Tag Archives: performance

Amateur Investor trails S&P500 for 2022, beats over longer terms.

March 24, 2023.

Amateur Investor’s longer term, 5 and 10 year performance is approximately twice that of the broad stock market index. However, the more recent 1 year return is approximately 31.6% worse. Therefore, AI did not escape the bear market of 2022.

Average Annualized Returns for Amateur Investor portfolio, as of 12-31-2022, with comparisons.

1y(%)3y (%)5y(%)10y(%)
Amateur Investor-25.66.916.719.3
S&P 500-
Vanguard Long Term
Treasury Index Fund

Our longer term, 5 and 10 year performance, is approximately twice that of the broad market index.  However the more recent 1 year return is approximately 31.6% worse. 

The broad market decline which occurred in 2022 is associated with several related changes in the US and global economy. These include: government policies regarding the “energy transition” intended to “renewable” energy sources, intended to “reverse climate change” which increase the price of normally used energy sources (coal, oil gas); disruptions to trade caused by the war in Ukraine.  These changes caused inflation and hindered economic growth. Excess government fiscal stimulus spending exacerbated inflation.  In an effort to reverse this, the Federal Reserve began raising the Federal Reserve Funds Rate in March 2022.  Increasing interest rates are intended to further slow the economy.  This prospect can threaten the growth of companies’ earnings.

The rise of Treasury rates naturally also more directly affected Treasury Bond prices.  I included the performance of a long term treasury bond index in the above table showing portfolio performance. When one is apprehensive because of a market decline, one might be tempted to seek safety in bonds, especially in the perceived stability of U.S. Treasury Bonds.  But bonds do not necessarily provide a safe haven in terms of return on investment in the short run.

How might we have mitigated our losses in the bear market? By being more aware of current macro economic changes, and responding to them by including in the portfolio, companies in sectors which are responsive to diverse macroeconomic factors. Specifically, companies which benefit from the same changes which threaten other companies, as well as companies which are relatively unaffected. Nevertheless, given that growth stock prices will inevitably fluctuate, our companies are still extremely profitable, dominate their markets, and continue to innovate in order to continue their growth and dominance. More on the value and productive method of diversification, in a future post.

Amateur Investor holdings, by percentage, as of 12-31-2022:

Microsoft (MSFT): 52.79%

Visa (V): 28.74%

Adobe (ADBE): 17.75%

Mercado Libre (MELI): 0.44%

Please welcome Mercado Libre https://investor.mercadolibre.com/investor-relations as a new arrival to the portfolio. Mercado Libre is an ecommerce company operating in Latin America. It is by far the dominant market leader in the region. Latin America has an internet penetration rate in the 70s%, and fast growing. MELI provides a suite of ecommerce related solutions: Mercado Libre Marketplace (online retail platform), Mercado Envios (shipping and logistics), Classified Ads services, Advertising services, and Mercado Pago (diverse payment solutions). I began by investing an almost irrationally small amount on August 4, 2022, at $1037.82 per share. This is simply a mark of the anxiety I usually have around a brand new investment.

Amateur Investor underperforms S&P slightly in 2021

Happy New Year!  Amateur Investor focused long equity portfolio returned 24% in 2021, compared with 26.89% for the S&P 500 Index.  Following usual annual custom, I compare Amateur Investor returns for 1, 3, 5 and 10 year periods, with those of an S&P 500 index fund. This year I chose the Vanguard 500 Index Fund Admiral Shares (VFIAX), a widely held low fee S&P 500 index fund managed by Vanguard.

Amateur Investor returns (as of December 31, 2021) for:

1 year: 24%

3year: 37.3%

5 year: 32%

10 year: 24.4%

VFIAX returns:

1 year: 28.66%

3 year: 26.03%

5 year 18.43%

10 year: 16%

Although Amateur Investor underperformed the S&P 500 index by almost 3% points of return, and VFIAX by almost 5% points, Amateur Investor beat the index handily for 3, 5 and 10 year periods.

For 2021, Visa corporation stock ended the year essentially flat, down 0.92% for 2021. MSFT was  up 50.5%, ADBE up 12.85%

As of December 31, 2021, my holdings were, in the following proportions:

MSFT: 53.0%

V: 24.33%

ADBE: 22.38%

Cash: 0.28%

During 2021, new funds were invested in the portfolio, equally invested in each of MSFT, V and ADBE.

Amateurinvestor performance more than double S&P index fund in 2020

Portfolio average annual return with trailing 1, 3, 5 and 10 year returns are as follows.

1 year: 37.4%

3 year: 33%

5 year: 27.3%

10 year: 24.5%

They are compared with returns of VFINX, a widely held S&P index fund from Vanguard. VFINX trailing returns are as follows.

1 year: 18.37%

3 year: 14.14%

5 year: 15.18%

10 year: 13.85%

The portfolio holdings, by percentage, as of 12-31-2020 were as follows.

Adobe: 22%

Microsoft: 50.85%

Visa: 26.75%

Cash: 0.39%

2020 was marked by the Covid pandemic. Because of the expected economic burden, one would expect the market to have responded negatively initially, as it did. However a pandemic is an example of the type of crisis which would be expected to be transient, and therefore might provide an opportunity to buy good companies at a relatively low price. The market would be expected to return to trend once the crisis was seen to be abating.

However that is not why Amateurinvestor outperformed the broad market yet again. I am virtually fully invested all the time, so had little new cash to invest. The reality is that Visa, Microsoft and Adobe play indispensable roles in the digitization of economic activity on this planet. And the pandemic compelled an acceleration of the secular growth of digital transformation, therefore these three indispensable companies continue to grow.

Amateurinvestor beats S&P in 2017

In 2017, Amateurinvestor portfolio soundly beat the S & P 10, 5 3 and 1 year returns, as shown in the table below.

Fund/index Expense ratio (%) 10y (%) 5y (%) 3y (%) 1 (%)
Amateur Investor   17.9 21.4 21.5 35.6
S & P Index   6.9 13.2 9.65 20.16


Holdings of each stock at 2017 year end are as follows:

ADBE: 7.7%

CNI: 5.1%

MSFT: 46.1%

SBUX: 12.6%

V: 27%

Performance of my stocks for 10, 5 3 and 1 year in the market, end of 2017, shown in the table below.

    ARR %    
stock 1y 3y 5y 10y
ADBE  74.97 35.77 36.8 15.8
CNI  25.7 8.38 14 14.67
MSFT 40.5 24.7 27.7 10.48
SBUX 7.97 14.6 17.6 21.04
V 46 21 na na

Note Starbucks (SBUX) has slowed its growth as it failed to meet earnings targets predicted by management, although earnings were still adequate for the present, just not fulfilling the past sunny promises. This is a common growth stock story and this is why we pay more attention to past achievement rather than rosy predictions.  It is also why we buy cautiously at high valuations.

Microsoft (MSFT) was range bound from late 2000 until late 2013. In that decade MSFT proceeded to dominate one historical stage of its market, consumer and business server software, with revenue increasing from $23B in 2000  to 77.8B in 2013. However under the non-engineer  Ballmer, MSFT did not reliably expand its dominance to newly emerging markets such as mobile and search.  In late 2013 under new CEO engineer Nadella, MSFT has accelerated its growth into the public/hybrid cloud on which business will depend in the future, returned to its historical focus of making its software available as a standard on all platforms.  The stock has accelerated, with the realization that even with the investment required to establish public cloud infrastructure, margins will remain high, and that the historical dominance in business server software will translate into a preferred competitive position in the hybrid/public cloud  for the business market.

VISA (V) has been a pioneer company with the  steadily strengthening competitive advantage of its global Visanet for multiple decades. It came out of the gate running as a public company March 2008, and has steadily grown into an expanding addressable market, while actively establishing standards which enable the  digital payments market.

Canadian National Railroad (CNI) stock price and to some extent revenue was affected by the fall in oil prices in 2015, but this did not materially affect the strength of its business.  meanwhile, its ports are expanding container volume capacity.

Adobe Inc. (ADBE) has continued to dominate the graphic arts digital content business and become a dominant force in digital marketing of this content.  Its partnership with MSFT gives it a stronger global reach.

It is satisfying to find that an Amateur can achieve these definitely satisfactory returns. Young or old new investors can do likewise, provided they do the adequate reading and think critically. Investment can be fascinating in what it teaches you about human nature in history and today, and what you need to learn about  prospective companies or those you buy.  The investor’s assets work and grow for him or her.




Portfolio Performance for 2016: underperformed, but businesses doing well

Performance of my portfolio for 2016 was only 7.4%, underperforming S&P which made 9.54%. 

On 12-31-16 the relative proportions of holdings were


MSFT 49.9%

V 22.7%

SBUX 15.2%

CNI 5.59%

ADBE 4.98%

Cash 1.43%


No stock trades were made this year.

Beginning with Q2 2016 dividends were credited to cash instead of reinvested, to build a reserve for future purchase of stocks when they should reach an attractive low price. 

The performance of my stocks in the market was as follows:


MSFT    +14.65%

V           +1.36%

SBUX     -6.1%

CNI        +22.67%

ADBE    +9.59%


Possible causes of the relatively low performance are as follows. 

In the market volatility in September 2015 and January 2016, the S&P fell 10% from its peak of 2126 on July 17 2015 to 1921 on September 4, 2015, before climbing again to a peak of 2099 in November 6, then falling 12% to 1864 on February 12, 2016.  Unfortunately, I had no cash ready to invest in order to take advantage of the attractive low prices which appeared during the dip.  That is one reason that my performance was lower than it should be.  To address this, as mentioned above I began setting aside dividends to build a cash balance to fund acquisitions at attractive prices, whenever these should appear.

Another reason was that SBUX and VISA had suboptimal years in performance, although not as businesses.  SBUX missed revenue expectations for the first threequarters of 2016, then beat in Q4.  It beat earnings in Q1, met in-line in Q2 and 3, and barely beat in Q4.  The stock price more of less followed these results.

During 2016 Starbucks began developing its strategy of “premiumization” of the Starbucks experience, with the Roastery flagships stores and the Reserve category of Starbucks stores.  The various initiatives to expand the Channel Development segment continued.  The Full year 2016 revenue rose 11% and non-GAAP EPS 17% yoy, so hardly a poor showing.  The trailing PE is currently about 30, which is approximately average for recent 10 years. The continued evolution of SBUX to strengthen its competitive advantage and adapt to new markets is intact.

VISA acquired VISA Europe on June 21, 2016, for €12.2 billion ($13.9 billion) and €5.3 billion ($6.1 billion) in preferred stock, convertible to VISA Class A stock, with an additional €1.0 billion, plus 4% compound annual interest, to be paid on June 21, 2019.  To pay for this, VISA in December 2015 issued $16 billion of senior notes with maturities ranging between two and 30 years. The acquisition was expected to be dilutive to earnings in 2016 in the low single digit range. 

Stock dilution is being offset as the $16B debt issuance is being used partly to increase stock buy backs.  The acquisition should be accretive in low single digits in 2017 excluding integration costs, and accretive in high single digit range by 2020.  The increased earnings are partly from increased efficiency:  increased scale, cost cutting efficiencies realized by integration of the businesses, and benefits related to Visa Europe’s transition from a member-owned association to a for-profit enterprise. VISA Inc. will be positioned to take on the estimated 37%, or USD $3.3 trillion, of personal cash and check spending in Europe. Europe has been an early adopter of mobile payments using NFC, expected to grow.  Visa Inc. has aggressively launched new mobile payment partnerships, platforms and products that will enable faster growth and adoption of mobile payments in Europe. This includes new tokenization services, support for digital wallets and wearables, strategic investments in other enabling technologies, ecommerce (such as VISA Checkout) and P2P payment capabilities, as well as the opening of several global innovation centers. 

VISA will be able to present a seamless experience and global capabilities to its European and international clients.  Hence the evolution of VISA Inc. to strengthen its competitive advantage as digital payments global market leader, and adapt to serve evolving markets, is intact.