In recent years, the performance of the stocks I recommend has seen a modest increase of only 59 percent, as indicated by the wiki Global Champions. In contrast, the MSCI World index records a remarkable gain of 88.5 percent when calculated in euros.
This discrepancy raises an important question: why the significant difference in returns?
This inquiry was recently posed by a member of the Facebook group ‚Kleine Finanzzeitung.‘ I initially responded within the group but felt it necessary to elaborate on the topic here as well. Another member sought insights from ChatGPT, but I found the AI’s conclusions unconvincing. It attributed the underperformance of my stock portfolio to companies like Chipotle and Intuitive Surgical, which is not the complete picture.
Understanding the impact of fees and dividends
A primary reason for the lagging performance of my wiki is the substantial management fees, which range from 2 to 3 percent annually. Over time, these fees accumulate, significantly affecting overall returns. Furthermore, while my private portfolio benefits from dividends from American stocks, this advantage is absent in the wiki format, resulting in an additional loss of around 1 percent in potential returns.
As a result, after five years, my private portfolio showcases an impressive 88.5 percent increase, while the wiki remains at just 59 percent (data as of August 14, 2025).
Identifying the underperforming stocks
Another factor contributing to the underwhelming returns stems from certain individual stocks that I have since removed from my portfolio: Disney, Starbucks, and Nike. These were previously significant positions that I gradually reduced over time. Concurrently, both Novo Nordisk and Chipotle are currently experiencing severe corrections, further impacting the overall performance.
Additionally, I hold several turnaround stocks that have shown potential for recovery but have yet to meet anticipated performance levels. Companies such as Peloton, Docusign, PayPal, and Etsy all exhibit this trend. My buying strategy was premature, leading to extended recovery periods that were longer than I had initially projected.
Lessons learned from stock selections
Reflecting on my investment decisions, I recognize the need for increased caution with turnaround stocks in the future. The initial misstep with Disney was mitigating the position early and reallocating funds into Netflix, which proved to be a sound choice. However, I regret holding onto Disney for too long.
Similarly, with Starbucks, I attempted to reduce my position while simultaneously investing in Chipotle. Yet, I still feel I retained too much exposure for an extended period. The situation with Nike has been particularly challenging, as it represents the largest loss among blue-chip stocks, with a staggering 28 percent decline over the past five years.
Evaluating turnaround potentials
Peloton serves as a representative example of these turnaround stocks, which have achieved some recovery but not enough to positively impact my portfolio. Despite boasting an impressive 170 percent increase year over year, my initial purchase occurred much earlier, resulting in significant unrealized losses. To break even, the stock would need to reach approximately 11.50 dollars, and to align with the MSCI World index, it would need to soar to 23 dollars.
With hindsight, I would avoid such risky turnaround investments in the future. My experience with Peloton reflects the challenges of timing and market sentiment, as the stock has faced substantial volatility, declining by nearly 87 percent over five years.
Contextualizing the dollar’s impact
One frequent question posed by investors is whether the strength of the dollar affects long-term performance. Over the last six months, the dollar has depreciated by about 10 percent, leading to some confusion regarding its overall impact. However, when evaluating the past five years, the changes in currency value appear to have minimal effect on my portfolio.
The euro’s slight decline of 1.2 percent during this period resulted in a negligible positive impact on my dollar-heavy investments. This trend holds true even when considering a 30-year timeframe, indicating that currency fluctuations have not significantly altered my investment strategy.
The road ahead
In summary, my experience over the past five years has reinforced the complexity of stock selection and market dynamics. Although the Global Champions have outperformed the MSCI World index in some periods, the challenges of managing high-cost investments are evident. I remain committed to refining my strategy and learning from past experiences, particularly regarding position sizing and timing. As I continue to navigate the markets, I hope to apply these lessons effectively for future success.