Historical Results and Commentary
Introduction
Welcome to Valueinvest.org, the home of the Bandy 20. The Bandy 20 is an index of 20 stocks that are traded on the NASDAQ or NYSE indices. The Bandy 20 is a value-oriented index, although certain other strategies are sometimes employed (and I usually repent when I do use them). The index was born on February 11th 2000 and has survived its infancy and early childhood with minimal ignominity compared with its peers in the general American investing community. The portfolio is rebalanced every 90 days, on the 11th of February, May, August, and November, so that each of the 20 stocks has a 5 percent weight in the portfolio1.
This website is dedicated to the principle that value investors have more to gain from sharing their insights and questions than they do from actively trying to compete against one another. It is the short-term speculator, not the long term investor, who views a slight information advantage as being critical to success in the market. For the long-term investor, the ability to collaborate with others and to learn is a far more valuable opportunity than to try to navigate the whims and perils of the stock market alone. It should also be mentioned that many of the great minds of value investing over the past 70 years such as Benjamin Graham and Warren Buffett have openly shared many of their strategies and tactics with no obvious detriment to their own performance. It is often the case that the potential investor’s worse adversary is not among the external investing community but is rather his or her own lack of patience, understanding, and discipline.
I have learned a lot from those of you who have emailed me your comments and suggestions. Please keep the emails coming! You can reach me at jvbandy@gmail.com (please put Valueinvest.org in the subject line as I get so much spam I run the risk of missing your email if it has a different subject line). Once I learn a bit more about the mysterious world of web design, I am hoping to set up a message board or bulletin board system on this webpage where people can post their own thoughts or suggestions.
Finally, this website is not designed to make anyone rich overnight, nor does it claim to contain special or unique information that cannot be found anywhere else. If you want to copy my portfolio (as I do) go ahead (especially if you are really rich, then you will significantly boost the value of my holdings ;) ). However, as I mention in the portfolio analysis section, I don’t think there is enough data yet to say that emulating my decisions is a statistically significant way to earn excess returns over the market portfolio, since the Bandy 20 has been around since only February 2000 (in the past 29 quarters it has beaten the S&P 500 in 24 of them, so the data is slowly starting to mount in my favor). If the portfolio continues to wallop the S&P 500 through 2014, I would say it’s pretty special, but as of right now I think there is an equally good chance that the law of averages has been unusually kind to me as there is that I have some special investing acumen. It is also possible that my particular investing outlook was well-adjusted to the market conditions over the last 7 years, and should those conditions fundamentally change, I would be poorly-adjusted to cope with them. Nonetheless, there are so many bad portfolio managers out there that if one were to lose badly by copying this portfolio, at least such losses would not be compounded by paying fees for bad management!
-JVB
1The portfolio intentionally agitates against the traditional year or decade convention. Too many people in the world think in traditional quarterly or yearly cycles that start on the first date of a month or year. While there is value in understanding convention, by intentionally skewing the reporting periods to start on odd days, one can gain a second perspective on the behavior of markets in addition to the yearly convention one finds in mutual fund prospectuses and newspapers. Initially, I wanted to rebalance the portfolio every 77 days (the most random time period I could think of), but since dividends are generally paid quarterly, it was easier from an accounting perspective to use a 90 day cycle.
Historical Results and Commentary