Monday, September 7, 2009

How are we doing?

Before we take a look at our year-to-date performance let’s look at the track record of some of the greatest investors and speculators of our time. Here are their annualized returns and length of time that it was achieved:

Warren Buffett 21% - 42-years
George Soros 30% - 30 years
Benjamin Graham 20% – 20 years
Peter Lynch 29% - 12 years

That’s right the all time greats are in the 20%-30% range! Frankly a few years ago when I was looking into this I was surprised. I thought the returns would have been higher probably because of all the people selling gimmicks claiming to get 50-100% returns. The reality is that over 80% of mutual fund managers cannot beat the S&P 500, which is the benchmark that all money managers and funds are measured against. The S&P 500 has a 25 year annualized return record of 9.6%. Therefore a 20-30% annual return average over a minimum 10 year period of time is phenomenal! The long track record is the key component that establishes legitimacy - the longer the period, the stronger the credibility of the record - it also weeds out the one-hit wonders.

Okay here’s our results - drum roll please…

Year to date we are up 20.2% (31% annual) assuming we can keep up the same pace for the rest of the year. We might be even higher if I had not gotten a late start by missing January and February trades.

What does this say about the Option Income system and its early results? Well we certainly have not yet stood the test of time, however the early results are promising and on track. Each successful year will bring added credibility to the system. To me it says that this system is right in the sweet spot. That 20-30% range that has been and can be achieved. Any higher has not been proven to be sustainable and is subject to too much risk, and any less would not be maximizing our capital’s potential. Oh and did I mention doubling our money every 3 to 4 years!

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