Quant Value Newsletter third quarter 2015 performance

//Quant Value Newsletter third quarter 2015 performance

dear fellow investor (blue)



We recently added more information to help you with your investment decisions.


Average yearly returns of 31.1% and 18.0%

We have added the average yearly returns of all the ideas recommended in the newsletter. Measuring returns against the index is good but, that depends on when and how many of the newsletter ideas you invested in.

As this is different for each subscriber the average return gives you a good idea of how successful the newsletter’s ideas have been.

And as you can see the returns have been very good at +31.1% in Europe and +18.0% in North America.


Current cash percentage

We have also added the current cash percentage in the two portfolios.

This may be different for each of you as it includes past returns but it gives you an idea of how much of each portfolio is invested at the moment.


Third quarter returns

Not much happened in terms of returns in the third quarter of this year very much like the second quarter, which also did not help returns much.

Europe up 6.1%

In the first nine months of 2015, the European portfolio returned 6.1% (+7.1% for the half year, +7.5% in Q1) compared to the 1.1% (+11.3% in the half year, +16.0% in Q1) return of the European STOXX 600 index.

North America down 4.6%

In the first nine months of 2015, the North American portfolio declined 4.6% (-1.2% for the half year, +1.7% in Q1), slightly better than the 6.6% decline in the S&P 500 index (+0.2% for the half year, +0.4% in Q1).


How we calculate performance

Before I show you more performance numbers, first a short reminder of how we calculate the newsletter’s performance.


Exclude dividends and include 2% fees

We calculate the performance without dividends and include a 1% buying and selling fee (2% in total) for all investments bought and sold.

Dividends are not included (although this would make performance look better) in order to make the performance figures comparable with the indices (which also exclude dividends).

A 1% buying and selling fee is conservative; you can get away with lower fees if you use an online broker (my broker charges 0.25%).

Equal to the results you can get

The aim is to make the newsletter’s performance equal to what you can make if you follow its recommendations.


Nine months 2015 performance

The table below shows the performance of the indices in the nine months till end September 2015.

Market Performance
European STOXX 600 +1.1%
US S&P 500 -6.6%
Average -2.8%

Source: Yahoo Finance


Newsletter performance

This is the performance of the newsletter over the same period.

Portfolio Return
European recommendations +6.1%
North American recommendations -4.6%



Performance since inception

The following charts show the overall performance of the newsletter since the service was launched.

European recommendations (Started July 2010)



Up 112% over 5 years, index only 36% (3.1 times better)

Helped by a performance slightly better than the index this year, if you followed all the European portfolio’s recommendations from when they were started in July 2010, your portfolio would have grown 112%.

Compare this to if you had invested in the index, in which case your return would have been only 36%.

This is 3.1 times better than the index.

Another way of looking at it is that if you invested €1,000 in the European portfolio, your investment would have grown to €2,118, compared to only €1,364 if you invested in the index.


Percentage of positive investments 72% – average returns 31.3%

Since June 2010, more than five years ago, the newsletter has recommended 126 investment ideas. 72% of these would have given you a positive return.

On average, had you invested in all the European investment recommendations, you would have earned a return of 31.3%.


North America recommendations (Started October 2011)



Percentage of positive investments 58%; average return 17.4%

Since October 2011, four years ago, the newsletter has recommended 90 North American companies. 57.8% of these would have given you a positive return.

On average, had you invested in all the North American ideas, you would have earned a return of 17.4%.

Why North American ideas are lagging behind the index

As you can see, the European recommendations have substantially outperformed the index and the North American ideas are lagging behind the index.

Long-time subscribers will remember that this was mainly because North American recommendations did not include Apple or some of the other large companies which were the major drivers of the good performance of the S&P 500 in 2012 and 2013.

2014’s weak performance was mainly because small companies (the ones I mainly recommend in the newsletter) did not do as well as the large companies that make up a big part of the S&P 500 index.

Oil & gas underperforming

And, of course, towards the end of 2014, North American US oil and gas companies (five recommendations in the newsletter) were the worst performing sector in the S&P 500, falling 10% in 2014 because of the unusually cool US summer and the falling oil price.

Change the strategy?

Although the North American investment ideas have lagged behind the S&P 500 index, I am not planning to change the model I use to select investment recommendations.

As you know, regardless of how well they have performed in the past, even the best investment strategies can underperform the market – as Joel Greenblatt mentioned in his excellent book The Little Book that Still Beats the Market – before they catch up and start to outperform again.

Why bad performance is good

In his book, Joel also says that periods of underperformance are a good thing for a good investment strategy, because without such periods, the strategy would be used by so many investors that it would stop working.

We have to be patient

I am repeating what I have said so many times before (I am embarrassed, but I am saying it again): we just have to be patient. It is simply a matter of time before the North American strategy starts outperforming the market.



Wishing you profitable investing


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By | 2017-05-21T07:19:01+00:00 November 17th, 2015|