On January 23, 2007, I created an investment portfolio to be frozen at that time, and evaluated on December 31, 2007 against the benchmark of the S&P500 index. The portfolio incorporated principles, economic trends, and technologies discussed in other articles here on The Futurist. Dividends were reinvested, and so the price paid reflects dividend-adjusted cost-basis. Yahoo and Google Finance do tend to miss recording some dividends, so one must go to a more reliable site like Morningstar to account for the exact dividends.
So how did the portfolio do? I achieved a return of 13.3%, vs. just 4.3% for the S&P500, from January 23 to December 31. Most fund managers are unable to beat the S&P500 index despite the advanced tools at their disposal. The fraction of those that can beat the index by a margin 9.0 percentage points is even more exclusive, putting this portfolio in the top 10% of all mutual fund results for this period.
As always, weightage matters just as much as stock-picking. The first two securities, amounting to 50% of my portfolio, were a total disaster. In fact, when I first created the portfolio, I listed FXI as a security that was strongly considered but left out. FXI returned an eye-popping 83% over the same period, so if I had included FXI instead of ICF, the portfolio's total return would have exceeded 25%. But it was not included, so 'what ifs' do not count.
The India Investment Fund (IIF) was a star, more than compensating for the failure of the first two securities. But the real home runs came from the video game stocks. Three of the four outperformed the S&P500, and two of those, Activision and GameStop, surged into the stratosphere. My selection and detailed analysis of this sector way back on April 17, 2006 yielded a spectacular payoff. As a quartet, these 4 gaming stocks returned a combined 49% over this period.
So there you have it. Futurism is not impossible after all. I have already started my 2008 portfolio, and we shall see how that goes on December 21, 2008. The same principles covered in the articles below, are being applied. Let us see if the success can be repeated or exceeded.
(cross-posted at TechSector)