Monday, January 05, 2009
As word of 2008 performance trickles in, the final-year numbers confirming what everyone knew all along, it becomes clear that even the smartest guys in the room the year before weren't nearly as smart last year.
Short funds, treasuries, the dollar, the yen, and gold were about the only things that went up in 2008, Bloomberg reporting that 2007's star performer, Ken Heebner's CGM Focus Fund (CGMFX) which had gained 80 percent the year before, lost 48 percent in 2008.
At first glance you might think that, after two years, things are OK with CGM Focus, up maybe 20 or 30 percent, but a gain of 80 percent followed by a loss of 48 percent is actually a cumulative decline of 6 percent which, come to think of it, isn't all that bad, relatively speaking.
Here's what the fund looks like over a four-year period (all charts start with a value of 100 at year-end 2004, making for an easy calculation of cumulative performance):
Another fund mentioned in the Bloomberg story was the humongous Fidelity Magellan Fund (FMAGX) that fell 39 percent due to ill-advised bets on financial stocks.
Apparently the fund isn't so humongous anymore, falling from $110 billion eight years ago, when it led all other mutual funds in assets, to about $19 billion as of last month.
Here's what it looks like since 2005 (also note that these charts use the same left and right scales making for easy comparison - maybe an animated .gif will appear here later today...)
The Growth Fund of America (AGTHX), the fund that displaced Magellan as the largest stock mutual fund, posted the exact same result as its predecessor in 2008 - minus 39 percent.
Bloomberg says, "Combined with withdrawals, the losses dragged the fund’s assets to $116.5 billion in November after they reached $200 billion earlier in the year." Apparently, exposure to foreign stocks hobbled them.
Here's the longer view:
So far, Ken Heebler at CGM Focus is looking pretty good over the longer term - up 35 percent versus down 17 percent and down 14 percent for the two monster funds.
Of the mutual funds with more than $100 million, the Gabelli ABC Fund (GABCX) fell the least in 2008, down 2.6 percent (apparently not a single long stock mutual fund posted a gain).
Over the last four years, it sports a modest 20 percent cumulative gain.
At the companion investment website Iacono Research, it was not a very good year, but it was still better than most. With a loss of 27.4 percent, following three consecutive years of 20+ percent gains, a good portion of earlier gains are still intact and it comes out ahead of Mr. Heebler's fund by a few percentage points.
Many more sales earlier in the year would have lessened the damage, but the gold stocks are coming back very nicely at the moment.
Here's what it looks like after four years (three years of meticulously documented performance data available to subscribers or those testing out the service with a free trial, along with one year of data prior to the model portfolio being formalized in late-2005).
You'll be hearing more about Iacono Research this week as there is a special offer all ready to be announced tomorrow.
Of course, short funds were where all the big gains were last year, the Federated Prudent Bear Fund (BEARX) posting what looks to be about a 24 or 25 percent gain last year, part of a 57 percent cumulative gain.
Here's a nearly perfect looking chart since 2005. No, it is perfect - that's exactly what you want to see in a curve that represents your money and your retirement aspirations.
Of course the 10 and 14 percent losses in BEARX in 2003 and 2004 don't look so good, but this followed a gain of 63 percent in 2002.
If you go all the way back to 1998, the Prudent Bear Fund is up a cumulative 39 percent, once again proving the old axiom, timing is everything.
There was one other investment that did quite well in 2008 - just one more good year in a long line of good years since we rang in the new century. It has truly been the decade of gold, but here it is, the decade almost over, and most people don't realize it yet.
Over the last four years, you could have doubled your money by buying dumb old gold coins.
If you went back a few more years, you could have tripled your money.