Job One of a Portfolio

It's the preservation of capital.
Stocks quotes in this article: AAP, DG, IBM, POT, MOS, BAC, GS, GS, PRXI, STRL, GNTX, DELL, MPAA, DVA, WEN, TECUA, DE, CHK, GM, IRDM, AAPL, ZINC

Another year has come and gone for the stock market. This year's Gad Winning Value Portfolio failed to best the S&P 500 for the first time since it was created in 2012.

For 2014, the Winning Value Portfolio was up approximately 7.3%, compared with a positive 13.6 % for the S&P 500 assuming reinvested dividends. Last month, I stated that it was very likely that the portfolio will underperform the S&P 500 in 2014.

Despite the underperformance, the Winning Value Portfolio succeeded in doing its ultimate job -- preservation of capital.

Even though I design these portfolios for a one-year duration, an investment track record is earned over a period of years. Since launching this portfolio in 2012, we have accomplished precisely that. Long-time Real Money readers who have followed our progress are aware of this. Still, below are the returns for the 2012 and 2013 portfolios:

My quick calculation of annualized returns shows an approximate 25% annualized rate of return for the Gad Portfolio vs. 17% for the S&P 500 over the last three years, respectively.

Last week, I unveiled the class of 2015, and in the coming days and weeks, I will dig deeper into this group.

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At the time of publication, Gad is long GM Class B Warrants. 

TAGS: Investing | U.S. Equity

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