When is a 10.2% total return good? When, as in 2018, it beats the 4.56% loss on the S&P 500.
And when is a 10.2% total return bad? When, as in 2019, it trails the 31.29% total return for the S&P 500.
The returns from these two years bring the cumulative total return on the Jubak Picks Portfolio, which dates back to May 1997, to 584.1% as of December 31, 2019. The comparable total return for the S&P 500 in that period is 281.3% without reinvested dividends and 477.1% with dividends reinvested. Since in the Jubak Picks Portfolio I do reinvest dividends (eventually), I think the appropriate comparison is with the 477.1% return for the S&P 500 with dividends reinvested.
I think the major timing influence on the performance of Jubak Picks during these two years was the percentage of cash the portfolio held on the sidelines. The percentage of cash in the portfolio at the end of 2018 was 22.5%. That was down somewhat but not remarkably from the 27.19% cash position at the end off 2017. Holding that much in cash was a plus for comparable portfolio performance in a down year from the S&P 500 such as 2018.
In 2019 I made a concerted effort to reduce my cash position making 16 buys for the year and only 8 sells. I finished the year 2019 with just 8.5% in cash for the portfolio.
But it took time to make those buys and deploy that cash and I wound up carrying a sizable cash burden during an extremely strong market rally. That’s a sure recipe for portfolio underperformance.
2020 to date (September 14) has been a challenge for cash management too. I went into the year with that 8.5% cash position, which was great as the market continued to rally into February, and then not so great as stocks tumbled into a bear in March. My selling into the bear in an effort to raise cash and take some profits then turned problematic again as U.S. stocks staged a huge recovery from the March 23 bottom. Right now I’m about 15% in cash as we head into a very uncertain end of the year.
Now that this portfolio’s performance has been updated (to go along with the earlier update on the long-term 50 Stocks Portfolio) I’m turning my attention to the Dividend Portfolio. It’s substantially smaller and less complicated than the Jubak Picks Portfolio so this performance update shouldn’t take quite so long.
Performance updates are also a chance to clear up any posting debris in the portfolio. This time around I hope that I can finally remove Targa Resources (TRGP) from the posted portfolio. I actually sold these shares in 2015. I can also remove Wisdom Tree Japan Hedged Real Estate (DXJR) from the posted portfolio since it no longer trades after having distributed most of its cash to investors in 2018.