Portfolio Three Performance – Three Rough Years

The third portfolio has a life of three years. These three years coincided with many of the markets toughest years and thus the returns on this portfolio have been the lowest of the three so far.

A total of $4500 has been invested in this portfolio over three years, and the current value is $3752, for a loss of $747. This represents a 17% loss, or an annual loss of approximately 9%. The beneficiary has invested $1500 and the custodian $3000, so at least the trustee is doing well with a value of $3752 vs. an investment of $1500.

This portfolio had one decent winner, China Mobile (we sold before the big drop), and two tough losses; one on ICICI bank (ticker IBN) from India which was sold at the peak of market turmoil (and since regained some of those losses) and also Nokia (NOK), which had losses and cut their dividend but we continue to hold.

With only 4 stocks in the portfolio (2 until recently) any portfolio in the early stages with this few stocks is subject to market gyrations. Portfolio Two now has 10 stocks and Portfolio Three has 15 stocks so they at least have more diversification across markets (generally 10 stocks means that you have decent diversification, as a “rule of thumb”).

Investing is a long term game and played with real money; so when you start investing in a bad market it can be stomach turning at times, especially for kids who see this as “real” money since they earned and saved their portion themselves. Given the time horizon of these trust funds in makes sense to stick with the volatility and continue to watch the markets and keep going rather than pulling out and putting the money into plain vanilla investments.

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