The S&P 500 is at close to record highs in 2015. And, the bull market is more than five years in the making. Today we are launching The Samurai Fund to prove a theory. Details below.
The tipping point in your 401K, where performance starts outweighing a maximum $19,500 annual contribution is roughly $200,000. Once you have $200,000, the real juice comes from performance where an 8% return equals roughly the maximum contribution you can make every year.
There are two lessons to be learned in 401K land:
1) Contribute the max to your 401K every year. And in 10 years, you will likely have $200,000 given company matches, and performance (even in this past decade).
And 2) Once you reach $200,000, you’re going to hurt like no other if you lose 40%, or $80,000 of your portfolio, so diversify! The sword cuts both ways.
IN SEARCH OF LUCK WITH FORESIGHT
I’ve only had a couple big stock hits in my life, and I attribute it all to LUCK. Of course, I also attribute all my loss making ideas to BAD LUCK, and not to poor timing, bad fundamental analysis, and generally not understanding what the hell I’m investing in!
Essentially, I believe with a lot of luck and a little bit of effort we can outperform the markets. Hence, let’s see if the PF community can outperform the S&P 500 with our own randomly unscientific stock picks based on permutations of our own names and blog titles!
Launching The Samurai Fund
This is going to be a lot of fun! Here’s what’s entailed in launching The Samurai Fund.
THE SAMURAI FUND – CONTRIBUTION GUIDELINES:
* The stock idea/ticker you come up with must solely come from your name or blog site. For example, my stock pick is ticker symbol SAM, or Boston Beer Company! If your name is Credit Card Chaser, your ticker is CCC, or Calgon Carbon CP etc.
* Your idea can be a stock, or ETF of anything if the ticker makes sense. Once you get your idea, please provide a brief description of the security, market cap (of at least $200 million to make it realistic), P/E ratio, dividend yield if any, earnings growth where available, and your own personal opinion. Yahoo Finance is a good place to go for info.
* The Samurai Fund will consist of around 10 names for a total value of $1 beeeleon dollars! I’m assuming there won’t be a flood of entries since it’s the holidays, and entries take a bit of effort, but we shall see.
* The picks will be equally weighted in the fund i.e. 10 picks will each have an initial position size of $100 million, with a purchase price based off this Thursday’s close.
* The fund performance will be reviewed once a month, highlighting every person’s pick, with an individual performance ranking and underperformance / outperformance vs. the S&P 500.
Company: Boston Beer Company
Market Cap: $668 million.
Earnings Growth 2010: 11.3% vs. 29% for the S&P!
Personal Opinion: Love Samuel Adams beer, but with no dividend, such lofty valuations and minimal earnings growth, this is not a defensive stock that is expected to outperform in 2010!
The goal of this exercise is to just have fun and help prove the theory that anybody can outperform the market with a litle bit of luck and thought. Once we have a diverse enough portfolio, as explained by the Modern Portfolio Theory, we should be able to compete with the likes of Warren Buffet and Bill Miller! Entries close this Thurs, Dec 31st.
- “The Snark Handbook” Book Review And Giveaway
- Joining The Millionaire Club And Not Looking Back
- Government Employee Entitled to A $100,000,000 Bonus!
- Cash For Clunkers = Personal Finance BOMB!
- 30 Minutes At Starbucks: Observing Day-to-Day Life
- Michael Vick Suits Up: A Comeback Story
Recommendation To Build Wealth
Manage Your Money In One Place: Sign up for Personal Capital, the web’s #1 free wealth management tool to get a better handle on your finances. You can use Personal Capital to help monitor illegal use of your credit cards and other accounts with their tracking software. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.
After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Definitely run your numbers to see how you’re doing. I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.
Updated for 2021. Let the bull market continue with stocks at all-time highs!