The Soc Gen Trend Index is usually applied as a benchmark expectation, https://wholesale.banking.societegenerale.com/en/prime-services-indices/ The index, in the past 21 years gained about 190%. If we assume linear performance growth, that means an average of 9.05%~ per year. If we assume they re-invested/compounded performance every year, then the average annual return becomes 3.11%~. Therefore I'm sorry the 20% per year, every year, is only achievable if you have a significant edge against the average trend following fund.
Yes, it is very ambitious and only the very few will be able to achieve this return on average. Elite = selection of the few, see page 16 of this thread where I posted the resignation letter of all-time great Bruce Kovner (21% per year return over 28 years). "Shooting for it" of course does mean it has to be achieved. If the returns would be subpar aka below 10% per year, I'd refrain from the game completely. But it is a fascinating topic. In general, most professional money managers, no matter what investment style the follow, fail to outperform the S&P 500 over a period of 10 years or more. Its performance in the 20th century on a US$ basis is around 10% per year dividends included .
Speaking of edges as a potential private investor who does not nor will ever access to insider knowledge - the only guarantee of returns (far) above average market returns - most of us are probably not mathematically gifted nor able enough to analyze company's balance sheets (party due to time reasons for those who work a regular "9 to 5" job) in the search of alpha. Black Jack & Investing legend Ed Thorp did very well, he ran an investment partnership twice, and in both cases was able to realize an annual return of more than 18 % per year with almost no draw down (the maximum peak-bottom loss was less than 1%). Here's an excerpt from the linked article, "Other winning strategies include superior security analysis by the gifted few and the methods of the better hedge funds." which of course includes Warren Buffett's holding company Berkshire Hathaway. https://macro-ops.com/lessons-trading-great-ed-thorp/ Warren is 90 years old and may not live much longer, but if he'll amass another giant stake in a company like he did beginning in 2016 with Apple (ticker symbol AAPL), it may be last time for an amateur investor to copy a Buffett investment by investing a big chunk of his / her personal net worth in the same company. This is from november 2017 when he gave a crystalclear signal that Apple is the way to go while he dramatically reduced Berkshire's position in IBM - which has seen its share price decline since then. https://www.businessinsider.com/apple-stock-warren-buffett-2017-11?r=DE&IR=T
Tesla (ticker TSLA, ISIN US88160R1014) has seen a massive increase in its share price post ipo (took place 2010). ARK Investments founder Cathy Wood, Ron Baron and some others are extremely bullish on this company, partly because they've built up big stakes in it and of course profit from a rising share price. The recent extreme volatility in Tesla, it has now lost almost 40% of its peak market value (ATH so far was 900 US$, on Jan. 25th 2021, shares closed @ 598 on friday Feb. 5th), I consider this a possible sign of a top. I think Tesla is not a buy right now, and think its shares may drop to around 200 US$. If this happens, this may represent a good long term buying opportunity.
Tesla part II . Why may it be a good buy at around 200 U$ ? Simply because Cathy Wood has developed three scenarios for the price in 2024 - 3 years from now on, note however that the share price in the graphic are pre-split, thus the prices displayed have to be divided by 5. Another words, the bear scenario values the shares @ around 300 US$, the bull scenario @ around 1,400 U$ and the superbull scenario @ around 3,000 US$ in 2024. If the bear scenario plays out, it'd mean around 50% appreciation potential until 2024 for Tesla based on Cathy Wood's pessimistic scenario if Tesla would drop to 200 US$ this year.
I've done the calculation on the S&P 500 for the timespan 01/1900 - 01/2021 with dividends reinvested, and the return would have been slightly below 10%. This means, had a low cost index fund on this index been available in 1900 (the first one was actually introduced to the public in 1975 with a relatively high yearly expense ratio of around 0.5%) with almost no fees, a net worth passed from generation to generation would have compounded at almot 10% per year, before inflation. This yearly increase in net worth is without a doubt impressive, but of course not spectacular, however, most professional money managers fail to generate alpha, as will most private investors. American citizens have access to the lowest cost index funds available on the S&P 500, with a yearly expense ratio of only 0.03% (Vanguard & Blackrock offer them) ! Add to this that discount brokerages offer all ETF purchases for free, the total cost of ownership (brokerage fees + fund fees) can be reduced to around 0.05% per year. That is, if you invested for a full 50 years in the broad american stock market, it'd only cost you 2.5% in total expenses. It's probably the best option for many folks if they have at least 25 years or more before them. Ideal would be to save as soon as one can, without trying to time the market. Ed Thorp, maybe one of the smartest folks around, suggests so, as of course does Warren Buffett. What may be a sensible idea aka "middle road" for investors wanting to go the route "active" aka place bets on the future direction of stocks, currencies etc ? 20% per year is probably too ambitious, but 15% per year may be in the cards with a lesser edge.
Back to trading / potential investment ideas. The company I today present is Altria (ticker symbol MO, ISIN : US02209S1033), it's currently yielding 7.6% per year and looks very strong technically. I think its share price will reach its all-time high again within the next 6 years and thus believe it's a bullish setup, the shares currently trade at around 48.20 US$ .
There are numerous websites that collect data from 13-F filings (demanded by the SEC from investment partnerhsips with > 100 million US$ in AUM, certain securities are not required for reporting) in order to give insight into the stock holdings of alpha generating fund managers aka the few star fund managers, this is a good, free source, URL -> https://www.dataroma.com/m/home.php
Larry McDonald saw his wealth, largely tied to Lehman Brothers stock, evaporate when his employer went bankrupt in 2008. He has bounced back, "A collosal failure", his recount of what led to this century's biggest bankruptcy, has sold well and here he gives an outlook on various markets. I don't think he's a top-notch analyst like Barton Biggs was or current market wizards are, but he's got experience and some convincing points he makes, quote "So if inflation expectations continue to rise, then real yields go big negative – and that’s when gold and silver will take off. I think silver can double from here until early next year. Gold could be up 50%." URL -> https://www.zerohedge.com/markets/l...t_9-oC9M2GbXSmPWXtfC7UT-evNmJOqLjUfwwBqKOtKJE
I'm bullish for the currency pair US$ vs CHF (USDCHF on tradingview), it's currently trading @ around 0.9400 . I think parity, around 1.00, may be in the cards until 2022. This pair has a positive swap - you earn a little interest income daily right now, here's another good website that shows spreads & swaps on diverse currency pairs -> https://forexop.com/swaps/USDCHF/