Note: I hope the readers will forgive me if this post is very informal.
I like to post my performance results, not to brag but to show that you are not reading a blog run by someone with an awful track record who has no idea what they are talking about. Unfortunately, they are far too prevalent; however, the worst offenders are the “professionals” on CNBC, Bloomberg forecasting what the stock market will be at in three months, a year or whenever. I like to be transparent with my readers, and that is another reason my full portfolio holdings are available at http://covestor.com/jacob-wolinsky/track-record/holdings, see this link for further explanation-https://www.valuewalk.com/portfolio-returns/performance-update-portfolio-data/
I opened my first “real” account with my own money after I got married in early 2008. Today I got the official results from my brokerage house for my three year returns. I am excited to post my results because I think three years starts to establish a real long term track record. However, I provided below other shorter term numbers for people who are curious.
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More
The time period covered begins 03/01/08-03/01/11. My results are as follows:
I was up 36.93% versus 6.73% (cumulative), annualized 11.04% vs. 2.04% for S&P 500. This time period includes the brutal bear market of late 08 and early 09. I had better performance than approximately 70% of professional Hedge Fund, Mutual Fund, and Pension Fund managers.
To see more about how my results are calculated please see an earlier article at the following link-https://www.valuewalk.com/portfolio-returns/performance-update-portfolio-data/
I do not want to get into theology, so I would say the entire reason for my out-performance is owed to one person; Benjamin Graham. Benjamin Graham was the father of value investing, and taught many famous investors the most famous being Warren Buffett. However, despite what the efficient market theorists state Buffett is not a Sigma-six event. Walter Schloss, Irving Kahn and many other investors took Graham’s teachings to completely outperform the market for their entire investing career, spanning several decades. Buffett destroys the whole coin toss theory in a famous speech titled SUPER INVESTORS OF GRAHAM-AND-DODDSVILLE.
Value stocks have been proven to outperform in almost every country in the world, time period etc. For more on the topic there is an excellent free booklet that was produced by Tweedy Browne-What Has Worked in Investing. Also you might be interested in reading Studying different Systematic Value Investing Strategies on the Eurozone stock market. A study of Piotroski’s formula on European equities.
The reason for this phenomenon is because the market is mostly efficient, but not entirely efficient. From my experience researching micro-caps, I can say that even stocks with a market cap below $50m, have plenty of Private Equity firms investing in them. However, there is a big difference between efficient and mostly efficient. The market over-reacts, and when it overreacts by going to low, that is when the best bargains are available. In early 2009 there were companies that were cash flow slightly negative/even/ and even profitable that were selling far below liquidation value. It made no sense at the time, but in hindsight people try to rationalize it.
That brings me to what I will focus on briefly. The two hardest points in my investing career were in late 2008/early 2009 and today.
Every investor knows (or should know) to buy when there is “blood in the streets”. After, Lehman Brothers collapsed on September 15th 2008 the world almost ended. Looking at data now released by the Federal Reserve, confirms that many non-financial companies would have ceased to exist without help from the Fed and Treasury. I strongly supported the Government’s actions at the time, but that is not the topic for now.
Every day in late 2008 and early 2009 I kept buying stocks that I found to be cheap. It sounds easy on paper, but it is one of the most difficult things to practice with your own REAL money. At a certain point in early march 2009; I said to myself “why do I keep buying stocks they are just going to go lower tomorrow”? However, I stuck to the teachings of Graham and kept buying. On March 6th 2009, the stock market hit its lowest point in almost 15 years. I had bought some stocks on March 4th, including Caterpillar at $24, which is now approximately $100 (I sold in late 2009 for $70). I was finally vindicated after months of agnoy.
Now is the second toughest moment of my investing experience for the opposite reason. The market has risen dramatically since March 2009, and there are far fewer bargains available. Almost, all indicators show the stock market to be over-valued by large percentages. To see more on this topic view my monthly valuation article, this can be found at the following link-Stock Market Valuation March 3rd 2011. One stock I bought recently and wrote up on is Calamos Asset Management. My write up on the company can be found at the following link-https://www.valuewalk.com/value-stocks/calamos-investments-finding-hidden/. Besides for Calamos, there were a few blue chip stocks that were cheap in the beginning of 2011, but most have gone up since I bought them; Pfizer, Microsoft etc. However, some of the blue chips are trading at bargain prices.
I will leave off with one last thought on 2011, and it has to do with the mentality many of us fall prey to. We like to think that we have the ability to predict the future. At the end of 2010 I commented that “Now is the time of year when people make their predictions of what will happen over the next 12 months. Most of them will be wrong, and they will be back again at the end of 2011 touting something else”.
Although, I wrote a year ago about the possibility of the Egyptian Government being overthrown (https://www.valuewalk.com/commodity-prices/egypt-repercussions/), I did not expect on December 31, 2010 that Mubarak would not be president within two months, or that a catastrophic earthquake would hit Japan shortly after. No one predicted the uprisings in the Middle East or the earthquake in Japan as part of their “2011 forecast”. People discussed gold, unemployment numbers, whether the stock market will go up (although most of the forecasts were not will the stock market go up, but how much will it go up ) etc. Not one person predicted these black swan events. The lesson for investors is always be prepared for the worst. The best way to accomplish this goal is to keep cash on the side so when these black swans do strike you will not lose as much principal. In addition, you will have the cash to invest when the bargains do appear.
One last note: I want to thank all the visitors to the site. Value Walk was started from scratch approximately 13 months ago. Now the site is receiving close to 1,000 visitors a day; every day is setting a new record in terms of traffic. Value Walk also has nearly 900 followers on twitter (, 800 daily subscribers, and is getting noticed by larger sites. I receive emails from Bloomberg asking me to post their videos, and even famous investors (names which I cannot disclose).
In my wildest dreams, I never thought that Value Walk would be such a success. The topic of the site Value Investing is a very specific area and can only attract a certain amount of people. This makes the numbers even more impressive.