Jan 29
What Guidance In 2003?
No, that is not a typo in the title. There are times when it makes sense to take current tools, such as the Quantext Portfolio Planner (QPP), and go back in time to see what projections were anticipated. In the clip below, I took 40 stocks from a semi-well-known list, entered them into QPP, and turned back the clock to 2003 so as to see what was predicted for the next years. Here is that clip.
Take special note of the projections in the blue area. The portfolio is expected to have an annual increase of 12.93% going forward with an annualized standard deviation (SD) of 18.03%. Now drop down into the yellow area where we have the performance of this portfolio over the period from 12/31/2000 through 2/31/2003. These 40 stocks generated a return of 15.6% with a SD of 17.69%. Don’t get caught up in all the decimals. Rather think of a 13% projection and a 16% actual return. Since the actual return is higher than the projection, the days ahead were not expected to be all that great. With this set of stocks, the probability of doing well with this group of stocks was not projected to be all that high.
Other periods of interest would include the last days of 1999 and the beginning of the most recent decline. Another date of interest would be November 20-21 of 2008, as that period may be close to the market bottom. Look for this information over on Premium Content.
Lowell Herr
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