No Touch Portfolio results

NO TOUCH MODEL PORTFOLIO
...One of the things I intended to do in this blog was to keep track of model porfolios. Back at the beginning of 2004, I made up a 'no touch' portfolio for a couple of friends. It was designed to buy and forget. I just checked out its results since the beginning of 2004 vs the market averages, as of the 11/4/05 close.
...It was designed as a $10,000 model portfolio. Here's the mix:
$3000 OAKBX
$1500 OAKGX
$1500 BBHIX
$1000 PEMDX
$1000 PSAFX
$1000 TGLDX
$1000 ICENX
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Since the beginning of 2004, here are the results. The results are given both with and without dividends. The results do not include capital gain distributions, since this is just a down and dirty exercise, and Yahoo Finance doesn't include that information. They also don't include total results for PEMDX, since Yahoo Finance doesn't include the data for this fund back to the beginning of 2004 - I used the earliest date in Yahoo for PEMDX. The dividends were just added on to the current price as follows: (Current price * number of shares) + total dividends paid since January 2004. Divide that total by original purchase price * number of shares to get the total return with dividends. Info provided just to let you see how the calculations were performed. They would not be exact, of course, in real life, but should be in the ballpark.
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Model portfolio returns:
20% return without dividends included.
25.1% return with dividends included.
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As compared to:
S&P 500: 9.7% return.
Nasdaq: 8.3% return.
The S&P 500 and Nasdaq returns were calculated by dividing the 11/4/05 closing price by the 12/31/03 closing price.
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SPY (S&P 500 trading vehicle):
13.2% return without dividends included.
16.6% return with dividends included.
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QQQQ (Nasdaq 100 trading vehicle):
11.1% return without dividends included.
12.1% return with dividends included.
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...I think the model portfolio has done pretty well. Makes me wish I had used it in real life. If I were using it in real life, I would probably re-adjust the dollars in the account annually to the original percentages (i.e., OAKBX being 30% of the fund, etc.). I would probably cut TGLDX and PEMDX in half as well, and distribute the funds prorata among the other funds except PSAFX.
...Looking at the results, I might look for something other than PSAFX. It was put in for diversification, and with the expectation that it would perform better in a poor market environment than some of the other choices. Remember, this was to be a buy and forget portfolio, and I think has done well overall.
...I also think the results could be improved with the following adjustment, but I have not done any research to back it up. It is just speculation. It would also require some trading, something the No Touch Portfolio was designed to avoid. Anyway, the idea would be to be long in a stock fund (my old favorite was NPMDX, a mid-cap growth fund - I haven't checked out fund performances for some time, so don't know how this has fared in the last year or two) anytime the markets were above key averages, and in a bear fund, probably URPIX, whenever the markets were below those long term averages. We could take the $1000 we get from reducing our exposure in the TGLDX and PEMDX funds, and use that for these occasional trades.
.....For example, let's use the 200 day moving average as the bull/bear line. Any time the S&P 500 is above its 50 and 200 day exponential moving averages, and the 50 day average is above the 200 day average, we are long in NPMDX. Any time the S&P is below its 50 and 200 day exponential moving averages, and the 50 day average is below the 200 day average, we are in URPIX. Any other combination of averages, we are in cash for this portion of the porfolio, and not in either fund.
...Following is the rationale used in making up the No Touch Portfolio:
...OAKBX: Balanced fund, usual mix seems to be about 60% domestic stocks and 40% high grade, mostly government, bonds. They've only had one down year since their inception in 1996. Oakmark is a value fund. This fund is my longest term holding, and I have been very satisfied. I tell people that if I had to put all my investment money into one stock or fund and leave it, this would be my choice.
...OAKGX: Oakmark's global fund. I like this one because it has the freedom to buy any stock they select, big or small, U.S. or foreign. So I feel I am getting their best ideas, and not just a fund that is being limited by some restriction (i.e., U.S. only, small cap, large cap, etc.).
...BBHIX: A government bond fund, mainly TIPs. It hasn't done very well, but was included for diversification and as an inflation hedge.
...PEMDX: Emerging market bond fund.
...PSAFX: Kind of a bear fund. It has holdings in foreign bonds, foreign currencies, U.S. and foreign stocks and precious metals, among other things. It was included for diversification and with the intent that it would be a portfolio help in poor markets. It has not done well.
...TGLDX: Precious metals fund.
...ICENX: Natural resources fund. This is my favorite energy fund, and I use it in real life.
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...As mentioned earlier, looking at the results makes me wish I had used this portfolio in real life. As it is, I keep long term positions in three of these funds: OAKBX, OAKGX and ICENX, and I trade stocks and mutual funds.