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Decade Results: 1999-2009

 This was a rough decade to begin investing.  I began my endeavor in 1999 with a purchase of now-defunct Value America at an average price of $1.50, after watching it plummet more than 95% from around $70.  Was I rewarded for my contrarian bent?  Absolutely not.  My first pick was by far my worst.  I think after looking at my 2009 picks and performance, you can see that I've learned a good deal since then.

Funnily enough, I applied the same reasoning for VUSA to Citigroup, the key difference being that Citigroup had already been bailed out by the government (I was thinking that a company as connected and with a brand like "Value America" would have either experienced a federal bailout, or an outpouring of patriotism - that was quite a learning experience).  I made a 100% gain on my C speculation last year, more than covering my VUSA debacle 10 years ago.

Total % Return over 10 years:


E/C, E = End of year balance, C = Cumulative contributions over 10 years

% Return, Annualized over 10 years, geometric:


(T + 1)^0.1

T = Total % Return over 10 years

By Comparison:
EDIT - 5/18/10 - seems after businessweek folded into Bloomberg, the link changed:

$10000 invested with the S&P 500 over 10 years                  

$10000 invested in 6 month CDs over 10 years                     

$10000 invested in 10 Year Treasuries over 10 years                       

$10000 invested in CRB Index over 10 years                         

$10000 invested in Gold over 10 years                                              

$10000 invested in BRKA over 10 years                                

$10000 invested with me over 10 years                                             

Best Trade: 
ACH - look at my 2009 results for an explanation.

Worst Trade:
LU, or ALU, or whatever they call themselves now.  Not only did I buy a significant position pre-merger @ 3, I also went hog wild buying speculative out-of-money LEAPs @ 5.  At pre-merger prices, LU currently trades around 0.60.  This was a profitable company too, when I bought it around 2003-2005.

Best Strategy:
Buying Stocks outright

Worst Strategy:
Going hog wild on out-of-money calls

This was most definitely the decade of the turtle, with those predicting the end of the world (gold) outperforming all other major benchmarks, followed by (of all things) 10 year treasuries.  Buffett did quite well, but was unable to beat the stodgy 10 year Treasury note.  I've been fortunate enough to beat the S&P by about 4%, but that's not saying too much, when I underperformed 6 month CDs.

As you could probably imagine, I did a lot of experimentation with stocks of varying quality, including such losers as Krispy Kreme, Value America, Lucent, and a penny stock called Sonoran Energy.  I also had quite a large victory list, with more than 50% returns on CIEN, LLL, KEP, ACH, CHU, JDSU, to name a few.  I also got comfortable with my exposure to options, preferring a hybrid sell-deep-put-buy-call strategy (this is how I learned from buying too many long out of money calls outright) that utilizes only premiums as opposed to buying long calls outright, along with covered calls and cash-secured puts.  Given that many of my initial long call purchases blew up in my face, I should consider myself fortunate I did not experience a 'lost decade'.

Qualitatively speaking, I saw a good opportunity to snatch up tech stocks at fire-sale prices, hoping that they would reach 50% of their 2000 peaks.  So far, INTC and CSCO (my current tech picks) aren't even close - instead, AMZN and AAPL (two stocks that looked like the dogs of the dogs in 2001-2002) have outperformed just about everything.  Stocks like JDSU and CIEN are still well below 90% of what they were going for in 2000.  Still, I made good money playing the dips on a variety of tech stocks, many of which were selling at net cash, to say nothing about book.

Current strategy is to go long commodities.  By extension, this also entails going long emerging countries (China), and ACH, YZC, and YGE make up a significant portion of my current portfolio.

I could go on, but I won't.  All in all, it was quite a good experience.  I look forward to better results in the coming decade.