As promised in my last blog post, here’s a recap of my stock holdings’ performance in 2021. In this post, I will let the charts do most of the talking. For context, see this post for my year-end 2020 performance.
For my one-year performance, see below chart. I underperformed the S&P 500 index by about 70 basis points while beating the NASDAQ composite handily. Note that this and subsequent charts do not consider the impact of dividends on either my portfolio or the S&P 500 index. It would have been nice to include dividends, but additional work needed to cover them was not insignificant. So I chose to take the easy path. Nevertheless, I don’t think it would have mattered to the relative performances I wanted to highlight in this post.
As readers of this blog would know, I don’t consider one-year performances to be terribly important for my investing style. I like to invest for much longer periods (3 to 5 years, at least). With that in mind, the following two charts show my 3- and 5-year relative performance.
For both the periods, my stock holdings outperformed the S&P and the NASDAQ indices by quite a bit. It turns out that NASDAQ has done really well for the last three/five-year periods. A near 24% IRR for five-years is nothing to sneeze at. My stocks however did even better.
Main reason for my outperformance is my technology holdings. It’s also why NASDAQ did so much better than the S&P. It’s possible that the tide will turn in favor of non-tech stocks in the next five years. We’ll see. Note that I am not a tech stock hugger by design. I just go where good businesses are.
A 20-plus IRR performance by the stock market is not common. I don’t expect many such high flying half-decades in our future. For context, the S&P 500 index performance in last 10-, 15-, and 20- years have been 14%, 8.2%, and 7.2% respectively. I shared historical 5- and 10-year market performances in a previous blog post. Last ten years have been outstanding for patient stock investors like me. The next ten years might bring down the averages but that would be OK from my perspective. I hope to continue to outperform broad market indexes over multi-year time periods by investing in high-quality durable businesses that do well in good and bad economic times.
The following table shows my top-20 stock positions as of EOY 2021. See this for the top-20 at the beginning of last year. Note that out of my top 10 holdings, five were not from the high-tech industry.