Significant Out Performance:
2009 return-average of Naworski portfolios
2009 return---S & P 500 Index
2008 return-average of Naworski portfolios
2008 return-S & P 500 Index
2007 return-average of Naworski portfolios
2007 return-S & P 500 Index
2006 return-average of Naworski portfolios
2006 return-S & P 500 Index
2005 return-average of Naworski portfolios
2005 return-S & P 500 Index
2004 return-average of Naworski portfolios
2004 return-S & P 500 Index
Past performance is no guarantee of future performance. There is a risk of loss of principal. All return figures include deduction of management fees and stock commissions. Please read the important disclosures.
DISCLOSURES
1. Performance is shown net of fees paid by the client. Performance shown includes payment of dividends and income. Past performance is no guarantee of future results, and investing in securities may result in a loss of principal.
2. The returns are calculated using an average return. Prior to 2007 the returns were calculated on an Asset Weighted basis.
3. Only those accounts that were funded for the full calendar year may be counted for each year's return calculations.
4. All returns shown are net of my fees, which mean that they include deduction for all stock commissions and investment management fees.
5. If an account is initially funded six months or sooner from the start of the calendar year it will not be included in the return calculations for the upcoming year.
6. Accounts that experience an outflow or inflow of money during the year are not included in the return calculations. Prior to 2007 accounts with an outflow or inflow of more than 25% were not included in the calculations.
7. Accounts that begin the calendar year under the minimum required for that account style are not included in the aggregate composite return until the first year in which they reach the minimum.
Investment Philosophy
As with my stock selection techniques, I use methods that are fundamentally sound, but differ from others in important ways. For instance, many investment advisors believe in asset allocation, that is, determining the proper mix of stocks, bonds, cash and other investments for their clients. That approach is wise because different types of asset classes move differently and are affected by different things. But it isn't enough just to spread funds across different asset classes. It's also critical to determine whether an asset class is overvalued and let that be a guide whether it should be purchased.
I try to determine if a particular asset class, say U.S. small cap growth, is undervalued or not. I tend to emphasize those areas that are undervalued. As undervalued classes become overvalued, funds will be shifted to areas that are undervalued. I will tailor a financial plan for each client depending on whether the funds are for a retirement or taxable account and based on their investment goals and risk tolerances.
Many advisors simply buy a percentage of each asset class without making a determination as to whether it is a good buy. I use the valuation skills that I have honed for stock selection in determining which mutual funds to buy for my clients. I analyze the stocks that the funds own and the sector weightings in the fund. My knowledge of individual stocks helps me in selecting mutual funds. By applying my views on which stocks are undervalued, I can determine which mutual funds are best for my clients.
Others often make a mistake by failing to abide by the "diversification" principle. There are many potential asset classes in the world that should at least be considered when designing a portfolio for someone. Too many portfolios lack true world asset diversification. Having four U. S. large cap growth funds in a portfolio, for example, is not proper diversification. Because the funds will likely own the same or similar stocks, you are not spreading your bets in a way that avoids risk.
Annual compounded growth (2004-2009):
(assuming a $100,000.00 portfolio)
Naworski Investments:
S & P 500 Index:
Difference:
Annualized total return (2004-2009):
Naworski Investments:
S & P 500 Index:
Why Performance Matters
Performance is the most important factor in choosing a money manager. One would not buy a mutual fund with a poor performance history.
Long term performance of at least five years should be compared. The measurement period should cover both up and down markets--good economies and bad economies. The longer the measurement period the more reliable the past record is at demonstrating the money manager’s investment skill.
One can get lucky or unlucky over 1-2 years. Luck is eliminated over longer periods. One can be in the wrong sectors or right sectors for 1-2 years which will enhance or detract from their performance.
What is a good long term record? If the money manager has beaten the index by at least 3 percentage points per year, after deducting their fees they have done an excellent good job. For a $100,000 account, that would add $80,082 over ten years versus the index.
Very few mutual funds and money managers do better than their benchmarks over a long period. If they did, they would be anxious to tell you about their great record.
PERFORMANCE DATA: ASSET ALLOCATION ACCOUNTS
$165,105
$113,267
$51,838
8.7%
2.1%
37.3%
26.5%
-27.2%
-37.0%
12.1%
5.5%
15.5%
15.8%
13.0%
4.9%
12.9%
10.9%