth and income portfolios are now available here.

The OSC Executive is reviewing the results and discussions begin November 24.  The proposed portfolios based on the voting results and OSC Executive review will be presented to members at the next OSC meeting on Tuesday, December 8.

Ottawa Share Club fantasy portfolio game begins to take shape

The Ottawa Share Club (OSC) members voted on the composition guidelines for the growth and income portfolios November 10, 2015.

I’ve now compiled the initial results for review and discussion with the OSC Executive.

We’ll be meeting November 23 to go over the results and discuss next steps.

See more about the OSC fantasy portfolios here.