Jurgis,
I might suggest you not consider throwing in the towel quite yet. fwiw, i think you are under-estimating your skills, the value of your additional return and over-estimating a perceived return Buffet et al. can achieve.
1. Consider as you note yourself, stocks average 7%. Your 10-year return is 10%. those 300 bps are extremely valuable to you. Why give them up because you had a couple bad years. As an investor, you do need to look at the longer horizon. Granted I am assuming you have another 10 years of quality living to look forward to. 10% is in no way a low hurdle to achieve.
2. Your perceived hurdle of 15% to 25% might be unrealistic. Buffets recent record isnt nearly as good as his early years, and what he does get is driven by access to deals you and I will rarely see -- GS preferred with a 10% coupon?? And his risk/reward trade is different using other people's money than his own. he can afford to take risks you might not be able to afford and not blink at the loss. Look at the risk/reward tradeoff needed to get those types of returns. Are you at a stage in your life to take those risks to earn those rewards?
3. one needs to be quite careful and considerate in choosing the timeframes (and historical bias) for such analysis as well. True, one could have bought BRKa and made money, or apple and made more. is that true going forward as well? maybe. maybe not. same risk/reward trade off analysis you would do for any other company at any other time. not really passive. true buying the S&P, some bond index, a TIPS fund and perhaps a smattering of emerging market index is best for most everyone in the market and is easy. but then again, looks to me like you will lose 300bps...
nonetheless, just some thoughts to perhaps consider. thanks for putting that out that for consideration and discussion. it is interesting to say the least. And I for one would miss your insights and thoughts should you choose to go "passive" on us.
all the best.
george |
