In the last five years, my recommended stocks have only achieved a 59 percent increase according to the wiki Global Champions. In stark contrast, the MSCI World index has surged by 88.5 percent when measured in Euros. This disparity raises an essential question: what accounts for this difference?
A member of the Facebook group ‚Kleine Finanzzeitung‘ recently sparked this discussion. While I initially addressed it in the group, I also want to delve deeper into the analysis here on grossmutters-sparstrumpf.
Index du contenu:
Identifying the key factors
Another group member sought insights from ChatGPT, but I found its conclusions lacking. The AI attributed the underperformance of my portfolio to stocks like Chipotle and Intuitive Surgical. However, this assessment is misleading. It seems that ChatGPT based its analysis solely on the stocks currently in my portfolio, overlooking some critical details.
As of now, Chipotle is trailing the market slightly, but the gap is insignificant. The primary issue lies in the high fees associated with the wiki, which amount to about 2-3 percent per year. Over time, these costs accumulate, affecting overall returns. Additionally, my private portfolio benefits from dividends on American stocks, while this advantage is not available in the wiki setup, resulting in an additional loss of around 1 percent.
The impact of past decisions
Three significant stocks that previously weighed down my portfolio—now removed—are Disney, Starbucks, and Nike. These once-held positions were substantial, and I have since reduced my exposure to them. Currently, two stocks are undergoing significant corrections: Novo Nordisk and Chipotle.
Moreover, I hold several turnaround positions that have not yet reached the anticipated recovery levels. Stocks like Peloton, Docusign, PayPal, and Etsy all show potential, but I may have invested too early or added to my positions prematurely. If these companies continue to improve, they may eventually yield positive results, but the risks are evident. In hindsight, reallocating funds to a more stable stock like Microsoft would have been a wiser choice.
Lessons learned from specific stocks
Reflecting on my experience, I will likely exercise more caution with turnaround stocks in the future. For instance, Disney has been a significant loss. I wisely halved my position early on and reinvested the proceeds into Netflix, which turned out favorably. However, my prolonged commitment to Disney was ultimately a mistake.
Similarly, my position in Starbucks had a detrimental effect. Although I reduced my stake and shifted some funds into Chipotle, I still held on for too long, leading to losses. The most substantial blow came from Nike, which has seen a staggering 28 percent decline over the past five years—an alarming figure for a blue-chip stock.
Evaluating turnaround stocks
Using Peloton as a case study, it exemplifies the challenges faced by turnaround stocks. Currently, it boasts an impressive year-over-year growth of 170 percent, but my initial investment was not made at the optimal time. The stock hit a low of 87 percent below its five-year peak, which underscores the volatility inherent in such investments.
Despite Peloton’s strong brand and loyal customer base, the anticipated profitability has been delayed due to leadership changes and restructuring efforts. Achieving a return to the 23 dollar mark would require not only cost management but also a revival in sales and user engagement.
Reflecting on high-growth stocks
My overall experience with high-growth stocks has been mixed. While some, like Crowdstrike, have delivered exceptional returns of 340 percent over five years, others have fallen short of expectations. This nuanced performance prompts me to reconsider my strategy moving forward.
In contrast, my investment in Nvidia has been a resounding success, with returns surpassing 1,500 percent. This positive outcome highlights the significance of recognizing promising stocks earlier. Regrettably, I hesitated to invest in Nvidia when it first captured my attention, which would have yielded an even greater return.
Ultimately, the lessons learned from my investment journey emphasize the importance of timely decisions and the risks associated with high-growth stocks. I aim to apply these insights in future investments, particularly when considering the potential of emerging companies.
Conclusion and future outlook
In summary, the comparison of my portfolio with the MSCI World index has offered valuable insights into my investment strategies. Despite recent challenges, I remain optimistic about refining my approach and learning from past experiences. The world of investing is ever-evolving, and I look forward to adapting my strategies to navigate its complexities.
