6/1/2006
Jim Dines writes "The Dines Letter." Through 12/31/05, his "Good Grade Portfolio", Long Term Growth Portfolio" and "Precious Metals Portfolios" all beat the Wilshire 5000 for the last 1, 5 and 10 year periods. This is probably due to metals doing very well after a long, dry period. If you look out 15 years or longer, Jim's portfolios have significantly underperformed the Wilshire 5000.
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The "The Hulbert Financial Digest's Long Term Performance Ratings" shows results for Jim Dines' many portfolios dating back to 1980. It looks like Jim got off to a rough start because Hulbert shows Dines' average annual return back to 1980 is only 7.3% while the Wilshire5000 is up 12.8%.
Lets see how much $10,000 invested on 6/30/80 compounding at 7.3% grows to through 1/1/2006 then compare it to 12.8% a compound growth rate.
$10,000 at 7.3%/yr from 6/30/80 through 12/31/05 = $689,168
That looks pretty good until you compare it to the Wilshire 5000's 12.8% average annual return
$10,000 at 12.8%/yr from 6/30/80 through 12/31/05 = $1,607,759
If you want an expert on what precious metal stocks to own, Jim Dines looks to be your man. However, you may do far better investing in the Wilshire5000 index for better long-term results.
I want to warn you that the data shows he has been calling for metals to do well for a long, long time and now he is correct. Mark Hulbert also shows six "Timing Only" portfolios for Jim Dines and they have mixed results at best. They all under perform in the one and ten year categories while three of the six portfolios beat the index in the five year category.
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Since beating the market is hard for most to do, I recommend a "Core and Explore" approach to investing. Core means place 80 to 99% of your money into a CORE, buy-and-hold, no load, mutual fund portfolio and then EXPLORE with the remainder. To build your core portfolio, I suggest a diversified basket of index funds.
I welcome suggestions for future articles at Kirk's Market Thoughts.
Kirk Lindstrom:
DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.
