Saturday, January 5, 2019

Dec 2018 Results: +1.43% Active Return vs S&P 500

December 2018 was yet another very volatile months for the US security markets. The main indexes ended the month near their low for the month.

The Optarix US portfolio was down as well. However, compared to the S&P 500 we managed to achieve an active return of +1.43% over our benchmark in the trailing twelve months (TTM). At the maximum, our portfolio was off the recent peak by about 18% in line with the broader market. Any number greater than 10% is typically seen as a correction, numbers greater than 20% as a bear market (Source: The Motley Fool). Based on that definition we are experiencing a correction but not a bear market yet.

The following diagram shows the active returns for all 12-month periods ending between Dec 2017 and Dec 2018. With the exception of June 2018, the Optarix US Portfolio performed better than the S&P 500. In other words achieved a positive active return.

(Click for Larger Version)


There were no changes in our portfolio in December 2018. Unless something unforeseeable happens we anticipate the next trade to be in Q2 or Q3 of 2019.

We rare sell shares. Our preferred holding period is "forever". We may sell shares once they appreciate in value too much so that their weight is beyond what we feel is commensurate to their chance/risk profile compare to our other holdings.  If that is the case we sell a small portion to bring the weight back in line. This plus cash flow from dividends is then used for entering new positions or adding to existing position. We roughly follow an equal weight approach. However, we are fairly patient in terms of the threshold at which we reduce or increase any of our positions. At times we may let a position continue to increase before we act.

While we cannot predict if the current correction will turn into a bear market, we continue to believe that using our set of rules for managing the Optarix US Portfolio should yield returns similar to the S&P 500. If things go well, we might see a better return than the index.

Happy Investing!

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