Bare Naked Million Portfolio
Funds & Featured Portfolios, by Mark Robertson, Managing Partner December 1st, 2015
The Bare Naked Million portfolio was born around Christmas 2006. The genesis was a phone call asking “What would you do with $1,000,000? How would you invest it if it were your money?”
The Bare Naked Million portfolio was born around Christmas 2006. The genesis was a phone call asking “What would you do with $1,000,000? How would you invest it if it were your money?” The portfolio is now approximately nine years old. The $1 million dollars has grown to $2,560,417 (12/17/2015). This represents an annualized total return of approximately 11%.
The stock market — as gauged by the Wilshire 5000 (VTSMX) has gained 6% per year over this 9-year period.
(Dramatic pause while that sinks in.)
Bare Naked Million Portfolio. This collection was started on 12/29/2006 with $1,000,000 invested in Vanguard Growth (VUG) and a number of industry leading companies over the next couple of weeks. The annualized total return since inception is 10.9%.
Bare Naked Million Portfolio. Inspired by the song, “If I Had A Million Dollars” by the Bare Naked Ladies, the Bare Naked Million was established on 12/29/2006. For the record, the Bare Naked Ladies are neither naked nor ladies. This relatively passive portfolio has generated an annualized total return of approximately 11% (over 9 years) while the Wilshire 5000 has gained approximately 6%. We’ll take an “easy” 5% relative return any day of the week … and twice on Sunday.
”Fervor Free” Investing
How much attention has been required? Answer: Not much. How many selling decisions? Not many. More on that in a minute.
The Bare Naked Million just might be the most important portfolio that we never talk about. Why? I was reminded of this not once, but twice, over the last couple of weeks while talking with friends about frustrating investing experiences. One colleague had invested $200,000 in a managed account first at a major brokerage firm for a few years and then switched to a well-regarded regional boutique money manager. As I looked over the statements, I was greeted by a parade of weekly transactions with no obvious theme other than “tactical asset allocation.” There are 10-12 transcations every week! The bottom line is that $200,000 has now become $210,000. $200,000 invested in the identical Bare Naked transactions would now be worth $512,000.
How many selling transactions has the Bare Naked Million done in nine years? TWO. That’s right TWO. (Jensen Fund and Fastenal) Simply put, the blood seemed to drain from her face as she left my office.
We’ll sell Lowe’s (LOW) from the portfolio now and replace it with two industry leaders from Eddy Elfenbein’s 2016 Buy List and our Weekend Warrior best ideas portfolio. Check out the Manifest Forum for more details on the decisions.