My 2012 Year End Performance

Written by

Jae Jun

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Although I beat the market last year and currently still beating the market since inception, I’m not satisfied with how 2012 turned out.

First the positives:

  • Much less activity. 26 total transactions in 2012 vs 41 in 2011 vs 82 in 2010.
  • Less mistakes
  • Analyzed more companies than in 2011
  • Didn’t look at stock quotes as much

Now the negatives

  • Less mistakes, but made some big ones that affected performance. Made bad contrarian bets. Underestimated certain factors of my analysis.
  • Didn’t make use of my advantages.

I have more mistakes which I get to below, but I grouped it into two main points.

I’m not too interested in discussing positives because I know that positive things will happen as I keep working to eliminate the negatives.

Still Made Big Mistakes

Here is a small collection of mistakes I made in 2012.

Mistake #1: I compromised my selling thesis and held on.

Lesson: Take gains especially if something shoots up quickly.

Mistake #2: Not sticking to things I understand. My bets on junior miners have failed miserably. Too many uncontrollable risks and variables.

Lesson: Learning new industries is good, but when investing before understanding as much as possible, it leads to losses.

Mistake #3: Not taking advantage of my small investor advantage.

Lesson: Although I hold a lot of OTC stocks, I could have done much more research into finding less well known and under followed companies.

Mistake #4: Bad judgement calls. Fell into behavioral errors.

Lesson: Radioshack has been a bad call. I neglected the industry, trends and what my eyes told me whenever I walked past a store.

Hopefully when I report 2013 results, I won’t be having to report these same mistakes again.

Performance Since Inception

Ending Words

After a bad 2010 and 2011, it does feel good to finally have had an up year, but the market was up considerably. 16% for the market is a huge year where it lifted everything.

So I can’t contribute 2012 to skill.

My goal is to perform great on an absolute basis over the long run. There is no point in losing  50% in one year and then making 100% the next year. It just evens things out on an absolute basis.

At the  moment, I’m on track but anything can happen. Best way to get luckier is to work harder.

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  • Smiley

    Hi, I’d like to know how did you calculate for the return each year, as some stocks are kept more than 1 year and some of them are sold less within a year. If you can provide the excel file that would be great. Thanks a lot and I do really enjoy reading your quality blogs and learn from it. Cheers :)

  • Frank

    This is a very raw analysis on your hits and misses. Your compounding interest is buffett-esque. Don’t be so hard on yourself about RSH. I got burned on it too. I bought shares at $8 sold at $5 with $500 loss and serious frustration and I closed my position (but I peek at the stock now and again). I also drive by the RadioShacks and see empty cracking pavement. They have a history of reinventing themselves…but this time its going to be difficult. They might qualify as a buyout for the real estate.

    I tend to stay clear of OTC stocks, There are some like FIATY and Canadian Junior miners that seem appealing but I always say to myself, “this is OTC land and OTC land is fraught with thieves and crooks”.

    I do have one mining company I like: CDE, a bit more civilized and good for the short term but too high priced for me. For contrarian plays HPQ comes to mind (they could be in cash burn mode but have survivability) I suffer from ‘cognitive dissonance’ on HPQ and scoff at it’s recovering stock price all the time.

    I should disclose I own none of the stocks above.

  • Marc

    What do you use to track your stocks?

  • Old School Value

    i use my excel spreadsheet which I’ve included as one of the spreadsheets you can download. The details of the spreadsheet is at the following link. I have developed mine further of course.

  • Old School Value

    Hey Frank. I was writing this at 2am so my mind was half asleep and I wasn’t able to write as detailed as I usually do. Still, it gives you a good idea of the direction I wanted to discuss.

    I actually like OTC land. Lots of people think of it that way, which is why I’ve done so well with RHDGF so far. I know several others who have picked brilliant winners by being selecting in the OTC market.

  • Old School Value

    I actually plan to write a tutorial on how to calculate it because it looks so simple but is one of the most frustrating and difficult numbers to find, keep track of and calculate, especially for the S&P500. I may do a video version too.
    In the meantime, start off with this XIRR spreadsheet. You are supposed to compare your portfolio value to the market in order to calculate the yearly returns.