“You only have to do a very few things right in your life so long as you don’t do too many things wrong.”
Warren Buffet
The art of getting things mostly right is all that Slack Investor wants to do – this is a theme that echoes throughout this blog. Slack Investor does not aim for perfection – good enough is good enough. Along the way will be fantastic opportunities that I missed out on … but that’s OK too.
Though not in Mr Buffet’s league, stock pick failures are something that we both accept – providing that they are not too common! Mr Buffet probably has regrets about his $US14 billion stake in Kraft Heinz … but unlikely to be losing any sleep about it. The Slack stinkers were outlined last post – again, no sleep lost. There will be times when the entire Slack portfolio goes negative – A good example is the first half of last financial year, From July 01 till December 31 2018, things were grim with the Australian Market down 9% and the Slack Portfolio down over 10% and the journey so far this financial year has been “wild and woolly”.
Slack Performance Results FY 2019
Performance results are before tax and, despite being over 10% down at the end of December, the Slack Portfolio grew a creditable 19.7% for the year. Full yearly results with benchmarks are shown in the table below. I have changed the residential property benchmarks.I am now using Corelogic Total Returns. This benchmark accounts for yearly asset price change as well as the gross rental yield. This provides a better benchmark for me as it reflects total return and answers the question – Would Slack funds be better deployed in Australian real estate?
In a 6 out of 10 years, the median balanced fund has done considerably better than asset growth plus the gross rental return from median Melbourne residential property. In 8 out of 10 years, the Slack fund has done better than Melbourne Property returns.
| YEAR | SLACK FUND | MEDIAN BAL | VGARD GROWTH | ASX200Acc | RES BRIS | RES MELB | CASH | CPI |
|---|---|---|---|---|---|---|---|---|
| 2010 | 6.6 | 9.8 | 12.3 | 13.1 | 10.8 | 26.9 | 4.2 | 3.1 |
| 2011 | 2.5 | 8.7 | 9.1 | 11.7 | -2.4 | 0.9 | 4.4 | 3.7 |
| 2012 | 8.3 | 0.4 | 1.3 | -6.7 | 1.3 | -0.9 | 4.3 | 1.2 |
| 2013 | 26.5 | 14.7 | 18.6 | 22.8 | 7.7 | 8.3 | 3.2 | 2.4 |
| 2014 | 23.6 | 12.7 | 14.5 | 17.4 | 11.5 | 12.8 | 2.6 | 3.0 |
| 2015 | 2.4 | 9.6 | 11.8 | 5.7 | 7.7 | 15.6 | 2.5 | 1.5 |
| 2016 | 14.2 | 2.8 | 4.2 | 0.6 | 8.4 | 9.5 | 2.2 | 1.3 |
| 2017 | 19.5 | 10.4 | 8.8 | 14.1 | 6.5 | 17.7 | 1.9 | 1.9 |
| 2018 | 37.6 | 9.2 | 10.0 | 13.0 | 1.1 | 5.2 | 3.9 | 2.1 |
| 2019 | 19.7 | 7.2 | 9.8 | 11.2 | 1.7 | -6.0 | 2.0 | 1.3 |
The Slack Fund yearly progress vs BENCHMARKS. The Median Balanced Fund, Vanguard Growth Fund, ASX 200 Accumulation Index, Corelogic Residential Property total return in both Brisbane and Melbourne, and Cash (Online bank Interest) and Consumer Price Index (CPI)
The Five-year compound annual performance gives me a much better idea about how things are going and will smooth out any dud (or remarkable!) results.
The compounding nature of a succession of good performance results can be seen in this growth of an initial investment of $10000 chart.
Well, so far so good … but trade wars, Trump, China and the constant press about the next recession are starting to make Slack Investor worry whether he has got any concrete shoes on. A momentary lie on the couch and a modest celebration for the good results this year and it might then be time for a review of the portfolio. A clean out of some of the companies that I am a bit doubtful about … and a think about what companies, or ETF’s, might do OK if a recession was to occur in the next 6 months to two years. Slack Investor has poor form in trying to predict the future … so wholesale changes are unlikely, but a tinkering around the edges of the portfolio might just be the right thing. In the wise words of Peter Lynch …
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.”
Peter Lynch, One Up On Wall Street: