Portfolio Performance
FALLS CHURCH, Va.–The SRI Long-Term Holdings Portfolio continues to outperform.
New readers, please note that this is a long-only portfolio. I imposed this restriction in order to fairly compare performance against benchmarks, and all major market indexes are also long only. Also note that this performance doesn’t include the Alternative Holdings Portfolio return.
Though quarterly results aren’t my main concern, the end of the period offers an opportunity to assess performance since inception. I also plan to publish yearly returns at the appropriate time.
Since its inception 15 February 2006 through 14 September 2007, the Portfolio is up 50.2 percent, while our benchmark–the Morgan Stanley Capital International All Country World Index Total Return (MSCI World Index), which includes gross dividends—is up 27.2 percent. The S&P 500 is up 18.2 percent, including dividends, during the same time frame.
Source: Bloomberg, SRI
I’d like to offer an explanation of the way I view the investment process.
The first step when you become an SRI reader–with its emphasis on global markets, emerging markets in particular–is to understand the argument that Asia will be a very important economic region in coming years. The next step is to contemplate that evolution and then act in a long-term fashion. Many investors have tried the “smart” way of trading Asian markets or have searched for the latest “hot” story to make a quick profit. These people ignore the big picture, and their profits are relatively small.
Long-term readers know that I haven’t positioned the SRI Portfolio in that manner and that I didn’t work like that when I was responsible for stock selection and sector allocation for another financial advisory. In other words, generating long-term, positive returns while avoiding short-term downside is the theory upon which I’m constructing the SRI Portfolio.
And I make every effort to alert investors when I see moves to the upside or the downside or any other special situations.
The approach here is top-down. I first identify long-term investment themes (or, as my colleagues and I call them, global secular trends). Because of the long-term approach, the Portfolio must be able to endure short-term volatility as long as we continue to be on the correct side of the global secular trend. To achieve this, the Portfolio is being constructed to offer a diversified set of holdings, while I also offer hedging ideas for more-complete advice.
A characteristic common to the Portfolio companies is suitability for the new realities of a changing world. They’ll benefit the most from the changes taking place in the global economy.
No one knows how long it will take for the global economy to navigate the secular trend identified here. This is the reason investors need to remain focused and have a portfolio that can last and perform well on a tactical basis. After all, the way to stay in the game isn’t by losing all the money, and tactical mistakes can cause that. This is the main reason I won’t put convictions above analysis and will avoid suggesting only one type of attitude or trade, especially short-only strategies.
It’s important that you look at the SRI Portfolio as a whole and not as an assortment of stock tips. Although few people will buy the Portfolio in its entirety, you, at the very least, need to buy SRI’s investment theme in order to diversify. Buying only banks or tech companies because you like the stories may offer a reward, but such an approach won’t provide the lasting benefits of the overall Portfolio.
Keep in mind that SRI comes to you weekly and always offers current advice. Adding and subtracting stocks from the Portfolio can be done more easily this way. There’s always another week, and neither readers nor the editor need to rush. Patience has always been a good thing to have when investing.
New readers, please note that this is a long-only portfolio. I imposed this restriction in order to fairly compare performance against benchmarks, and all major market indexes are also long only. Also note that this performance doesn’t include the Alternative Holdings Portfolio return.
Though quarterly results aren’t my main concern, the end of the period offers an opportunity to assess performance since inception. I also plan to publish yearly returns at the appropriate time.
Since its inception 15 February 2006 through 14 September 2007, the Portfolio is up 50.2 percent, while our benchmark–the Morgan Stanley Capital International All Country World Index Total Return (MSCI World Index), which includes gross dividends—is up 27.2 percent. The S&P 500 is up 18.2 percent, including dividends, during the same time frame.
Source: Bloomberg, SRI
I’d like to offer an explanation of the way I view the investment process.
The first step when you become an SRI reader–with its emphasis on global markets, emerging markets in particular–is to understand the argument that Asia will be a very important economic region in coming years. The next step is to contemplate that evolution and then act in a long-term fashion. Many investors have tried the “smart” way of trading Asian markets or have searched for the latest “hot” story to make a quick profit. These people ignore the big picture, and their profits are relatively small.
Long-term readers know that I haven’t positioned the SRI Portfolio in that manner and that I didn’t work like that when I was responsible for stock selection and sector allocation for another financial advisory. In other words, generating long-term, positive returns while avoiding short-term downside is the theory upon which I’m constructing the SRI Portfolio.
And I make every effort to alert investors when I see moves to the upside or the downside or any other special situations.
The approach here is top-down. I first identify long-term investment themes (or, as my colleagues and I call them, global secular trends). Because of the long-term approach, the Portfolio must be able to endure short-term volatility as long as we continue to be on the correct side of the global secular trend. To achieve this, the Portfolio is being constructed to offer a diversified set of holdings, while I also offer hedging ideas for more-complete advice.
A characteristic common to the Portfolio companies is suitability for the new realities of a changing world. They’ll benefit the most from the changes taking place in the global economy.
No one knows how long it will take for the global economy to navigate the secular trend identified here. This is the reason investors need to remain focused and have a portfolio that can last and perform well on a tactical basis. After all, the way to stay in the game isn’t by losing all the money, and tactical mistakes can cause that. This is the main reason I won’t put convictions above analysis and will avoid suggesting only one type of attitude or trade, especially short-only strategies.
It’s important that you look at the SRI Portfolio as a whole and not as an assortment of stock tips. Although few people will buy the Portfolio in its entirety, you, at the very least, need to buy SRI’s investment theme in order to diversify. Buying only banks or tech companies because you like the stories may offer a reward, but such an approach won’t provide the lasting benefits of the overall Portfolio.
Keep in mind that SRI comes to you weekly and always offers current advice. Adding and subtracting stocks from the Portfolio can be done more easily this way. There’s always another week, and neither readers nor the editor need to rush. Patience has always been a good thing to have when investing.