North America Small Cap Fund – annual yield 15%

From the figure below, we can find the red remark 1 shows fund unit price decreased. From January, 2015, investor A could start to buy in North America Small Cap Fund with 40e per month. From red remark 2 we can find out that from January to March, 2016, fund’s unit price fell down dramatically, but investor A could continue buy monthly with same amount of money.

American presidential election had affected North American Small Cap Fund unit price. Because people started to worry about Trump’s victory and unit price started to decrease from October to November, 2016, as red remark 3 shows. Market generally didn’t look optimistic about Trump, and people even predicted stock market will decrease dramatically.

After Trump won, market suddenly rallied up. Within a month, market price increased about 40%. From January 2015 to November 2016, total investment was 900e. By then, every single transaction started to get positive yield. This is the signal that it is time to sell.

From 11.11.2016 selling out gradually. First transaction happened in July, 2015 and when it was sold, only gained 0,75e, yield rate is only 0,75/41=1,83%.

Sale date Buying date Selling price (€) Buying price(€) Gain/loss(€)
2016-11-11 2015-07-13 41.96 41.00 0.75
2016-11-15 2015-04-13 41.27 40.00 1.05
2016-11-15 2015-05-13 42.38 40.00 2.17
2016-11-15 2015-06-15 42.50 40.00 2.29
2016-11-17 2015-02-13 43.19 40.00 3.19
2016-11-17 2016-08-16 47.43 44.00 3.43
2016-11-18 2016-07-13 47.76 44.00 3.76
2016-11-22 2016-09-13 49.83 45.00 4.83
2016-11-22 2016-10-13 49.99 45.00 4.99
2016-11-23 2015-08-13 46.05 41.00 5.05
2016-11-23 2015-01-13 45.54 40.00 5.54
2016-11-28 2016-11-14 46.58 45.00 1.58
2016-12-01 2016-06-13 50.70 44.00 6.70
2016-12-01 2015-10-26 68.92 60.00 8.92
2016-12-05 2015-11-13 47.78 41.00 6.78
2016-12-07 2016-09-14 49.64 41.00 8.64
2016-12-08 2015-12-14 50.69 41.00 9.69
2016-12-08 2016-05-13 54.48 44.00 10.48
2016-12-09 2016-04-13 55.92 44.00 11.92
2016-12-09 2016-03-14 56.96 44.00 12.96
2016-12-12 2016-01-13 55.53 41.00 14.53
2016-12-13 2016-02-16 62.06 44.00 18.06
Total 1143.71 990.00 152.87

The later investor A sold, the higher of yield percentage. The last acquisition was sold with yield rate of 18,06/44=42,9%. As red remark 4 shows.

Total yield rate was 152,87/990=15,4%. Acquisition and selling lasted about two years. Annual average yield rate was about 15,4%/2=7,7%. However, because investor A used dollar-cost-average method, the totally effectively invested amount was actually 990/2=495e. It just offsets the two years duration. Therefore, annual average yield rate was 15,4%.

We may sum up a few main points:

  • Don’t’ believe the mainstream media that often predict market trend. Individual investor’s loss provides the salary and bonus for them. They gained the money from these accounts but didn’t protect those welfare and benefit.
  • Don’t stop buying when market decreases. This is the opportunity for you to lower your average cost largely.
  • When every acquisition has positive annual yield, you may think of selling out.
  • When you are selling out, it would be better to sell in several batches. This is in case after you sold in one batch, market continues increasing.
  • It is better to choose the acquisition with the minimal annual yield as your first batch to sell. Then gradually sell to acquisitions with maximum yield. In this way you may maximize your yield.

2 thoughts on “North America Small Cap Fund – annual yield 15%”

  1. I feel like more times than not the media’s predictions are often wrong. It’s usually a black swan event that the media and experts overlook and then try to look smart afterwards explaining why everyone was wrong. Oh well, that’s why I shut out the noise and stick with my plan 🙂

    1. Yes, sticking with own plan is a smarter way because principal is his own not others. One should take accountability of his own investment.

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