20 responses

  1. Aloysa
    January 21, 2011

    You know, it’s a shame but I don’t know how my portfolio is performing. We have 401K plans and I check the balances fom time to time, and all I care is if we are making anything. So far we were okay (not too bad, not too good). I know how lame it sounds. In the begining we did thought it through and analyzed and invested. After that – we did not do a thing.

    I really enjoyed reading your post. Today I discovered something new for myself. Thank you for sharing. I am going to check out this book. Sounds fascinating!

  2. retirebyforty
    January 22, 2011

    I have to admit I don’t know my APY… I know how it did in 2010, but I don’t keep a good enough record year to year. :(
    I’m staying tune for the next post!

  3. Robert @ The College Investor
    January 22, 2011

    Considering I’m a die-hard investor, I do know my exact annualized return:
    1yr – 20.43% vs. 17.47% for S&P500
    3yr – 6.21% vs. -1.42% for S&P500
    5yr – 5.39% vs. 0.87% for S&P500

    Whether or not you agree with their marketing, these ladies did know how to invest!

  4. moneycone
    January 22, 2011

    @Aloysa: Thanks for your support, I really appreciate it. Investing is a life-long learning experience. We all learn something new everyday. Calculating annualized returns involves a little bit of math, but I’ll make it really simple. I’ll be doing a follow up in the coming weeks.

    @RB40: Annualized returns should be something the brokers should provide. It’s a shame most don’t.

    @Robert: You are doing pretty good! And yes I agree, these ladies know how to invest! It was really sad to see some of the comments this book received in Amazon. These folks are better of following a Cramer.

  5. everyday tips
    January 22, 2011

    I felt so bad for the Beardstown Ladies!

    I do not know our APY either. I do have a goal of sitting down and going through everything in the next month or so and seeing where we stand.

    Great post Moneycone, I kind of forgot about the BL. Thanks for the reminder about tracking our investment more closely.

  6. moneycone
    January 22, 2011

    @Everyday Tips: You are welcome Kris!

  7. Squirrelers
    January 22, 2011

    Thanks for sharing. I recall this story, but it’s been a while so many people a bit younger might not have been familiar. Good story to learn from on many levels. Know how to calculate your returns, no question about it. It’s important not as much for credibility as in their case, but to know how your past strategies worked so you can make the right adjustments going forward.

    I still give these ladies credit, they took the initiative to do all this and they still got decent returns. I didn’t know that they continue to meet – that’s kind of cool!

  8. moneycone
    January 22, 2011

    @Squirrelers: Oh definitely!

    Apparently, the club is doing pretty well. The ladies simply don’t reveal the returns any more! Some of them passed away, some new members were added, but they continue to meet!

    It is actually quite fascinating, though rather unfortunate what happened. The media was brutal after the fall. Remember this was right during the boom time when pundits were claiming the old ways of judging companies are no longer valid and Buffet was a bad word!

    Time even carried an article titled “Jail The Beardstown Ladies”.

  9. LifeAndMyFinances
    January 22, 2011

    Nice article! These ladies remind me of Warren Buffett and the old school approach to investing. No matter how many computer models claim that their system is unbeatable, I think the best way will always be to look into the company, observe their operations, and get to know the management.

  10. 101 Centavos
    January 22, 2011

    Nice trip to the not-so-wayback machine. I remember the Ladies, it was just an honest mistake. I started paying very close attention to our investments in early 2009. I track our annualized returns on a simple spreadsheet.

  11. Money Reasons
    January 22, 2011

    I read both of their books (including the 2nd one, “Stitch In Time”). Yeah the math was bad, but the concept was great! I wish I didn’t work where I worked at, I’d love to form an investing club!

    I use to know my return, but once the market crashed I stopped (too depressing)…

  12. Roshawn @ Watson Inc
    January 23, 2011

    That’s a phenomenal return and story. It’s just so inspiring when people buck the trend and do something significant, often in spite of things that most people would count as limitations (lack of professional training, age, etc.) Thanks for sharing!!!!

  13. DIY Investor
    January 23, 2011

    I don’t know man I need some help here. Their reported results were approximately 5% per year or 2% per year below the market depending on which time frame you’re looking at. Actually 5% below the index is what the typical investor does according to the Dalbar data. For those who think that’s good performance you will truly be amazed at low cost index fund investing.
    I agree that every investor should know their time-weighted-return and look forward to your future post.

  14. Jackie
    January 24, 2011

    Count me in as one of those who isn’t confident that I’ve calculated my returns correctly. I wish there were an easy way to figure it out!

  15. Jessica07
    January 24, 2011

    By the way, this was a wonderfully written post–both entertaining and enlightening. I just realized I immediately included it in our round-up, but hadn’t taken a moment to comment on it. I really did like this post. :)

  16. moneycone
    January 24, 2011

    @LifeAndMyFinances: Very true! Bill Gates, who is a very good friend of Buffet, wanted him to invest in Microsoft. Buffet refused. Buffet doesn’t understand computers as well as Coca Cola and he said no to one of the largest company in the world!

    These women’s investment strategies were similar but on a smaller scale.

    @101: Good for you!

    @MR: If you still have the book, I’d love to read a review

    @Roshawn: Glad you liked it!

    @DIY: Low cost index funds with good asset mix and regular rebalancing works wonders. All you need is some patience!

    @Jackie: An idea for your next iPhone app!

    @Jessica: No problem! Thanks for the link love and glad you liked it!

  17. The Biz of Life
    January 26, 2011

    The Beardstown Ladies certain had honorable intentions and didn’t intend to mislead anyone. They just weren’t very good at math. However, the publisher is the one at fault and should have verified their claims prior to accepting the book for publication. Shame on them. There’s plenty of software out now that will accurately calculate your annualized performance.

    Life so many of the pro money managers, the Beardstown Ladies didn’t beat the indexes over a prolonged period of time.

  18. moneycone
    January 27, 2011

    @Biz of Life: Agree, the publisher should’ve verified before making that claim – on the cover that too!

    And this wasn’t some unknown publisher who was new to the publishing business. This was Hyperion, a Disney company!

  19. DIY Investor
    January 27, 2011

    Part of the problem is that people want desperately to believe. After all what could be better than nice old ladies kicking Wall Street’s butt?

  20. optionsdude
    April 4, 2011

    I have used the internal rate of return function on the Excel spreadsheet to calculate my return. It took a while for me to figure out how to input the formula properly, but now that I have it, it works like a charm. Recently, my brokerage has started doing this for my retirement accounts so it is nice to have it already done. It is quite convenient and matches my calculations as well.

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