- Joined
- Oct 27, 2009
- Messages
- 1,210
This year has been unreal. It will likely never repeat itself ever again.
As some readers know, I invest in stocks and real estate during crashes. During the 2008 and early-2009 meltdown in the markets I held my nose and bought stock. Thousands of shares of ... retailers. It was brutal. It was my most significant investment in stock since the 2002 tech wreck. I was rewarded in 2009 with a 30%+ return. I expected that to be the end of it.
I was wrong.
My 2010 YTD return is 35%. This compares favourably to the indicies:
2010 YTD Returns*
S&P500 +3.9%
DOW +5.0%
NASDAQ +5.1%
* does not include dividends
The following is what this year has looked like so far:
http://finance.yahoo.com/echarts?s=BRK-B+I...ource=undefined
My return has been approximately 15% annualized over the last 14 years. This results in the quadrupling of an original investment compared to the 60% return of the S&P500 over the same period.
It`s not amazing, it`s respectable I think. I`ve made a lot of mistakes, but I`m continually learning.
How did I find these businesses?
When I was a teenager there was no internet so I had to go to the library, pull out the huge Value Line books and go through them sheet by sheet.
A subscription to Value Line is tens of thousands of dollars a year, but anybody can get it for free at the library.
http://www.valueline.com/
Now with the internet, it is infinitely easier. The following are two free screeners:
http://screener.finance.yahoo.com/newscreener.html
http://www.cnbc.com/id/15839076/site/14081545/
Another useful resource is Morningstar. Morningstar used to provide 10 years of information for free (now they only provide 5). You can still get 10 years of information, but you need to pay. I don`t pay for any information that I can`t get for free elsewhere.
http://financials.morningstar.com/income-s...p;culture=en-US
When things couldn`t get any better I started investing in rental properties in Phoenix, AZ. The numbers appeared very solid as far as I could tell. I would be buying properties at prices less than 5x gross annual rent in low crime areas a stones throw away from downtown Phoenix. I screened thousands of properties to find the best, and it was worth it.
My buying caught the eye of the Associated Press and they gave me a few lines in their article:
http://www.google.com/hostednews/ap/articl...docId=D9IL4I780
Each unit that I pick up for $40K is rent ready and puts almost $4k in pure profit in my pocket per year. That doesn`t sound like much, but week after week, unit after unit, the profit builds up very nicely.
This all requires a bit of time, but for me, investing doesn`t require much speed. In 10 years, the stock market is usually in a bull for 7-8 years and in a crash scenario for 1-2. In my brief experience I usually get 8 years to research what I want before a crash hits. When the crash eventually hits, I`m just buying off my wish list. When the next bull market comes around, I go back to doing nothing and let my investments compound tax deferred - shopping for the next crash.
This mindless method of buying stock at 10 P/E and 2 P/B or less and/or buying real estate at 5x gross annual rental income or less has helped me become a millionaire in stocks and real estate separately in my 30s (with a personal debt/equity ratio of 0.15). I could probably have made a lot more by employing significant leverage, but that`s just not in my personality.
I have been lucky.
Fate decided that I should be born in a capitalistic and democratically stable society with a personality that is suited to exploit market downturns and then provided me with the following:
1. Canadian real estate crash (1992)
2. Tech stock market crash (2002)
3. Credit crisis stock market crash (2008)
4. U.S. real estate crash (current)
If that isn`t luck I don`t know what is.
This means that I have experienced and taken advantage of 4 crashes in 15 years. I wouldn`t be as successful as I have been without them.
In closing, as I said at the start of this post, 2010 will be unrepeatable.
Good luck and godspeed!
As some readers know, I invest in stocks and real estate during crashes. During the 2008 and early-2009 meltdown in the markets I held my nose and bought stock. Thousands of shares of ... retailers. It was brutal. It was my most significant investment in stock since the 2002 tech wreck. I was rewarded in 2009 with a 30%+ return. I expected that to be the end of it.
I was wrong.
My 2010 YTD return is 35%. This compares favourably to the indicies:
2010 YTD Returns*
S&P500 +3.9%
DOW +5.0%
NASDAQ +5.1%
* does not include dividends
The following is what this year has looked like so far:
http://finance.yahoo.com/echarts?s=BRK-B+I...ource=undefined
My return has been approximately 15% annualized over the last 14 years. This results in the quadrupling of an original investment compared to the 60% return of the S&P500 over the same period.
It`s not amazing, it`s respectable I think. I`ve made a lot of mistakes, but I`m continually learning.
How did I find these businesses?
When I was a teenager there was no internet so I had to go to the library, pull out the huge Value Line books and go through them sheet by sheet.
A subscription to Value Line is tens of thousands of dollars a year, but anybody can get it for free at the library.
http://www.valueline.com/
Now with the internet, it is infinitely easier. The following are two free screeners:
http://screener.finance.yahoo.com/newscreener.html
http://www.cnbc.com/id/15839076/site/14081545/
Another useful resource is Morningstar. Morningstar used to provide 10 years of information for free (now they only provide 5). You can still get 10 years of information, but you need to pay. I don`t pay for any information that I can`t get for free elsewhere.
http://financials.morningstar.com/income-s...p;culture=en-US
When things couldn`t get any better I started investing in rental properties in Phoenix, AZ. The numbers appeared very solid as far as I could tell. I would be buying properties at prices less than 5x gross annual rent in low crime areas a stones throw away from downtown Phoenix. I screened thousands of properties to find the best, and it was worth it.
My buying caught the eye of the Associated Press and they gave me a few lines in their article:
http://www.google.com/hostednews/ap/articl...docId=D9IL4I780
Each unit that I pick up for $40K is rent ready and puts almost $4k in pure profit in my pocket per year. That doesn`t sound like much, but week after week, unit after unit, the profit builds up very nicely.
This all requires a bit of time, but for me, investing doesn`t require much speed. In 10 years, the stock market is usually in a bull for 7-8 years and in a crash scenario for 1-2. In my brief experience I usually get 8 years to research what I want before a crash hits. When the crash eventually hits, I`m just buying off my wish list. When the next bull market comes around, I go back to doing nothing and let my investments compound tax deferred - shopping for the next crash.
This mindless method of buying stock at 10 P/E and 2 P/B or less and/or buying real estate at 5x gross annual rental income or less has helped me become a millionaire in stocks and real estate separately in my 30s (with a personal debt/equity ratio of 0.15). I could probably have made a lot more by employing significant leverage, but that`s just not in my personality.
I have been lucky.
Fate decided that I should be born in a capitalistic and democratically stable society with a personality that is suited to exploit market downturns and then provided me with the following:
1. Canadian real estate crash (1992)
2. Tech stock market crash (2002)
3. Credit crisis stock market crash (2008)
4. U.S. real estate crash (current)
If that isn`t luck I don`t know what is.
This means that I have experienced and taken advantage of 4 crashes in 15 years. I wouldn`t be as successful as I have been without them.
In closing, as I said at the start of this post, 2010 will be unrepeatable.
Good luck and godspeed!