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Friday, December 29, 2006

Seventy-Four Percent

That's my investment return for the year 2006 and the highest percentage gain I've ever had for a year. Pretty much all of it happened in the last two months in one gigantic leap. Needless to say, it's been interesting. I have no idea what will happen in the next year, but I'm working hard to prepare for it. I figure that one or two stocks may reach full value fairly soon and I don't want to be caught flat footed, having to get up to speed searching for new investments. Who knows; be prepared.

My return for 2005 was pretty much flat. I had maybe a few percent gain. Things went well later in the year, but I had a big loss from bailing out of LVLT at a low price early in the year. But I was very happy at the end of 2005 because I had a lot of great investments.

As 2006 ends, I have big expectations for Strathmore Minerals... and CVU... and perhaps BakBone Software. I figure CEDA is selling for about half of what it's worth. I have some hope for EPLN getting some market share, but their revenue gains have been modest so far.

CXTI is getting close to what I consider as a conservative estimate of full value. I may hold on to some of the shares in a taxable account because I think their future looks very good in the long term. As time goes forward, I'll probably look for places to park single-digit portions of my portfolio and just leave it there.

On to 2007!

UPDATE Dec 30, 2007:
Here's a screen shot from my brokerage. Yeah, it's E*Tarde. They've improved their algorithm for measuring gains/losses (and now they won't show the graph from previous years). I'm not sure how much it was off in the past, but it wouldn't matter much since I don't add or withdraw significant percentages to/from the account. Who would have guessed that the results would be so oddly distributed. You just never know. I try not to be affected by the market rather than the value of the business, but it's a challenge to not let wild price swings like this color my judgement. Was I a bad investor in August and a fabulous investor in December? No.

2006 results

I've been digging around for old charts for prior years and I have a very interesting one for 2001. This chart is along the lines of the Richard Branson quote in the next post. The figure below answers the question, "How can a 20% gain for a year be absolutely disasterous?" The answer is when you have a 100% gain while doubling down on what turns out to be a total fraud (ACLN aka ASW). That one was painful, especially since I had a 6% loss in the following year 2002. I actually lost a significant amount of money in 2001 because I added a large amount of cash at the worst possible time, having been "downsized" and having added the severance and 401K into my portfolio mid-year.

2001 results

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