Just with excel. Easy. Money goes in the box. Money goes out the box. Start and end totals. That's it. Don't know any other programs that do it. It's very worth it to ensure you know you're proper returns of your entire portfolio if you're doing this yourself. For investors that devote hours picking stocks and doing research, I don't understand how a couple of minutes of putting some data in returns spreadsheet is a big deal. Once you keep track, moving along its low maintenance. In fact, this is actually necessary in order to measure your performance.
treva84 wrote: I do agree that drawdown will be an issue with the next major crash. I disagree that holding bonds is the best way to mitigate this. Bonds and stocks have been highly correlated in their movement since ~ 2000, so holding bonds doesn't guarantee much, other than paltry returns.
Was talking about portfolio recovery, and the effect it can have on your CAGR. Bonds have a very important utility in a portfolio. Because losses and gains are not equal, they help you during and after market crashes.
Using couch potato and "worse case" example, investor (starting 2007), it took 7 years to come back with 100% equity portfolio. It took investor 6 years with 25% bonds to come back. It took investor 4 years?to come back with traditional 40%bond /60% equity split. Now, if investor rebalanced bonds aggressive into 100% equity after market crash, the recovery would be 1-2 years, pulling much higher CAGR out into the bull market. (with MUCH less risk)
Another interesting look: It took 100% equity investor over 10 years since 2007 to beat investor with 25% bonds. And the difference today is only beating by total 1.04%, (not annual)
The 20 year CAGR of couch potato with 10% bonds is 6.63%, with 25% bonds its 6.63%. (same return, lower risk with 25% bonds!)
XBB has a 5.44% annual return since inception, (nov 2000), not plarty return (a double and a half), and that came with low risk. But the real utility bonds held in your portfolio has more value than that. (sleep at night, hold value, something to rebalance etc)
Bonds are still correlated. Using e-series again, it was up 5.66% in 2008 while everything else had crashed.
So what this has shown, is adding certain mix of bonds to stocks can lower volitility of portfolio, smooth returns and help deliver similar return. (with lower risk)
treva84 wrote: You can see evidence of this if you look at my longer term returns chart - when the rate of return for the broad index dropped between Dec 2014 and Dec 2015 I dropped a little then resumed my upward trajectory as I continued to buy stocks. Of course, the real test will be during the next bear market - we'll see how I do then.
If your returns are correct +48% (as shown by TD Waterhouse screenshot since 2012), comparing to an "all equity" couch potato shows you might have underperformed by a lot. The total return is 109% as of 2012. Does your waterhouse include all your accounts?
You might enjoy stock picking but if there is an approach that is less risk that can make more, might be something to seriously consider.treva84 wrote: With respect to risk, it all depends on what our definition of risk is. If we define risk as losing money, I don't think stock picking is risky. I believe I have a decent vetting process that allows me to generally pick long term winners. I won't get every one right - no one can. As long as I get the majority right I'll be ok. Also consider this - indexing is immensely popular, and every time someone buys the index it increases the market cap of the top stocks. If the earnings stay the same (and why would they increase if people buy the stock?) the P/E expands with increasing prices, driving up valuations. So in essence as money flows in, you get less and less of a good deal. Eventually, you're buying the most expensive stocks, while everyone else is rushing to buy them. Prices keep going up, everyone feels good, money keeps flowing in, prices keep going up, everyone keeps feeling good. Does that not sound risky to you?
Also with respect to your is it worth the time comment, @freilona made a great point with her sweater analogy - sure, she could spend 100 hours knitting a sweater or she could just go out and buy one. Although going out and buying one is easy, is knitting it automatically bad, if it's her hobby and she enjoys doing it?