Down goes the Dow

You know how they say the greatest stock pickers in the world are only right 60% of the time?

Saint Druckenmiller made a bad trade. But even this bad trade made money so I guess it's ok.

And these go off 13f records, which have a lag, so not sure what the most accurate start date is.

Since this tweet

NVDA +43%

IWM: +16%

Hedge Vision
@HedgeVision
Stanley Druckenmiller files his Q1 13F, sells 71% of $NVDA stake while buying $IWM calls

3:52 PM · May 15, 2024
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Dude, you're wrong on this. BONDS are an investment. CASH is not an investment. Listen to seattle prattle. He's got it right. I am actually very surprised that you don't.

Flagpole, you get so many things wrong. It is exasperating explaining things to you. Bonds ARE an investment but to include them when comparing your portfolio to the Dow Jones should not be done. Bonds, historically, on average have returned about 4.5%. Stocks about 11% with dividends reinvested. So your portfolio would be at a huge disadvantage if you compared to the 30 stock Dow Jones. But your portfolio anyway is make-believe. So we will make believe you beat the Dow 33 out of 35 years, despite how ludicrous that assertion is. Bonds should not be included in your portfolio performance. But I have a lot of target date mutual funds that have both stocks and bonds but get progressively more conservative (i.e., more bonds) as you approach your retirement age. I would include them in the overall performance of my portfolio because you really can't separate out the bonds. Hope you and your family had a wonderful Thanksgiving but your performance is make-believe. Shushh - we won't tell anyone.

Flagpole right on this. Your cash is being decimated by inflation - especially the 9.3% inflation that Joe offered us.

it's not so much a right or wrong, it's more just recognizing that portfolio 'performance' is not apples to apples among different investors.

I think it makes most sense to take the biggest picture...but you want to count just a portion of a portfolio in your performance. I count it all. And you want to make bonds and cash different categories, despite their playing almost the same role to you and me.

Pick your poison, choose your fighter.

In any portfolio cash is an element of construction. How often are they quoting Buffett’s cash position? Any person involved in financial services understands cash is a unit of the portfolio.

It is a unit of a portfolio but when comparing one's portfolio to the Dow Jones, you should only be comparing stock performance to stock performance. Bonds will drag down the performance of ones' portfolio to the stock-only Dow Jones.

1) I do not own any bonds, so how could they be counted in my "portfolio?"

2) The rest of what you say there is either nonsense or not applicable to me or uninteresting.

No, it's wrong. Bonds are an investment. Cash is not. Bonds PERFORM. Cash does NOT perform. We are not talking about net worth here. If so, then yes, you count cash and home value, etc. You are also not quite understanding what my big picture is. I'm not going to give you exact numbers here, but as an example, let's imagine someone has 4 YEARS of expenses saved in cash, and that that amounts to $30,000 a year times 4 (for someone with NO debt including a paid for house, that's easy). $36,000 x 4 = $120,000. Now, let's also assume that person has $10 million in stocks. That would mean that their cash there is 1.2% of their total value (not including home value or other material posessions). Peanuts.

I track the performance of my stocks within mutual funds. I can decide to do that if I wish. I don't need to ascribe to what you consider to be my "portfolio." Since I have CLEARLY stated that I track the performance of my stocks, that should be all that is needed.

TYPO-should have been $30,000 x 4 = $120,000

Of course cash performs.

judge by real returns…if you get 3% on your cash but inflation is 4%, you have a loss.

All time high sp500 and dow

huah

Are you going to count the $60 in cash in my wallet? My coin collection? My house? My cars? Anything I own that I could sell for cash?

I'll just track the performance of my mutual funds. You can just know that that's what I do.

tl/dr: only include cash and bonds in porfolio performance to the extent that those entities are manipulated, however briefly, as part of one's investment portfolio. And do not include them if they are instead, part of one's permanently held cash reserves.

I think there is some confusion because we are really talking about two different things, and it may be useful to differentiate Portfolio Performance from Overall Financial Asset Management.
AI defintion of the former:
"An investment portfolio is a collection of financial assets that an investor owns and manages to generate returns while preserving capital:
Assets
Portfolios can include stocks, bonds, cash, real estate, currencies, commodities, mutual funds, and exchange-traded funds (ETFs)"
But if an individual chooses to set aside cash reserves, a primary residence, US Treasuries, Bonds, or whatever for the purposes of financial security and living expenses, that is not part of their Investment Portfolio, and it is not because, according to the definition, it is not for the purpose of generating returns.
And here is how I would draw the line - if things like one's cash reserves (in FP's case) and Bonds (in Agip's case) are ever, ever, ever tapped to be used for investment purposes, even briefly, then they are indeed part of the Investment Portfolio and should be included in the calculation.
I would, however, include the cash and bond holding reserves in dicsussions of Financial Asset Management, though, and as such, they are managed separately from one's investment Portfolio.
For me, this is very simple since I don't keep cash reserves or bonds or anything that I don't tap into to manipulate my investment portfolio. I have about a month or less of cash reserves, and any cash I have in my brokerages gets increased or decreased as a key part of my portfolio and it definitely included in the performance calculation thereof.
Simply put, for the purposes of determing Portfolio Performance, those items (including cash) should be included but only to the exent that the cash is used as a component of the Investment Portfolio. If an indidual has their cash reserves set at a fixed level of one year expenses, for ex., and chooses to park that in bonds, I would not consider that as part of an investment portfolio, and I say that because that reserve is not for the purpose of generating returns primarily.
As an example, if an investor chooses to have several years of cash reserves (including bonds) set aside and never, ever, ever resorts to dipping into those reserves to make investments, then those cash reserves are not part of their portfolio. If, however, the investor would ever consider tapping those reserves for investments (under the "right" circumstances, then that cash should be considered as part of the portfolio and included in the calculation.
Note that in defining it in this way, an individual could hold bonds and/or cash in both their Investment Portfilio and another group of bonds and/or cash separately as part of their overall Financial Asset Management as a cash reserve.

I hear you seattle, and can't really argue.

I'd just say that if someone keeps 3 years(!) of expenses in cash (or bonds)...well that's a giant decision that really should be incorporated when talking about the performance of that person's investments. Without it you get a false impression of overall returns.

But clearly this is going nowhere.

Yes, completely agree.

To keep it meaningful one could simply note something like this year I had a portfolio performance of XX % with a cash reserve of approx, 3 years expenses in the form of cash and bonds. In that way, some disclosure of an unusually large buffer could be included in order to capture an unusually conservative management of overall assets.

But I see your point, and it is a good one. I just don't know how you get a full picture otherwise. You really do need to look at both.

I think the part about all this that gets glossed over is that the cash/bond holding might really be considered as a very favorable component in portfolio performance in the down years of the markets. And this is an easy thing to discount since we have undergone a period with so many up years.

Are you counting the gold fillings in your teeth? Most of Flagpole's cars are not worth much. But his double-wide could probably fetch $15,000 if not more. The broken-down car in his front yard not so much.

I'm betting there's a guitar or two and maybe a keyboard as well, and they are nothing to scoff at. Just a hunch....

Not sure about the guitar(s) but I could definitely see a couple of banjos there.