Evaluating Stock Investing Performance

ICICI Direct has a very good tool for you to analyze how you perform with your stock investing.  While we constantly engage in the buys and sells, in our mind we over weigh our profits and ignore and try to forget our losses thereby making us overconfident on our abilities.  Having such a tool helps you to sit back and take notice of whether the activity you engage in is a fruitful one or you would have been better off if you invested in Fixed Deposit or give it to some professional money manager.  My goal is to make a decent return of over 15% per annum over long term. 

I do not wish to personally compare myself against what the market (Sensex or Nifty) did.  Reason for this is that one would unnecessarily come under pressure if we compare with benchmarks thereby making mistakes.  Comparison is important for Mutual Fund Managers or those that are doing professional management as they are constantly compared with their peers and the moment they lag, investors flee them.  If you do not understand what I mean take a look at HDFC funds and Mr. Prashant Jain (A very good fund manager who was lagging others last year) as to how their performance impact their customer retention.  For personal investing, our benchmark should be longer term hurdle rate. It varies from one to another.  Mine is 15% and this is what my performance as of date is. 

Some points that emerge from this are below:

• For the profits I booked until now (since I started investing), I had an annualized return of more than 25%  per annum which is way above my hurdle of 15%.  As a bonus, I have beaten the benchmarks by around 8% which is great.
• For the stock I hold until now, I have done 19% on long term basis (holding more than a year) which is again beyond my hurdle rate of 15%.  This is in line with the benchmark.  However, I know that this is caused due to the recent split of Mayur (major holding of mine) which caused this to be reduced.
• For stocks held below one year my return is 62% against benchmark 18% but as I mentioned this is again skewed because of Mayur returns moving from long term to short term due to stock split. 
• Short term profits booked until now is around 6% and it is lower than benchmark. Most I book only losses in short term to take advantage of taxes.  I quit short term with profits only in rare circumstances.  So, if i see a positive number here that is incredible.

So, overall I am outperforming my hurdle rate and happy about it.  What is your hurdle rate and how are you performing?   Since most of the users have ICICI Direct the navigation to check is Portfolio > Equity Annualized returns.