As I mentioned in last years review, I really came to realize that all-time investment performance is heavily dictated by the most recent years performance. It’s just the nature of compounding. A really good or really bad year now will greatly influence my all-time performance, just because I am now dealing with much larger numbers. A 50% swing one way or another when your portfolio is worth $1M vs $10,000 moves the needle a ton and dwarfs all of the moves that were made in all of the years leading up to it. So bottom line one shouldn’t get too confidence or discouraged looking at long term annualized result as its greatly influenced by recent returns, which is kind of goofy.

So in that vein my all-time annualized stock return fell from 22.65% to 15.33% – which honestly is still quite spectacular and honestly higher than I had expected. The calculated risks that I talked about last year have at least in this short period of time looked like dumb decisions – keeping nearly half of my nestegg in a stock that is down 69% in the last year. Trust me I would love to have the few extra million that I had on paper last year, but this is a marathon and not a sprint and I still feel like long term I will outperform the market with these calculated risks.

I do however and have always acknowledged that I think I am probably more lucky than skilled and going through another one of these downturns will probably make me re-evaluate my investment allocations going forward. Not so much because I think that the approach is wrong from a profit maximizing standpoint, but from a risk/reward standpoint taking added risks and them paying off does not meaningfully affect my life where as if it turns out I am indeed just a lucky moron and I am completely wrong on most things going forward it can affect my life.