Replies to post #22565 on Value Microcaps Motherboard

[StockCowboy]

This market has been anything but flat:

http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[r,a]daclyyay[dd][pc10!c20!c50!d20,2!c200!d10,1....

And FWIW, I am not sure what the point is in posting returns (or projected returns).

[SAMNOTSAMUEL]

Cleverrox,

The only way to normally get 200% a year is with I think your plan to place the bulk of your money in 5 stocks or less.

My track record has never been good enough for me to take that approach. I would say in any case that only smaller portfolios should do that.

sam

[abh3vt]

I would echo Samnotsamuel's comment. High returns such as 200% can only be achieved by taking huge amounts of risk (i.e. very concentrated portfolios and/or using leverage via margin or options)

Let's say you have a few good years and start investing larger amounts of money. Do you really want to risk those hard won gains as much? Probably not.....plus it gets more difficult to buy and sell your positions when you want and in the size you want as your portfolio gets bigger.

Try this: if you have access to a financial calculator that can compute future values based upon certain assumptions, try plugging in different rates of return and the number of years and see what you get.

EX:

PV: $10,000 (present value)
N: 5 years
I: 200%/yr
PMT: none (no additional payments or outflows)
FV: $2,430,000

That might seem achievable, but I guarantee you that the 200% return in year 5 is MUCH more difficult to achieve than in year 1..........

[hogfan2]

Cleverrox...Both replies before this one are my exact thoughts....the market has been nice of late and as I have diversified my portfolio I have seen steady increases but can not imagine pulling all stocks at 200% per year year after year...

I have wondered what type of return that I should expect year after year...

I am fairly new at this and I am up about 80% for the year...

Comments on average returns expectations would be great to hear...thanks...hog

[researcher59]

cleverox: for great investment ideas, this message board board has been a bonanza. Outsized returns seem to be a sure thing, at least this year, for those who follow the expert consensus picks here. Mr Sheep is testimony to that, incredibly in 2nd place 11 weeks into our contest with a return of 95.59%. Hmmmm, did I see my magic '59' in there not once, but twice ? And he's in 2nd place in spite of the inherent disadvantage to being amongst so many with similar pick6 profiles, as Lentinman's computer simulations of the contest bear out.

But outsized returns are achievable only with relatively small dollar amounts and very aggressive portfolio management, with perhaps 5 to 10 stocks at the most. If Mr Sheep were able to keep up his returns of 95.59% on a quarterly basis, he would achieve a return of 1363% per year (nearly doubling his money each quarter). Compounded over 5 years that would turn a mere $1000 into roughly $670,000,000. Within 7 years he would have $131 Billion, exceeding the wealth of Bill Gates.

Needless to say, Mr Sheep would be having serious liquidity problems in our microcaps within just a very short period of time. But three cheers to Mr Sheep for his outstanding results thus far in our first contest. However, he'll have to prove himself again over the next 3 months and in the next contest.

[10 bagger]

200% a year....
Is possible if you buy every fraud out there and sell a month before the SEC calls the FEDs.. To program a portfolio with position's of $100,000 or greater you end up with sell to who, or is it to WHOM.. There are no stocks as a group that can be researched for 200% a year.. If you find them most will blow up in your face... Now 50% is only 25% on margin and If I have a good last quarter I'm almost there... ALY count's for a lot this year but the tanking of ACRG with a six figure position from 4.10 to 2.97 didn't help a bit...Hank

[John Bates]

In '99 many people had huge percentage gains and diversity wasn't even needed. That time was special though.

These days, I think something on the order of 200% is possible if you concentrate on 2-3 stocks with everything else minor. It may be manageable with a $100K portfolio, or even a $200K, if a person is working. What about a million though? Do you really want to put $300K+ very often into 3 individual stocks? I think once in a while, it might be a good move to do it for one stock, provided the downside is limited and you really know the stock. That might give you a good shot at 100%, but probably not 200%. If you put large amounts in 6 of them, one is likely to blow up in your face though (See WHAIE). Anwyay, if you did make your 200%, what would you do next year, million dollar positions? :)

[10 bagger]

ACRG...
Was the largest position I have ever owned,, even when I sat on a trading desk with $5,000,000.00 allowed in my trading account.. At the top I owned over 2.5% of the company with all the family accounts.. The stock went from 0.30 to 4.17 in 39 months.. The position had a cost basis below 0.40 and at no time was I up 200% for the year.. On a mark basis when ACRG went from my high purchase of 4.17 to 2.96 the loss was over $320,000.00 or over 3x what I paid for the whole position..I was long term on all except 22,000 shares and this something that I ponder always...I am sure Bobwins has the same feeling for TGA. Now I will be happy with 20% clean per year and at that rate I still make 2X the ave of my 5 highest as a publisher doing what I like..