Remember back in the summer when Josh and Austin did their annual fantasy stock draft? This episode is all about the results! (Listen to part 1 here!) We won’t spoil who ended up winning before you listen, but Josh and Austin go over it ALL, including their personal best picks and what they wish they did better. They also talk investing short periods of time and of course, share a dad joke of the week.
For the full transcript, links, and resources, visit theinvesteddads.com/204
Sign up for our exclusive newsletter here!
The Invested Dads: Website | Instagram | Facebook | Spotify | Apple Podcasts
Remember back in the summer when Josh and Austin did their annual fantasy stock draft? This episode is all about the results! (Listen to part 1 here!) We won’t spoil who ended up winning before you listen, but Josh and Austin go over it ALL, including their personal best picks and what they wish they did better. They also talk investing short periods of time and of course, share a dad joke of the week.
For the full transcript, links, and resources, visit theinvesteddads.com/204
Sign up for our exclusive newsletter here!
The Invested Dads: Website | Instagram | Facebook | Spotify | Apple Podcasts
Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments, here are your hosts, Josh Robb and Austin Wilson.
Austin Wilson:
All right. Hey, hey, hey. Welcome back to The Invested Dads Podcast, the podcast where we take you on a journey to better your financial future. I'm Austin Wilson, Co-Portfolio Manager at Hixon Zuercher Capital Management.
Josh Robb:
And I'm Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management.
Austin, how can people help us with our podcast?
Austin Wilson:
We would love it if you'd subscribe if you're not subscribed. Hit that Plus or Follow whatever that icon is on your podcast player so you get new episodes when they drop on Thursdays. And if you could leave us a review on Apple Podcasts or Spotify or wherever you're listening, that will help us to be able to be found by more and more listeners like yourselves.
Today, Josh, we're going to be breaking it down like disco style, breaking down the second half stock draft for 2023 results. First of all, you're going to be able to find out who won.
Josh Robb:
Yes.
Austin Wilson:
And then we're going to be able to find out who lost.
Josh Robb:
Yes.
Austin Wilson:
And we're going to go over what worked and what didn't work for our own portfolios.
Josh, I'm going to dig right in. The results, great turnout. We're excited about that. I did include the market as an entrant, so we'll be able to say who outperformed the market and who underperformed the market, the bogey.
[1:21] - The Investopedia Stock Draft Final Standings
Austin Wilson:
And 14th place AverageDad06 minus 35.6%.
Josh Robb:
I'd almost venture to say, "Below average."
Austin Wilson:
That was a slightly below average-
Josh Robb:
Below average dad.
Austin Wilson:
Yeah, I would say. Below average return for AverageDad06. 13th place, JoshHunter100 -15.5%. 12th place, JRigWM, -1.2%. 11th place, KelliSou, 0.
Josh Robb:
Ended at 0, they never invested. That was their strategy potentially-
Austin Wilson:
That was their strategy, yeah.
Josh Robb:
... thinking that maybe that would help them out.
Austin Wilson:
Thinking they might unwind a little bit. 10th place, TheEverydayAdvisor, 0 cash. Ninth place, JRobbHZ-
Josh Robb:
That's me.
Austin Wilson:
1.4%-
Josh Robb:
Positive.
Austin Wilson:
Positive. Eighth place, GoPack, 2.6%. Seventh place, Bdubbs1, 3.5%. Sixth place, LetsGo2023Invest, let's go. 4.5% return. Fifth place, ChaseJRose, 5.3% return. Fourth place, AshMil, 7.2% return. Third place, TTime50, 7.4% return.
Josh Robb:
There you go.
Austin Wilson:
This is where I will insert market's performance because the market returns 7.9% the second half, total return, includes dividends.
Second place, username AWilson.
Josh Robb:
Who was that?
Austin Wilson:
That was me.
Josh Robb:
Okay.
Austin Wilson:
A return of 10.4% for the second half there. Not quite 17, but 10. In first place, with a percent change in the second half of the year of 17.2% was BuffettBeater is the username.
Josh Robb:
All right.
Austin Wilson:
I bet they beat Buffett, actually, in the second half.
Josh Robb:
There's a good chance.
Austin Wilson:
Buffett Beater-
Josh Robb:
So that was the six-month return. 17%.
Austin Wilson:
17%.
Josh Robb:
Nice.
Austin Wilson:
Looks even better annualized.
Josh Robb:
Yeah. We are sending him a little swag, a little bit of a thank-you-for-participating and you get to brag for the next six months-
Austin Wilson:
Until the next one.
Josh Robb:
... until we start under our next one.
Then you got title to defend.
Austin Wilson:
That's right.
Josh Robb:
But yes-
Austin Wilson:
Target on your back.
Josh Robb:
... thank you all for participating. The fun part about this is there's zero risk because it's not real money, so you do get to take some chances. I don't know exactly for Buffett Beater if those were out of the left field guesses or their whole strategy behind it, but 17% in six months is pretty good-
Austin Wilson:
That's pretty good.
Josh Robb:
... considering the market was just under 8-7.9%. Good work.
[3:59] - Dad Joke of the Week
Austin Wilson:
Absolutely.
All right, Josh, let's take a break before we talk about our portfolios, dad, joke of the week.
Josh Robb:
Dad joke of the week. We've been doing dad jokes for a while, so I got to ask, did I tell you the joke about the paper?
Austin Wilson:
I don't think so.
Josh Robb:
No, I probably won't because it's terrible.
Austin Wilson:
It's terrible.
Josh Robb:
Terrible.
Austin Wilson:
Terrible. All right, Josh, thank you for that.
[4:19] - 2nd Half Investments: What Worked & What Didn't Work
Austin Wilson:
We're going to talk about what we did, what worked and what didn't work in our portfolios. Josh, go ahead and get us started. You were positive, 1.4% return. What worked and what didn't work?
Josh Robb:
I think what worked was I let the market go up and I didn't change. I made some investments there in July and really, I didn't touch anything. I made a couple additions just because I had extra cash, but other than that, I didn't get in and really change anything throughout the whole six months. I think what worked was I was in a positive market, what worked was I allowed... Even though some of my investments underperformed the overall, they did go up. In fact, they had a pretty good recovery because they were down for a little while and my investment choices were all fun ones. I had the ticker names were pretty cool, that's why I picked half of my stuff. It was more of a fun exercise for me.
To see that it was down for quite a bit of those six months, it was really only the last probably six weeks or so that it moved to the positive and upwards. What worked for me was what we tell our clients, which is, "If you have a plan, stick with it." Now, I wish I had a better plan and again, being fake money, I was fine with it. But the idea was the market worked itself out. If you look at 2022, we did a stock market draft. The market was not great in 2022. 2023 market was a lot better. If you allow time, the market over the long-run works itself out. So I participated in the upper move. I wish I was a little more diversified and maybe wasn't focusing on fun names, but I don't regret that because it's not real money.
Austin Wilson:
But a rising tide lifts all boats.
Josh Robb:
It does. Which brings to also 2 of the 14 outperform the S&P500. The idea there is it takes a lot of work, especially in up markets to do well because, again, when the market's moving, a broad one will capture most of that movement and you have to guess right to get a good chunk of that. Picking names becomes a little bit harder in certain market conditions. Up markets, down markets, flat markets you may do better because there's less variation or volatility. That's something I think we experienced this last six months, especially as you saw a handful of names really move the market quite a bit.
Austin Wilson:
Oh, absolutely.
Josh Robb:
If you're choosing those, great. If you missed them, you're a little bit different.
All right, Austin, what worked for me, what didn't work was irrelevant because I was only at 1%. What worked for you, second place man?
Austin Wilson:
I was up, what? 10 and change or whatever. A little bit of outperformance for that six month period. What worked? I would say toward the end of year I bought some equal weight ETFs that I hoped would outperform the market cap weighted ones because a lot of those mega cap names had driven the returns. I went from more of the mega caps into some more equal weight stuff towards the end of the year, that did really well in the last month or two of the year. That helped as the rally broadened.
I was able to make some quick gains on some triple leverage small cap picks.
Josh Robb:
Oh, boy.
Austin Wilson:
I mean I didn't have a ton in it, but there was one day where I thought that things were due for a little bit of a small cap bounce back, it was the day of The Fed pivot or whatever. So the Fed was pretty much like, "Okay, we're going to hold rates here and here's our cuts next year." The market rallied, but small caps rallied extra hard and my triple leveraged tripled that.
Josh Robb:
Did really well.
Austin Wilson:
So I just wrote it for a day, sold, captured some gains, and that was a really nice little pop for me there.
I stayed diversified overall. I didn't put too many eggs in one basket. I was active and nimble enough to unwind positions that were out of favor before they got too bad, which I think was key. Cut your losers short and let your winners keep going in for you. So that was-
[8:13] - What are Stop Loss & Limit Orders
Josh Robb:
And in the real world, people do that sometimes with stop losses. And the idea there is, let's say I buy a stock for $10 a share and I say, "I think it's going to do well," but if I'm concerned it might not, I may put a trade order in that says, "If the price ever gets to $8 a share, 20% drop, sell it." The stop loss or limit order is the idea that when you hit a trigger, it automatically happens and it prevents you from losing more. So you want to put it far enough away where it's not going to get triggered-
Austin Wilson:
Right away.
Josh Robb:
Yeah. Or when you don't really want it to. But if it drops to a certain amount and that just allows it to... Like you said, cut it before it gets worse. In real life, people do that a lot, especially when they're taking maybe a little bit more of a risky position to make sure it doesn't get away from them.
Austin Wilson:
And you were actually able to do that. You can set new orders-
Josh Robb:
You place your own orders orders.
Austin Wilson:
You can set limit orders, you can set stop loss since by percent or dollar or whatever in the software. Hopefully more people will utilize that in the future. That is a cool feature.
[9:17] - Going Equal-Weighted Vs. Market-Cap-Weighted
Josh Robb:
And then you mentioned at the beginning going equal-weighted versus market-cap-weighted, and then I wanted to talk about that. The idea there is the S&P500 is market-cap-weighted, so I wouldn't say 500, there's 505 companies. But the S&P500, 500 companies and the amount of each company's waiting or the percent that's in there is not equal, it is based on how big the company is. So that's market-weighted.
Austin Wilson:
Yeah, market cap is calculated by the number of shares outstanding by the share price.
Josh Robb:
So if you have a big share price and a lot of shares out there, you have a big market cap.
Austin Wilson:
For example.
Josh Robb:
Give me a good one. Apple's a great one.
Austin Wilson:
Apple's two and a half trillion dollars-
Josh Robb:
Big company.
Austin Wilson:
... in market cap because they're huge. And if you look at a market-cap-weighted index, Apple is the biggest portion if they're in that index by far. Apple's 7% of the S&P500, Microsoft's not too far behind at all. These are huge companies. When they do well, the market, quote unquote "the market," which is market-cap-weighted, does very well. An equal-weighted index gives all 500 members the same proportion-
Josh Robb:
Equally divided.
Austin Wilson:
We've got 1/500th. Apple's only representing the same as a smaller company in terms of market cap. So what I was hoping for and what actually worked out is as the rally extended through the end of the year, other companies picked up some speed, even as the big cap tech companies maybe didn't perform as well, they still did okay.
Josh Robb:
And it was because they had a big run in the first half of the year.
Austin Wilson:
Huge run.
Josh Robb:
That was just something I wanted to point out the difference on that for you.
So that's what worked, what didn't work? Were there anything in there-
Austin Wilson:
Oh, there were things that didn't work. I didn't come out ahead on everything and I probably could have done on better. I didn't trade all the time. Obviously, we're still working jobs here, so once every handful of days or once a week, I'd get in and say, "Oh, how am I doing? I don't know."
Josh Robb:
Mine was about once a quarter.
Austin Wilson:
Exactly.
Josh Robb:
I'd look and say, "Oh, that's too bad." And then I'd log out.
Austin Wilson:
I feel like I could have done better if I was even more on it, but you have to balance how often you can trade in. There's nothing on the line-
Josh Robb:
How much do I want to pay attention to make money?
Austin Wilson:
Exactly.
What didn't work? I think that I was under the impression for the second half of the year that higher quality, dividend-paying stocks would do really well because they underperformed in the first half. That did not necessarily happen until the very end of the year, but it didn't happen as much. So I was in more value-oriented investments earlier in the half, and then I thought bonds would do well. I thought yields had peaked out before they had.
Josh Robb:
Yep. They were pretty resilient.
Austin Wilson:
They were pretty resilient and actually moved much higher through the end of the third quarter and I was early on that. Now, it really would've worked out at the end of the year, but it didn't necessarily work out for me very well. So I was mostly wrong on that until again, November, December. I also thought international would do better than it did. International really underperformed for quite a while. It actually ended up underperforming quite a bit for the year. So I had some sizable international investments and those didn't really outperform, but I guess all in all, the things that helped, helped me more than the things that hurt.
Josh Robb:
There you go. Well, overall, I think it always is fun. I enjoy it even though I don't do much trading, it is fun. I do log in every once. I'll just look at the rankings here, where everybody's at, and it's fun to see how they get there. People made a lot of different decisions, some worked, some didn't. The average dad there took some bets and could have played out, could have been the winner.
Austin Wilson:
Could've gone either way.
Josh Robb:
It is just fun to watch, especially since there is no downside risk for this type of thing.
Austin Wilson:
Absolutely.
[12:47] - A Thank You to Participants & Next Year's Competition
Josh Robb:
It was a good time. Thank you everybody for participating in that. We will be doing another one in July, so keep your ears open for when we announce that and any changes to the rules like we do periodically for that.
And again, for Buffett Beater, appreciate the hard work you put into be the winner and hope you enjoy a little gift from us for that victory.
Austin Wilson:
All right, well thank you for listening and being here with us this episode. If you had someone asking about how they did in the draft-
Josh Robb:
There you go.
Austin Wilson:
... from this episodes, that'd be great. If you have any episode ideas for this year for us to talk about, send us an email at hello@theinvesteddads.com, we would love to hear from you and we'd love to incorporate what you want to hear into our plan for the year, and we're just happy that you're here with us.
Josh Robb:
Just as a reminder, the Stock Draft is fun, not real money, but if you are having questions or thoughts, nothing we talk about or invested in our fantasy draft is a recommendation. So make sure you talk with a financial professional about any decisions. And if you need help, feel free to reach out to us because we'd love to help you. You can reach us at theinvesteddads.com, we'd love to talk with you.
Austin Wilson:
Well, until next episode, have a great one.
Josh Robb:
All right, talk to you later.
Austin Wilson:
Bye.
Thank you for listening to the Invested Dads podcast. This episode has ended, but your journey towards a better financial future doesn't have to. Head over to the investeddads.com to access all the links and resources mentioned in today's show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click Subscribe and don't miss the next episode.
Josh Rob and Austin Wilson Work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin, or any podcast guest are solely their own opinions and do not reflect the opinions of Hixon Zuercher Management. This podcast is for informational purposes only and should not be relied upon for investment decisions.
Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment.
Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.