10 year total shareholder return - any studies?

[GG999]

Do you think it would be useful to study the total return to shareholders over a period of 10 years - data taken from Commsec (Morningstar) - basically look back at what information was available 10 years ago and what companies would you have bought, and what would have been your 10 year return?

And then, if it was possible to learn anything from such a study, one would apply these lessons to choices made now?

Main question - if this has been discussed or done in the past, does anyone have a link?

If it hasn't been done, is it worth having a go?
All sorts of complications with share splits, takeovers and obviously missing the younger companies etc etc - but would one learn anything do you think?

So far I've downloaded the 10 year total returns and separated into industry groups
If the market was efficient for people holding for 10 years then you would think that the total return from different shares bought 10 years ago wouldn't vary all that much - but obviously there is enormous variation - does prove that the market is very inefficient for this time frame?

e.gs Bluescope -9% Steamships Trading +43%

NAB +4% CBA +15%

Hills Holdings -6% Adelaide Brighton +17%

FKP Property -11% United Overseas +41%

I would be using Commsec/Morningstar info only going back to 2003 - probably need info going back much further so that one could study what the different stocks would have looked like back then.

Are there so many variables that people think it's just not worth trying to do such a study?

 

[burglar]

... If it hasn't been done, is it worth having a go? ...

In the midst of your ten years was a "one in a hundred year" event!
Study what you will, learn what you can!
I won't go there.
Lived through it, moving on!

 

[So_Cynical]

I don't know of any Studies or 10 year specific discussion...sure something can be learned, but i doubt there's much value to be had in trying to guess what you would or mite of done 10 years ago.

Any broad look at 10 year charts will show 3 main events.

• The bull market run up from 2003 to xmas 2007/8
• The GFC crash 2008 and early 2009
• The Post CFC recovery from mid 2009 onwards

If nothing else its a good guide to what stocks look like when they are over valued and under valued, and a guide to the extremes of market behaviour.

 

[Julia]

Do you think it would be useful to study the total return to shareholders over a period of 10 years

With what aim in mind?

 

[Bill M]

Do you think it would be useful to study the total return to shareholders over a period of 10 years - data taken from Commsec (Morningstar) - basically look back at what information was available 10 years ago and what companies would you have bought, and what would have been your 10 year return?

Are there so many variables that people think it's just not worth trying to do such a study?

To be honest I think it would be a waste of time to do such a study. The thing is that there are so many factors influencing individual companies that there is no one rule for all. Companies go bust all the time and to devote any study to that is a waste of time.

I would be more inclined to do a study on the index itself or another sector specific sector ETF. The ETF's IMHO seem to give you a better picture. The reason being is that they simply drop companies that go bust or don't perform from the index and puts those in that do. In other words those that are there are there because they remain profitable, pay dividends or are in the top 200. Study the sector that you are most interested in, be it resources, financial, top 200 etc. no use studying something that went bust 10 years ago.

It probably doesn't answer your question. What I do myself now is buy specific ETF's that keep good companies within the portfolio. If the companies fail they get dropped from the ETF, only the good survives. When the market drops as a whole like it did during the GFC then I load up.

As a exercise go to the Vanguard site. Check the performance of the ASX 300 unlisted fund. It is the same fund as the listed one VAS, but the listed one has not been around as long as the unlisted one. They will have 10 years of records there. Cut out the hard work and study the index you might be interested in. I am not suggesting buying the index but I think it gives a better picture as a whole of the market rather than individual stocks that may or may not be around anymore.

All just a thought, good luck.

 

[GG999]

In the midst of your ten years was a "one in a hundred year" event!
Study what you will, learn what you can!
I won't go there.
Lived through it, moving on!

Yes, that's very true - I agree that the GFC is yet another complicating factor

 

[GG999]

I don't know of any Studies or 10 year specific discussion...sure something can be learned, but i doubt there's much value to be had in trying to guess what you would or mite of done 10 years ago.

Any broad look at 10 year charts will show 3 main events.

• The bull market run up from 2003 to xmas 2007/8
• The GFC crash 2008 and early 2009
• The Post CFC recovery from mid 2009 onwards

If nothing else its a good guide to what stocks look like when they are over valued and under valued, and a guide to the extremes of market behaviour.

Yes, good points.
Probably in the next 10 years we'll have other bull markets and a crash or two. Those stocks that didn't give a return to shareholders - was there any warning signals 10 years ago that could have been recognized? And for the stocks giving very large returns - the people who invested in them did very well - did they recognize the value or were they just lucky

 

[GG999]

With what aim in mind?

I'd like to improve my chances of choosing shares that when held for a long period will give a return higher than the market in general. And avoid as many as possible of the shares that give a poor return.

 

[sydboy007]

I was justg reading an article about long term investing - can't remember if the SMH or macroinvestor - and they were showing how boring companies eg a tobaco, colgate palmolive, and a couple of others had produced quite outstanding capital growth of 500%+ along with dividends over the time period.

The argument of the story was that sometimes it's better to invest in companies that don't have to constantly reinvent themselves eg apple pretty much need sa new latest and greatest every couple of years or it's toast, whereas toothpaste is toothpaste, though were are seeing more and more premium pastes out there too.

As long as a company is well run and you can see EPS growth then I'd say it's the kind of company you want to hold on to.

 

[burglar]

I was justg reading an article about long term investing - can't remember if the SMH or macroinvestor - and they were showing how boring companies eg a tobaco, colgate palmolive, and a couple of others had produced quite outstanding capital growth of 500%+ along with dividends over the time period.

The argument of the story was that sometimes it's better to invest in companies that don't have to constantly reinvent themselves eg apple pretty much need sa new latest and greatest every couple of years or it's toast, whereas toothpaste is toothpaste, though were are seeing more and more premium pastes out there too.

As long as a company is well run and you can see EPS growth then I'd say it's the kind of company you want to hold on to.

Can you guess who will be the next "Johnson & Johnson"?


No! Neither can I.

 

[FlyingFox]

I'd like to improve my chances of choosing shares that when held for a long period will give a return higher than the market in general. And avoid as many as possible of the shares that give a poor return.

I have been thinking about this as well and was the point of another thread on detecting trends. My personal view is that while you will get some info from looking at the performance of stocks, it may not necessarily tell you everything about future performance.

Hopefully by picking up on trends, you can invest at times when the stocks are truly undervalued and also get out before the trend turns. Just my theory.

 

[FlyingFox]

Can you guess who will be the next "Johnson & Johnson"?


No! Neither can I.

We can try

 

[colin g]

Do you think it would be useful to study the total return to shareholders over a period of 10 years - data taken from Commsec (Morningstar) - basically look back at what information was available 10 years ago and what companies would you have bought, and what would have been your 10 year return?

And then, if it was possible to learn anything from such a study, one would apply these lessons to choices made now?

Main question - if this has been discussed or done in the past, does anyone have a link?

This isn't exactly what your after, but it's along the same lines and might give you an idea at how to look at the data:
In Investing, It’s When You Start And When You Finish

 

[skc]

Are there so many variables that people think it's just not worth trying to do such a study?

Before you spend your time doing the study yourself, do a search on google scholar and I guess you will find plenty of studies on the topic trying to explore what generates alpha / above market returns.

Chances are you will find very generic list of "criteria" explaining outperformance - low debt, competent management team, attractive industry etc. While it's easy to identify some of the more objective metrics (i.e. financials), the subjective metrics (like competitiveness of technology and quality of management) are quite difficult to pin down.

It may tune your brain to know what to look for, but you will need to build more knowledge and experience to know what you are looking at. And ultimately, your list will start to look like a basic fundamental analysis 101 book anyway.

 

[GG999]

This isn't exactly what your after, but it's along the same lines and might give you an idea at how to look at the data:
In Investing, It’s When You Start And When You Finish

Many thanks, will have a good look at that

 

[GG999]

This isn't exactly what your after, but it's along the same lines and might give you an idea at how to look at the data:
In Investing, It’s When You Start And When You Finish

That was really interesting Colin g, thank you
I'm surprised that they didn't give critical info on how the returns are calculated e.g 'includes fees' - what fees? They could make a lot of difference over long periods of time. People already know that if you get index-like returns then you should make sure that you're not in a fund that has sizeable fees