How to Beat the Indices over the Long-Term - Part 1 of 2
By Stephen Sutherland, author of Liquid Millionaire.Posted in the Category of ISAS, Investing, Stock Market, Wealth Building on 14th July, 2010.
Tags: hire car, isa trend investing, isaco, nasdaq composite.
Seeing as the second financial quarter is now over, I’d like to talk about the importance of long-term performance. We are going to start by taking a look at my 2010 ISA performance; and what exactly the results mean.
The information in this table tells you even though my ISA performance is flat for the year; the first half of 2010 has been a success. In my eyes, it has been a success because I’m fortunate to have outperformed both the FTSE 100 and the Nasdaq Composite in both the first and second financial quarters.
In my race to stay ahead of the indices over the long-term, this has helped me to stretch my lead even further. What I’m particularly pleased about is; quarter 2’s performance. That may surprise you because as you can see on the table above, I actually made a loss of 7.6%.
To remove any confusion, let me explain why I’m so pleased with it.
Normally, when markets fall as they have done over the last three months; because I invest in investment funds that hold leading growth stocks; the stocks held inside my chosen investment funds tend to correct much more than the market does. That means my portfolio in theory should have corrected much more than the Nasdaq.
In fact in many cases, my account can correct as much as one and half times to two times more than the Nasdaq does. That means in quarter 2 it would not have surprised me to see my performance log a loss of as much as 16% to 22%. So, because my account gave back just 7%, it tells you and I two things.
1. The current correction is a healthy one.
2. The investment funds I own for now are sound choices.
I’m fortunate to be doing well this year versus the indices, let’s remind ourselves that my overall objective and your overall objective is to beat the market (indices) over the long-term.
As you can see from this chart below; as of the end of 2009; my portfolio (It’s named as ISACO’s HIRE CAR™) was ahead of the Nasdaq Composite, the FTSE 100, and Cash ISA’s.
To close off this key point about performance, when you add these two elements together (2010’s performance + 1999-2009 performance) it tells you that at the moment I’m still fortunate to be ahead of the market. As you are well aware, this should always be the overall objective of any long-term ISA and SIPP investor.
Now you may be saying, but Stephen, what investment strategy did you use to help you to beat the FTSE 100 and the Nasdaq Composite?
If you did ask such a quality question you’ll be pleased to hear that I’ll be sharing what strategy I used and continue to use when we speak again on Friday.
Until next my friend.
If you would like to know more about how we manage to beat the market over the long-term, and request a FREE Telephone Consultation (£1,997 value) or obtain a FREE copy of my book Liquid Millionaire, get in touch.
You can email us or call 0870 757 8554 if you prefer.
In both cases you are under no obligation to do anything, buy anything or sign up for anything.
