06-30-2015, 03:55 PM
(06-27-2015, 09:39 AM)rayray Wrote:(06-23-2015, 02:06 PM)800peace Wrote: OK, I tweaked my hedge, which allowed me to increase leverage, which increased the dividends received. I made another tweak to decrease my turnover, and now annual turnover averages 0.45%. Now I have the following historical dividend payments, net of margin interest paid, on a one-time $10,000 investment:
Year Amount
1999 $488
2000 $624
2001 $1,713
2002 $2,271
2003 $2,750
2004 $3,831
2005 $8,432
2006 $12,962
2007 $26,664
2008 $24,521
2009 $27,514
2010 $49,609
2011 $64,455
2012 $67,319
2013 $71,087
2014 $93,426
2015 Estimate $122,420
The payback period is 6 years. More than the original principle is being paid in annual dividends after 8 years. Telling doubters where to stick it after 12 years.
I like this time horizon because it includes 1) internet bubble popping, 2) 9/11, 3) housing bubble popping, and 4) The Great Recession. Below are some risk measures since inception in 1999:
Model
Inception Date 01/02/99
Total Return (%) 29,393.21
Annualized Return (%) 41.27
Max Drawdown (%) -38.37
Standard Deviation (%) 27.71
Sharpe Ratio 1.35
Sortino Ratio 1.90
Correlation with Benchmark 0.33
R-Squared 0.11
Beta 0.45
Alpha (%) (annualized) 36.30
If compounding interest is the 8th wonder of the world, dgi is the 9th wonder of the world.
You had an initial one time investment of 10K.
But how much did you hedge over the years and how often?
On a side note, everyone is here because we do care. Not only do I care about my own finances/investments but I care about my fellow DGI's and I want others, as myself to make good financial decisions. We all come here to learn and share, it's a Dividend Growth Forum.
OK great, finally not a sour criticism. I hedged 6 times since 1999, but wasn't successful every time. The longest hedge period was during The Great Recession... It lasted from approximately around Jan 2008 to Oct 2009... I don't know if those are the exact dates, but it is around there. Anyways, the hedges I use are going short SPY (100% of holdings) or UPRO (35% of holdings), depending on a couple of factors. You could also buy puts on SPY, but options have an expiration date, so you can either buy as long of time as is available, or make a foolish guess on when you'll have to exit the hedge. This is the only area where I partially use advice of other people, (Standard & Poors). Once Standard & Poors estimates are confirmed by the market, I enter the hedge or exit the hedge. Thankfully, P123 is linked to S&P database, so I can just program what I want to see on my hedge and P123 with give me a notice when the stars align. P123 is even working on linking brokerage accounts to the trades in the models. It is a really great tool and I advise everyone check it out.
If you think my returns are crazy, you should see what the P123 community is accomplishing. There are a lot of smart finance folks, and you can see if they're a successful investor or not.