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Friday, September 10

My Frugal Miser - Funding my Retirement (Investment Performance Update)

From time to time I post an update about how my stock market investments are performing. I am a value investor, and I believe that most people can outperform the market by following a few very simple rules. My investing philosophy is simple:
  • Minimize trading costs and taxes by sticking to a "buy and hold" program.
  • Buy when everyone else is scared to buy.
  • Focus on smaller companies that are growing at a reasonable rate.
  • Preference goes to dividend paying stocks.
In 2010 I have sold just two stocks, and I was able to buy one of them back when it returned to a more reasonable valuation.

How am I doing?

8/31/2010 (Year to Date)
S&P 500: down 5.93%
Roth IRA: up 11.35%
Rollover IRA: up 15.53%

I outperformed in 2009 as well. Let me make this clear: I am not an investing genius. What I am is a realist. I know not to get caught up in fads - that's why it's so easy to outperform the markets. A large part of "the market" is made up of mutual funds whose managers are chasing after each other. There is very little original thought out there because managers are scared they will make a mistake and lose their job. This fear leads them to follow the pack. It's hard to lose your job when your performance is similar to everyone else.

Investing can be really easy, especially if you do buy and hold like I recommend. Personally I spend about an hour or two each week catching up on news pertaining to stocks I own or would like to own. That's it.

Simple is good.


  1. After reading this I decided to see how my investments have done this year. I'm up 2.4%. That isn't very good but since the S&P 500 is down 5.93% I guess I should be happy with those results. I do own mostly dividend stocks. Unfortunately, one of them was BP which definitely diminished my return for the year. I should have sold it sooner.

  2. Hey Andy, BP killed your return - that you are still up is great considering this. Do you invest in a regular brokerage account or just an IRA? I used to have a regular brokerage account but liquidated it to buy rental properties. That helped me miss some of the downside over the last couple of years.