I was a broke college student learning wonderful and useful stuff like Beta, CAPM, ETF portfolio management, etc. Anyway, just a couple of years earlier, I read The Intelligent Investor so I was a value investor at heart.As part of the curriculum, we ran a virtual portfolio in which we talked about our strategy, holdings, and performance at the end of the semester.
I remember I decided to go with a concentrated portfolio of 5 stocks. If I remember correctly, it was WFC, USB, eBay, and two others. These purchases were made almost at the absolute bottom of the crash. Because my portfolio had 2 financials, my results were mixed but anyway, I remember getting dinged for not diversifying and having too much beta when other students over diversified and/or day traded.
Boy would I love to see my portfolio performance now. I mean, WFC was in the low 20's, and eBay around $10.
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(10-29-2014, 09:29 AM)alexg Wrote: ... As part of the curriculum, we ran a virtual portfolio in which we talked about our strategy, holdings, and performance at the end of the semester.
I remember I decided to go with a concentrated portfolio of 5 stocks. If I remember correctly, it was WFC, USB, eBay, and two others. These purchases were made almost at the absolute bottom of the crash. Because my portfolio had 2 financials, my results were mixed but anyway, I remember getting dinged for not diversifying and having too much beta when other students over diversified and/or day traded.
And this seems to be why the average investor underperforms so much.
Any of those strategies can be successful or fail spectacularly over a 1 or 2 semester course. Did they make you do any back tests, forward projections, compare the different methodologies? I'll bet they didn't even mention dividend growth investing but were all about MPT.
I do agree that
over the long term value and dividend growth investing (both buy and hold/monitor over an extended period of time) will eventually provide superior returns unless one is exceptionally good at trading & timing.
Alexg, did you think you came away from that course with a better understanding of how markets work and the strategies one can employ? Which strategies seem to be the most productive? I don't think I'd want to participate in that sort of "game" for that short a period of time unless I was a diehard indexer. At least I could rely on the law of averages.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
Any of those strategies can be successful or fail spectacularly over a 1 or 2 semester course. Did they make you do any back tests, forward projections, compare the different methodologies?
No. It was basically a "run a portfolio, make a presentation detailing your performance and strategy." I remember being one of the few to actually have a long term strategy.
did you think you came away from that course with a better understanding of how markets work and the strategies one can employ? Which strategies seem to be the most productive?
Better understanding, yes. But in the back of my mind, I knew successful investors didn't use CAPM,MPT or Beta, so I wasn't too happy about them spending a great of time on them. I did have a professor who focused on DCF and valuation. So I tried to take him as much as possible. Coincidentally, he had the most "real world" experience and managed a portfolio for a private equity group.
