Reasonably Thinking

I keep track of my performance using two different metrics:

1. Absolute Return for new stock trades in 2009
2. Trailing twelve month (TTM) internal rate of return (IRR) for my entire portfolio

The quarterly performance pages show absolute returns for 2009.  These do not include any 401k/mutual fund contributions, purchases/sales of physical commodities/currencies, or additions/decreases to positions owned previous to 2009.  It is simply a measure of, in 2009, what new stock idea did I act on, and how has it performed.  Please keep in mind that some of my trades are intended to be held beyond 2009.  To view the most recent quarterly performance page, click here.

The TTM IRR measures every dollar that goes into and out of my accounts along with when the money moves.  (For example, earning $100 in one month will have a higher IRR than earning $100 over six months.)  The graph shows consistency and accuracy as it depicts how a portfolio of $10,000 would have performed under my watch over the past three years.  (sorry if the image is of poor quality,  it is the best I can do with this host)

The interpretation is that had I started with $10,000 three years ago, I would now have $12,363.  This is an annual 7.9% return relative to the market’s 0.7% return.  (The market would have only yielded $10,210).

Bottom line – given that 2009 was a lackluster year for me, I’ve still performed quite well over the past three years.