At the time of writing (just before 1pm) on Friday March 21st, the All Ordinaries are at 4338.
There are two new additions to the Hypothetical Ethical Share Portfolio: Vocus Communications and Cryosite. Vocus is added at $3.77 and Cryosite at $0.385. From now on, I will signify that I am buying a share in the hypothetical portfolio by commenting on an article, prior to the purchase. The hypothetical purchase will only count if shares are subsequently traded at that price: see the comments on the Cryosite article for an example.
Purpose of Hypothetical Ethical Share Portfolio
This is a thought experiment, nothing more and nothing less. If the Hypothetical Share Portfolio does better than either of the real portfolios that I manage, I'll be quite upset with myself. The thought experiment has the hypothesis that a small independent ethical investor can beat the market. Not exactly ambitious, I know.
I screwed up
I "bought" and "sold" Affinity Education in both my own portfolio and the Hypothetical Portfolio. Although I made a small gain, I haven't recorded it in the table below, because I haven't figured out how to represent a share sale. I will do this for a subsequent update, as well as find a way of incorporating dividends.
How to keep score with dividends
The problem with simply subtracting dividends from the buy price is that it reduces the initial price, thus boosting percentage returns more than real returns. It also makes the results for a high dividend paying company look artificially good... over the long term, one would expect a company like Integrated Research to return its entire purchase price in dividends (assuming that you had the wisdom to buy the company at below 50c). However, if you keep subtracting dividends from the buy price, over the long term you will have a buy price of $0.00 or less, thus boosting percentage based returns to infinity, a very impressive return indeed.
Get to the point, Claude
I did this update at 1pm-ish, so that was a bit silly, but I wanted to just get it done. It's worth noting that I don't claim this to be proof of my investing ability, and there is no possible way anyone would be able to follow me on this (nor are they meant to). I've still got my investing P plates on, that's for sure. However, the kindly advice of more experienced investors is allowing me to get better by learning (in theory, anyway).
| Company | Code | Date Added | Buy Price | Most Recent Price | Percent Change | ASX All Ords Change | Relative Return |
| Energy Action | EAX | 19/07/13 | $2.88 | $3.28 | 13.89% | 7.63% | 6.25% |
| My Net Fone | MNF | 17/10/13 | $1.40 | $2.10 | 50.00% | 1.06% | 48.94% |
| 1300 Smiles | ONT | 24/10/13 | $6.50 | $6.00 | -7.69% | -0.66% | -7.03% |
| Fiducian Portfolio Services | FPS | 7/11/13 | $1.18 | $1.55 | 31.36% | -1.43% | 32.79% |
| IMF Australia | IMF | 25/11/13 | $1.70 | $1.78 | 4.71% | -0.15% | 4.86% |
| Vocus Communications | VOC | 27/02/14 | $3.77 | $4.67 | 23.87% | -1.53% | 25.40% |
| Cryosite | CTE | 10/03/14 | $0.385 | $0.45 | 16.88% | -1.71% | 18.59% |
| Average Return excluding dividends | 19.00% | Average Relative Return excluding dividends | 18.54% |
Nothing on this website is advice, ever. I hold positions in all of the companies mentioned above except Affinity Education.
The Hypothetical Ethical Share Portfolio