Ditto @Slew. Strawman has been my research lab for the past 12 months. I’ve learnt a lot from the community about different styles of investing and different perspectives, and have had a lot of fun along the way!

Typically (IRL) I invest in profitable businesses with growing earnings and a high ROE that pay some dividend and are fair value. I sell businesses if they get too pricey. IRL my largest holding is BHP, at one stage it was 50% of my holding. I don’t hold BHP at all in Strawman at the moment. It wasn’t the right time to buy BHP when I joined, in fact I think I was reducing BHP IRL not long after I joined.

To date, I have used Strawman to experiment with unprofitable businesses with high sales growth (the so called ‘growth stocks’). I can’t say I done well out of any of these companies. Most I’ve now sold at a loss. This could be much to do with the timing of joining Strawman (Feb 21) when growth stocks were hot, and exiting with in the era of inflation when unprofitable growth stocks are in the dog house.

Basically, I’ve learnt that I have no idea what I’m doing when it comes to unprofitable businesses! I’m mostly a speculator buying a CEOs story about the big sales and profits to come. I seemed to buy the growth stocks where the profits were like the carrot and the donkey. I was the donkey and the carrot seemed get further away with each ASX announcement! :D

So apologies fellow Straw People, I’ve helped to move the index down over the past 6 months! My challenge now is to select stocks to get me back to $100k when I’ve got a -5% handicap! Wishing all Straw People a much smoother ride over the next 6 months!

Cheers

Rick

If I were going to ever get a tattoo, that image would be in my shortlist. Right on the bicep so the carrot swings back and forth when flexing.

Hey, at least we're above the tech index, right? ;)

I'll put some thoughts together on this when I get the chance.

But also interested in how others think about this.

Hi All

I am a believer that style, risk and luck play a big part in medium term performance. since i whinged that growth stocks were being flattered by an unbelievably low cost of capital for the last few years, it is of little surprise to me that such a speculative portfolio such as SM, u/p during a huge risk off period. i suppose it shows there are few market timers in SM? market timing is of course is quite hard-getting it right both ways, most appear LT investors. personally i am more interested in any opportunities that this sell off throws up. do the work now because you will have little time when it turns. i would love small/micro prices back at 2016/17 levels. thats my 2c.

Yeah definitely a "high beta" portfolio. And certainly the index methodology plays a big part (for better or worse).

We have considered changing methodology in the past, but it feels a bit like moving the goal posts and "curve fitting" the data to suit a narrative.

Of course individual member portfolios won't suffer from this, and is a direct signal as to what each person person is thinking.

There is a lot of group think on Strawman and the index is incredibly weighted towards small/micro cap technology with a lot of these companies being unprofitable. I own a few of these in my Strawman portfolio and I’m not saying they aren’t good companies at all, but with the index so strongly weighted to what may be described (fairly in my view) as the riskier end of the market there is bound to be significant volatility. We saw the index dramatically outperform when these small tech companies had a great run and now the reverse is true. The true test over time will be how these businesses perform - this will determine the success (or otherwise) of the index.

Definitely shouldn’t change the method around the index. The reason it feels like “moving the goal posts and curve fitting the data to suit a narrative” is because that’s exactly what it is. A few people pointed to the significant market outperformance during the good times and there was no thought about changing the methodology then, there should be no thought about it now when things get a bit tougher. Authenticity is really important here.

I also don’t think it is such a good idea to change how the Strawman index is constructed or suddenly give out more notional capital to use for profiles. However I must admit I was curious the other day how a different type of index would look right now.

Given we have had a bit of a market slump lately I was thinking the longer term records might be starting to reflect more realistic returns. It crossed my mind if there was a filter say for example the top 20 members performance with records over 24 months, I was wondering what might be the most popular 10-20 stocks that they are picking out?

Perhaps such stocks might turn out well? But then again maybe not?! Could just be an interesting list to filter but not necessarily having to create an index in itself.

Authenticity is everything.

Not sure what we even have without that. Not much I suspect.

On one hand, my view is that these periods are inevitable with small cap investing. You don't get several years of 30%-plus compound annual returns without some mean reversion eventually.

And it's hard to think of a successful long term investor who hasn't lived through more than a few rough patches.

On the other hand, over a relatively short sample period, can we simply assume that this is a temporary slump, and not a reckoning of sorts? Did we mistake our earlier luck for skill, in what was a long running and aggressive bull market?

It's hard to say.

Whatever the case, I'm not going to change the index methodology now, although giving users the ability to build bespoke indices based on (say) people they are following, or something similar, is an interesting idea.

I guess as an investment club, and one in which we're all responsibile for managing our own portfolios (both here and in real life), all we can do is worry about our own choices and hope that collectively that adds up to something decent. And if it doesn't, we will at least see those with genuine ability rise to the top -- and help give the rest of us some good signals as to the stocks we should be paying attention to.

Couldn’t agree more.

I’m incredibly new to this and learning every day.

Experiencing this cycle in a true and transparent way is genuinely invaluable to me (although at times slightly butt-clenching lol).

Appreciate knowing the integrity of the index is consistent.