Friday, July 15, 2005

The 2.5 Year Double

Mo' money, mo' money, mo' money! Yesterday marked the day that our Relative Value portfolio doubled. So your $1 became $2, or your $1,000 became $2,000, or your $10 million became $20 million! Feels good especially given that the feat was accomplished in about two and a half years. Our goal is usually to double our money in about six years. We beat our goal by about 3.5 years!!

Another nice little tidbit is that while the Relative Value portfolio has returned 104.9% since December 31, 2002, the Russell Midcap (using the iShares Russell Midcap Index ETF [symbol: IWR] as a proxy) return was 77.3%. So the portfolio has done extremely well over the last 2.5 years compared to its closest benchmark.

Now maybe doubling your money in 2.5 years doesn't seem like much, especially to those that that have dabbled in the real estate market in the last few years. Well, I'd say don't get too excited about those real estate returns. Although stellar, they still haven't exceed the returns of the stock market. Unlevered real estate (meaning leverage isn't considered but neither are mortgage costs in the return calculation), as measured by the the NCREIF Apartment Index has been approximately 38%-40% over this time frame.

Of course, this performance could have all been a fluke. It's too short a time frame to tell if our outperformance was luck or skill. Just as the underperformance of the Choice portfolio this year could be a fluke. But we're patient.


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