Paper challenge update

A year ago discussion about mutual funds, risk and diversification, v. stock picking, prompted me to slap together 10 stocks (for the benefit of those from Missouri). There was also discussion about the end of
the world. It has not quite been 365 days, but I added up some numbers today for the trailing earnings (about four hours, including reading about the businesses). Next year looks to be better than this year, but managements are marginally cautious, for the most part.
Most importantly, the earnings of the portfolio dropped from $8,838 to $6,938. Those are roughly comparable after GAAP and non-GAAP adjustments, continuing ops, mergers and acquisitions, share repurchases, and so on. The PE has increased from 11 to 21. Of the five dividend paying stocks, four increased, one lowered. Total payout $1,747.
http://www.stockalicious.com/portfolio-holdings/4710 http://www.stockalicious.com/portfolio-holdings/4745
Comparative performance was less than I actually expected, but the market has risen more than I expected, Seven stocks outperformed the market, three under-performed. I should'a ....
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dapperdobbs wrote:

Less than expected! If this were a mutual fund you'd be on the cover of Barron's. After almost a year the 10-stock portfolio has a pile more money than "the monkey." It depends on how you define the returns and the effect of dividends but it looks to be something on the order of 15-20% more than the market based on those links. So if you worked for ____ mutual funds you could ditch it all in spiders, and ride that outperformance for the next 5 years while doing the talking-head circuit.
BUT
It looks like it was all about Ingersoll-Rand. It wasn't that the dart hit 10 winners, it's that one dart hit one big winner. Throw that one out and here's what I get:
Site says (both, no-divs, correct?) Monkey: 32.47% return Darts: 50.77% return - Super!
Darts minus best pick: 35% average return for 9 stocks, no divs Darts minus best & worst pick: 40% average return for 8 stocks, no divs
It's a nice micro example of "the mutual fund manager selection problem." Is it that you have a method of stock-picking that is going to find an IR at least 10% of the time? Or was that Just Dumb Luck?
And what's the next move...?
-Tad
PS I love that the "dartboard portfolio" lives on MIFP, the WSJ having canned the feature. I'm curious how this will look 3 years from now, the WSJ only ran it in 6-month blocks
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No, no, Tad. Ten stocks are ten stocks. You "Fundies" are just used to throwing perfectly good money away! :-) Like paying ordinary income tax rates on short-term distributions, guessing which stocks you might actually be invested in, relying on probabilities, fudging numbers ...:-)
Thanks for the compliments (but you confused me with the monkey and the darts). Excluding IR five stocks appreciated above the market, BP matched (if I recall correctly - 30% up). So in total, seven "winners" for this time period. A more thorough presentation would compare the earnings of the broad market to the earnings of the paper portfolio. There is no next move. These are sound companies with serious businesses. All were then and are now earning money. Hopefully they will do a bit better over the next three years.
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