Survival of the Fittest for Investors by Dick Stoken

Author:Dick Stoken
Language: eng
Format: epub
Publisher: McGraw-Hill Education
Published: 2012-01-07T16:00:00+00:00

Annual Returns

Now we are going to translate the B&S strategy’s record into annual returns and examine how well it stacked up against the B&H stock market program. See Table 9-3.

Table 9-3 Buy and Sell : Annual Returns

When B&S was invested in the stock market throughout the whole year, we used Ibbotson’s annual figures. Partial year returns were calculated from the appropriate indexes with dividends added. Interest income and capital gains, from intermediate government bonds, when out of the stock market were also added (Federal Reserve “Historical Statistical Data” and Ibbotson’s figures).

The results speak for themselves. Over the whole 85-year period, B&S’s compounded annual return came in at 12.77 percent, which was 2.90 percent better than B&H’s 9.87 percent figure (see Table 9-3). Although this might not seem like all that much to beat the drums about, when tabulated over the whole 1926 to 2010 period, it was enough to deliver a more than nine times greater total return. A $1000 B&H investment would have grown to an impressive $2,982,470 by period’s end, while the same initial investment in B&S would have sprouted into a mouthwatering $27,411,419 nest egg by the year-end 2010.

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