Portfolio Tracking II

This post is a follow up of the earlier post dated Feb 11 2008 entitled Portfolio Tracking ... We have updated our tracking engine and have set the following conditions as well as make some observations:

Conditions:
1) tracked the performance of stocks /ETFs for comparable periods from April 2004 through March 2010,
2) selected those that have generated average return in excess of 15% p.a. or with Sharpe ratio above 0.4 ( risk free set at 3% ), and
3) ranked them according to average return.

Observations:
1) based on an equal weighting of amount invested per period ( annual ), it is possible to surmise that an investor can achieve a reasonable return on a "buy-and-hold" basis,
2) such counters exhibit high betas ( ranging from 1.3 to 2.0 ) with the exception of XOM ( 0.5 ) and HPQ ( 1.0 ),
3) such counters also are quite correlated to S&P 500,
3) they are mostly "growth" stocks / asset classes i.e. emerging markets, linked to emerging market growth stories ( US Exporters, commodities etc ),
4) include technology stocks with great innovation ( AAPL ), and
5) these counter also suffered significant dips during 2008/2009 but rebounded strongly subsequently.

If these counters maintain their sound fundamentals there is no reason that they cannot outperform the market.

The trick is to stay focus and follow the simple rule of ensuring that the portfolio is re-balanced periodically by taking profits off the table and topping losses where necessary.

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