I'm about to leave on vacation for another two weeks, my portfolio is two thirds cash, I'm looking to move into a new type of investing. What better time to do a comprehensive 2011 performance review? First, here's the current state of the model portfolio:
Total Value: $125,961.05
TRLG: 1,000 shares
NRG: 1,180 shares
I decided on a performance review to answer a few key questions:
1. Why has my real portfolio gained 6.8% over the same period the model portfolio has been up almost 26%?
2. Have my trades been successful this year, or should I quit trading for a longer-term outlook?
3. Have I achieved the goals set down in my 2010 performance review?
1. Over 90% of the difference in the model portfolio's performance and my real portfolio's performance was based on two very successful trades: BAC & TRLG. After a few entries and exits, I made around 25% in BAC. TRLG is up 56% since I bought it. I made niether of these trades in my real portfolio. They were surrounded by failed trades, but more than made up for them. I should have entered into TRLG, but I don't regret not trading BAC with real cash.
2. My trades have been entirely unsuccessful this year. Not a single one of them has been profitable, and of the 13 positions I've closed this year, only 3 have been profitable. My portfolio is down 13.1% in 2011, and IWM is only down 7.6%. That's pathetic, and something's got to give. As much as I've studied technical analysis and the market, my market timing has obviously been terrible.
3. My average holding period has increased dramatically; from 26 days in 2010 to 46 days YTD, or an increase of 77%. My goal of having around a dozen trades in 2011 has already gone bust, as I've had 28. Long story short, this is way too many trades.
I have no sympathy for myself right now. This failure is entirely personal. I have lacked patience, and, once again, despite making good investments I've timed the market poorly and lost money. That being said, I'm not here to sit and wallow in self-pity. See part 2 of this article for my action plan.