The latest edition of Fortune magazine entitled “2010 Investor Guide” had a great piece by Pat Regnier on how hard it is to pick winning stocks consistently for most investors – individuals and pros alike. The article highlights how only a third of mutual funds beat their index over a five year period. For what its worth, the numbers are vastly worse for mutual funds when the hurdle test is raised a bit. Only 5% of US equity mutual funds beat the S&P500 by ten percentage points or more so far this year. How does that compare to AlphaClone? Over 70% of our 3,100 clone portfolios are beating the market and over 50% (yes half) are beating by ten percentage points or more.
Many of you may not know this but I decided to build AlphaClone out of a personal sense of frustration with the stubborn reality above. It turns out that same feeling of frustration is nearly ubiquitous amongst investors who want more control in their investment lives; pros and individuals alike. That’s why it’s particularly gratifying that I find myself, for the first time in my investing life beating the market by nearly 3x! As of 12/10/2009 I am returning over 58% in my ETrade IRA account – and every single trade I executed this year was based on using AlphaClone. Here’s a rather beautiful graph:
What clones did I follow – there were several including those based on Kingdon and Kleinheinz but, importantly, I also was opportunistic and tended to over-weight smart money holdings in beat down sectors. It worked for me but with over 50% of our clones beating the market by ten percentage points or more this year, chances are if you’re an AlphaClone member, you did just as well and very likely even better.
