Tuesday, January 11, 2005

Hanging On To The Dowry

The Dow just closed at 10550 or thereabouts, so perhaps I should mention a word or two about how I manage my portfolio. A week ago we had some discussion about the fact that professional advisers average a return of 6.8 percent while private individuals average 6.4.

I took over management of my own retirement fund on April 16, 2003, so I am approaching the 21 month mark, and I have achieved 17.5 percent growth, averaging out to almost exactly 10 percent a year.

The only item that I trade is the Dow Jones Diamonds (symbol=DIA), which essentially follow the Dow index. In other words, if the Dow is 10000, the Diamond sells for approximately $100. This way my fate is tied to the Dow, which has averaged 10 percent annual growth for almost a century.

It also pays a small dividend and is a great all-around deal. Since I'm a bit of a market timer, I sold them all at $107.96 apiece at the end of December, right below the peak of $108.55 and am now sitting on the sidelines with cash, waiting for a more hospitable climate for reentry.

3 comments:

Hunter Baker said...

Very interesting, Jay. I was begging my parents to get in big when the Dow was dwelling in the 7000's. I've always thought you could do well figuring out the range and buying and selling accordingly.

Jay D. Homnick said...

I'll tell you what. When I decide to buy back in, I'll post it; then you can track my results.

Hunter Baker said...

We need an opinion from Zycher and Reynolds, but I'd peg buyback time at about 10,300. Not sure we'll get there again, though, at least in the near future.