Over the past five years, the stocks I currently recommend have seen a 59 percent increase in the wiki Global Champions, which is significantly lower than the 88.5 percent increase experienced by the MSCI World index when converted to euros. This discrepancy raises an important question: what accounts for this difference?
A member from the Facebook group ‚Kleine Finanzzeitung‘ recently brought this topic to attention, prompting me to share my insights both there and here on grossmutters-sparstrumpf.
Initially, I responded within the group, but I found that a more thorough explanation was warranted.
Index du contenu:
Analyzing the performance gap
After a member sought the opinion of Chat GPT regarding the underperformance of my wiki, the AI suggested that companies like Chipotle and Intuitive Surgical were responsible for the lackluster performance compared to an MSCI World ETF. However, this assessment was misleading, as it likely only considered current holdings without accounting for stocks that were sold off.
While Chipotle may currently show a slight lag in euro terms, the primary reason for the underperformance of my wiki is the substantial management fees that range between 2 to 3 percent annually. This accumulation of fees over time presents a significant barrier to growth. Furthermore, my personal portfolio benefits from the dividends of American stocks, which do not contribute to the wiki’s performance, resulting in an additional loss of around 1 percent.
Identifying the major culprits
The three individual stocks that have notably dragged down the performance of my portfolio—Disney, Starbucks, and Nike—were all significant positions that I ultimately decided to reduce. These stocks were sold off last year, and Chat GPT’s analysis likely overlooked them entirely.
Presently, two key stocks, Novo Nordisk and Chipotle, are undergoing notable corrections, further affecting overall performance. Additionally, I have several turnaround stocks that have made some progress but have not yet reached the expected recovery levels. These include Peloton, Docusign, PayPal, and Etsy.
Reflections on investment strategies
In retrospect, I recognize that I entered these turnaround positions too early, which has delayed potential gains. If these stocks continue on their recovery paths, they could still yield significant benefits. However, this strategy carries inherent risks. A more prudent approach may have been to invest in a well-established company like Microsoft with the same funds.
From these experiences, I have drawn two key conclusions: first, I plan to exercise greater caution when considering turnaround investments in the future. Second, I will explore the landscape of semiconductor stocks, particularly Nvidia and related companies.
Learning from losses
Disney stands out as the first significant misstep in my investment journey. Fortunately, I reduced my stake in Disney early on and redirected those funds to Netflix, which proved to be a wise decision. However, the prolonged retention of Disney shares ultimately did not pay off.
Starbucks also significantly impacted my portfolio’s performance. While I took action by reducing my position and initiating an investment in Chipotle, I still held onto Starbucks for too long, which hindered my overall returns.
Among the blue-chip stocks, Nike stands out as the most considerable loss over the past five years, reflecting a decline of nearly 28 percent. This highlights the need to evaluate investment choices critically.
Future considerations and market dynamics
When examining other turnaround stocks like Peloton, it’s evident that while they have made some progress, the recovery hasn’t been as robust as needed to positively impact my portfolio. Peloton saw a year-over-year increase of 170 percent, yet my investment timeline spans five years, during which I faced substantial losses.
To reach a break-even point, Peloton’s share price must climb to around $11.50, and achieving the $23 mark seems distant. Based on current insights, I would not embark on such a risky turnaround speculation again, particularly given Peloton’s past performance, which has shown a staggering 87 percent decline over five years.
Despite the occasional setbacks in high-growth stocks, I’ve also enjoyed successes, such as Crowdstrike, which experienced a remarkable 340 percent increase over the same period. This illustrates that while the high-growth sector can be unpredictable, it is not entirely without merit.
In conclusion, my investment in Nvidia, which yielded over 1,500 percent returns, stands as a bright spot in my overall performance. However, I acknowledge the mistakes made along the way, including hesitating to invest larger sums earlier and missing out on a potential 2,700 percent return. Such experiences serve as learning opportunities for future investments.
