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Tony Seba Winners Take All - Virtual Investment Portfolio
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Copyright @Tony Seba - 2008 - All Rights reserved
Applying The Lessons of 'The 9 Fundamental Rules' to the stock market:
- The Winners portfolio is up 94.46%
- The Comparables portfolio is up 1.14 %
- The Market is up 17.85%
What's the story of these virtual portfolios?
Sometime during March of 2005 my book agent asked me how I could prove (to publishers) that the 9
Fundamental Rules worked. That was a great question, so I decided to put together a virtual portfolio
based on companies that I wrote about or thought applied the 9 Fundamental Rules. I called this the
'Winners - 9 Rules' virtual portfolio (short for 'Winners Take All - 9 Fundamental Rules of High Tech
Strategy' of course.) I also thought I needed to have a comparison portfolio with companies that are
competitive or comparable with the ones above (Apple vs. Sony, Google vs. Yahoo, etc). I called this the
'Comparables' portfolio. Finally I wanted to compare both with the market.
I 'invested' about $10,000 virtual dollars in each company on or around April 1st 2005. (No real money
changed hands). The portfolios are displayed below. I want to remind everyone of the educational
purpose of these portfolios. I hope it's a learning experience for the readers as much as it has been for
me. Please read the legal DISCLAIMER below. I also add some comments to the portfolios.
DATA below is as of June 13, 2008.
- The Winners portfolio is up 94.46%
- The Comparables portfolio is up 1.14 %
- The Market is up 17.85%
What's the story of these virtual portfolios?
Sometime during March of 2005 my book agent asked me how I could prove (to publishers) that the 9
Fundamental Rules worked. That was a great question, so I decided to put together a virtual portfolio
based on companies that I wrote about or thought applied the 9 Fundamental Rules. I called this the
'Winners - 9 Rules' virtual portfolio (short for 'Winners Take All - 9 Fundamental Rules of High Tech
Strategy' of course.) I also thought I needed to have a comparison portfolio with companies that are
competitive or comparable with the ones above (Apple vs. Sony, Google vs. Yahoo, etc). I called this the
'Comparables' portfolio. Finally I wanted to compare both with the market.
I 'invested' about $10,000 virtual dollars in each company on or around April 1st 2005. (No real money
changed hands). The portfolios are displayed below. I want to remind everyone of the educational
purpose of these portfolios. I hope it's a learning experience for the readers as much as it has been for
me. Please read the legal DISCLAIMER below. I also add some comments to the portfolios.
DATA below is as of June 13, 2008.
Comments on the 'WTA 9 Rules' portfolio.
There are 15 stocks in this portfolio - 10 out of 15 stocks are out-performing the market while just 3 are
in negative territory. The portfolio gain is up to 94.46% which is, about 93%
above the gain of the 'Comparables' portfolio (1.14% - see below) and more than 77
percentage points above the market performance (17.85% see below.) An interesting point: 4 stocks
have more than doubled and 2 stocks have gained 300+% (in order: Salesforce.com (400%), Apple
(309%), Google (214%) and Netflix (195%).
Note: I only included public companies in the portfolio. However, many of my 'Winners Take All' book
cases were private as of April 2005: Skype, StarMine, Clickability, Craigslist. Skype was acquired by eBay
and Starmine was acquired by Reuters. We can only imagine the portfolio gains if I had added them!
I remind the reader that my book is about building winning products and great companies. It's not about investing
or about building stocks. This whole exercise was about testing the predictive power of The 9 Fundamental
Rules of in real-life, competitive, fast-changing markets. One would hope that by building great
companies the stocks will follow (although this is not always the case!)
Here's what I like about the 'WTA 9 Rules' portfolio: 10 out of 15 companies are out-performing the
market. Sure, the 94% portfolio gain is great and probably beats most investmen funds out there.
However, I really like the fact that the rules apply broadly as well as deeply. Just to compare: a portfolio
will do well if one or two stocks are substantially up even when all the others go down. For instance, let's
assume you invest $10,000 in each of 10 different stocks. 9 go down by 90% each (so you get back ten
cents on the dollar) and one goes up by 1,550%. The portfolio as a whole would be up 92%. If you are a
portfolio manager you would be doing fine. However, if you're a company manager, employee, or
shareholder of one of the other 9 companies that went down, you would be out of luck (and probably out
of a job!) The latter portfolio doesn't show you know how to build a great company. The goal of my book
is to have rules, strategies and tools that work broadly - across the board.
There are 15 stocks in this portfolio - 10 out of 15 stocks are out-performing the market while just 3 are
in negative territory. The portfolio gain is up to 94.46% which is, about 93%
above the gain of the 'Comparables' portfolio (1.14% - see below) and more than 77
percentage points above the market performance (17.85% see below.) An interesting point: 4 stocks
have more than doubled and 2 stocks have gained 300+% (in order: Salesforce.com (400%), Apple
(309%), Google (214%) and Netflix (195%).
Note: I only included public companies in the portfolio. However, many of my 'Winners Take All' book
cases were private as of April 2005: Skype, StarMine, Clickability, Craigslist. Skype was acquired by eBay
and Starmine was acquired by Reuters. We can only imagine the portfolio gains if I had added them!
I remind the reader that my book is about building winning products and great companies. It's not about investing
or about building stocks. This whole exercise was about testing the predictive power of The 9 Fundamental
Rules of in real-life, competitive, fast-changing markets. One would hope that by building great
companies the stocks will follow (although this is not always the case!)
Here's what I like about the 'WTA 9 Rules' portfolio: 10 out of 15 companies are out-performing the
market. Sure, the 94% portfolio gain is great and probably beats most investmen funds out there.
However, I really like the fact that the rules apply broadly as well as deeply. Just to compare: a portfolio
will do well if one or two stocks are substantially up even when all the others go down. For instance, let's
assume you invest $10,000 in each of 10 different stocks. 9 go down by 90% each (so you get back ten
cents on the dollar) and one goes up by 1,550%. The portfolio as a whole would be up 92%. If you are a
portfolio manager you would be doing fine. However, if you're a company manager, employee, or
shareholder of one of the other 9 companies that went down, you would be out of luck (and probably out
of a job!) The latter portfolio doesn't show you know how to build a great company. The goal of my book
is to have rules, strategies and tools that work broadly - across the board.
Comments on the 'Comparables' portfolio.
Both PalmSource and Siebel Systems have been acquired. The prices shown are as of acquisition time.
(1) PalmSource acquisition offer represented 83% premium over the market price Sept 8, 2005. See
Press Release.
(2) Siebel acquisition price of 10.66 represented 17% premium over then market price. See news.
This 'Comparables' Portfolio at 1.14% is basically at the same level it was at inception. It's more than 16
points below market performance (17.85% -see below) and far below the 'Winners - 9 Rules Portfolio'
(which gained 94% - see above.) There are 13 stocks in this portfolio, of which only 4 are out-perfoming
the market and 9 are under-perfomers. HP at 116% gain is the best performing stock while PalmSource
with a gain of 98.71% (83% represent the acquisition premium) comes in second. The worst performing
stock was Borland which lost 84.57% of its original value while Palm Inc lost 72.78% of its value. Two of
the companies here were acquired vs. none in the 'Winners - 9 Rules' portfolio.
An interesting point: 7 stocks are in the red of which 4 stocks have shed 60% or more of their value. On
the positive side, 2 stocks have about doubled: HP and PSRC.
Both PalmSource and Siebel Systems have been acquired. The prices shown are as of acquisition time.
(1) PalmSource acquisition offer represented 83% premium over the market price Sept 8, 2005. See
Press Release.
(2) Siebel acquisition price of 10.66 represented 17% premium over then market price. See news.
This 'Comparables' Portfolio at 1.14% is basically at the same level it was at inception. It's more than 16
points below market performance (17.85% -see below) and far below the 'Winners - 9 Rules Portfolio'
(which gained 94% - see above.) There are 13 stocks in this portfolio, of which only 4 are out-perfoming
the market and 9 are under-perfomers. HP at 116% gain is the best performing stock while PalmSource
with a gain of 98.71% (83% represent the acquisition premium) comes in second. The worst performing
stock was Borland which lost 84.57% of its original value while Palm Inc lost 72.78% of its value. Two of
the companies here were acquired vs. none in the 'Winners - 9 Rules' portfolio.
An interesting point: 7 stocks are in the red of which 4 stocks have shed 60% or more of their value. On
the positive side, 2 stocks have about doubled: HP and PSRC.
Comments on the 'Market Indices'
The blended market is up 17.85%. This is the performance since April 1, 2007. The Nasdaq at 22.17% is
outperforming the Dow at 14.61% and the and S&P 500 (14.61%).
The blended market is up 17.85%. This is the performance since April 1, 2007. The Nasdaq at 22.17% is
outperforming the Dow at 14.61% and the and S&P 500 (14.61%).
| This is a portfolio that accompanies the book "Winners Take All - 9 Fundamental Rules of High Tech Strategy" for educational purposes only. We do not recommend, advocate or urge the buying, selling, or holding of any financial instrument whatsoever. Trading and investing involves high levels of risk. The authors express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The authors may or may not have positions in the financial instruments discussed in this website, book, and newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future performance. |
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