Two Year Self Invested Stocks ISA Account Performance Review – Still Beating The Market 1


How time floes. In two weeks time, I will be celebrating my 2nd anniversary of my active stocks and shares ISA portfolio. Over this time, we have had the Greek Crises, the oil crises, the commodities crises, the Chinese crises, rate increases, emerging market slowdowns, Brexit, populism and the trump bump. Yet it still feels like its only yesterday that I took charge of my own money and bought my first stock.

With my portfolio and tax year ends quickly approaching, now seems a good time to analyse my performance over this period. I need to know if actively investing by picking my own stocks has been a good choice or if I would be better of sticking my money in a low cost index fund.

The last time I did a performance review – a year ago – I comfortably beat the market.In that review, I received a return of 4.5% whilst the market average was -8% My outperformance was over 13% and here is hoping it continues.



2 Year Stocks Portfolio Return VS The Market

Let’s start with the low cost index funds first. Since 6 April 2015, the FTSE 100 has returned 14% including dividends. The S&P500 has returned 17% and the FTSE World all world share Index returned 23% in this same period with dividends reinvested. Not bad.

Turning to my own portfolio, I returned 35%! Yes, I beat the best performing low cost index funds by 12%. And I did this with having a lower drawdown and lower average volatility than the market. Not bad if I say so myself.

This is the second year in a row I have outperformed and I am currently up 2 – 0 VS the market. If this does not give you confidence that individual stock picking is better than index investing in an overvalued market, I don’t know what will.

How I Beat The Market?

It is no secret as to how I beat the market 2 years running. I catalogue all my purchases in the my journey section of this site. Regular readers will know that I like to buy high quality companies when they are cheap.

Take Royal Dutch Shell (RDSB) for instance. I bought it in December 2015 and January 2016 when it was extremely hated by the market. There were fear over Shells debt load once the BG acquisition was complete. There were also fears that oil might go to $10 a barrel. Instead of listening to analyst perceptions or the media i.e. noise , I went and dug out Shells historical annual reports and studied the company for myself. I learned how the business operates, its strategy for a low cost oil environment and the cyclicality of its profits. I learnt how profitable the company is, how much Free Cash Flow it generates, its emphasis on Return on Invested Capital and its dividend history which goes back 50+ years. All this lead me to believe that Shell was deeply undervalued.

I bought RDSB at an average price of £15 with most of the money I had at the time. The dividend yield was 10% at the time meaning that if Shell never cuts its dividend going forward, I get a guaranteed annual return of 10% before any capital appreciation. Studying Shell, I recognised that its pay-out was safe and that is why I jumped in. The rewards far outweighed the risks. It was a sweet deal! In the stock market, you need to take risks and it is your job to figure out which risks you’re willing to take and which ones are unnecessary or avoidable.

“Risk control is the best route to loss avoidance. Risk avoidance, on the other hand, is likely to lead to return avoidance as well.” – Howard Marks

Today, RDSB trades at £22.30. My capital gain so far is 45% which is just a bonus. I am in it for the dividend. The dividends paid out to me, including the payment I will receive in a weeks time, total £450. This is a total gain so far of 57%. And the best part is the Shell story in my portfolio is just beginning! I cannot fathom what the total gain will be in 5 or 10 years time, let alone 20 years time.




Shell is only one example of a company whose share price did not reflect the fundamentals of the business. Other undervalued stocks I bought include Zambeef, Astrazeneca, G4S and Burberry to name just a few. That is the trick to being successful – buying high quality at low prices.

Whilst it is always great tackling about successes, I do have to talk about the stocks I bought that have not yet worked out. The laggards in my portfolio include Cobham, BT and Pearson. Whilst their share prices have certainly come down from my initial purchase price, I have no regrets about purchasing the, I think these companies are currently being undervalued by the market and future performance will reflect that. The great part of having a diversified portfolio is your winners will more than compensate for your losers and this gives me time to be patient and let the losers turn into winners.

In a couple of weeks time, I will be writing an article on my ISA strategy for the 17/18 tax year. I will be detailing 3 key factors that individuals should use to build long-term wealth via the stock market. Be sure to check back and read that article.

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