I used to be an active investor, always chasing the hot stock and unreal returns. I was simply dreaming of getting rich fast. My focus has since changed, and The Beta Post will be my journal for my new strategy: building a long term portfolio.
Over the past 5 years my portfolio had some great returns but also large downturns. Due to the large number of transactions I have not calculated the exact return, but a good estimate is around 0% over that period. Yep you read that right, zero capital gains. Now I might actually call my self lucky since I still have my capital base to invest, but I have also lost 5 years of a bull market.
The irony is that during those 5 years I took a master in finance. And one theory you learn in school is that if the market is efficient it is not possible to beat the market over the long run. Now I was stupid enough to think that the academia was wrong about that, and that I could create superior returns. But in retrospect I was just gambling.
After graduating I continued to have a great interest for the financial markets, and the syllabus was replaced with books such as One up on Wall Street, Beating the Street, The Intelligent Investor and most importantly A Random Walk down Wall Street. The last one really changed my view on investment. Instead of fooling myself to believe I could beat the market, I should just follow the market. Over the long run it has proven to increase you purchasing power.
In summary the book states that the market is efficient and that it is impossible to beat the market year after year. Of-course people will question this, and I'm not here to convince you to a passive investment strategy. But I've found this strategy to suit me perfectly. I actually feel calm knowning that is close to impossible that I will loose 40% the next day (which could be the case earlier).
Now if I was a strict beta investor I should just find a low-cost index fund and my stock selection was done. But as you can see from my portfolio, this is not the case. It might not be economically rational, but it's quite simple: I think it's rather fun to build a diversified portfolio and documenting the dividend stream it generates.
So this is what The Beta Post is about; building a portfolio for the long term.