Tuesday, January 24, 2017

2016 Portfolio Review

After several years of trailing the market, in 2016 my brokerage account outperformed. It had a total return of 13.67% (composed of capital gains of 10.97% and income of 2.70%).  The market (as represented by the S&P 500 ETF index fund VOO) had a total return of 12.04% (capital gains 9.83%, income 2.21%).

My best performer was SOUHY (a spinoff of BBL) which was up 260.71%.  However this is my smallest position.  BBL also did well up 41.55% but remains badly under water.  These are mining stocks and CAT (which makes mining equipment among other things) also rallied strongly up 40.99% as did my railroad, NSC, up 30.55%.  My Canadian banks (BNS up 43.08% and CM up 29.31%) did well as did JPM (up 33.47%).  My other American bank, Wells Fargo (WFC) lagged (up 4.17%).  I purchased WFC in hopes it would be less scandal prone than JPM which hasn't worked out too good. My Australian bank WBK (down -.22%) continued to underperform.

My energy holdings XOM (up 19.62%)  and the sector ETF, VDE (up 28.84%) beat the market but COP (which I sold in October) lagged (off 2.73%).  The sale proved poorly timed as COP rallied at the end of the year ending up 9.53%. This is a pitfall of tax loss selling, you can end up selling temporarily depressed securities before they recover.  I would have been better off reinvesting the sale proceeds in VDE as I considered but didn't do.

My utilities also beat the market with ED (up 18.81%) and PEG (up 17.65%) slightly outperforming my sector ETF, VPU (up 17.56%).  VYM (a high dividend ETF) also outperformed (up 16.82%) as did insurance companies Allstate (ALL up 21.45%) and Aetna (AET up 15.62%).  IBM (up 24.61%) also outperformed.

Lagging were VNQ (a REIT index ETF) up 8.50%, Intel (INTC) up 8.30% and Target (TGT) up 2.67%.

I began the year with 4.54% in cash and ended with 8.38%.  The increase was due to dividends received and the COP sale slightly offset by the increase in value of the portfolio.  The cash position hurt performance as interest rates remained near 0.  The COP sale was my only trade.

Although I beat the market this year I remain well behind over the life of the account.  Beating the market (other than by luck) is hard and probably isn't something the average person should expect to do.

1 comment:

  1. Yes, I believe you can reinvest after thirty days in a similar investment, which may have been a better way to go. Taking money out of the market means you lose if the stock goes up, so it's probably better to reinvest it.