TIP618: Stig's Portfolio Performance since 2014 w/ Stig Brodersen & Clay Finck

Episode Summary

Executive Summary: Stig Broderson reviews 10 years of investing and concludes that his strong 21.4% annualized return versus 8.9% for the MSCI ACWI was driven as much by luck, changing goals, and selective risk-taking as by skill. He discusses private investments, Monish Pabrai, major mistakes and winners, a shift toward quality and capital preservation, why benchmarks matter less for private investors, and why he does not want to run a fund.

Main Topics: 10-year portfolio performance review (Priority: 5/5): Stig shares his dollar-weighted compound annual growth rate over a decade and compares it with the MSCI ACWI, while emphasizing that public track records can mislead without context. Luck, skill, and changing objectives (Priority: 5/5): He argues his results are heavily influenced by luck, timing, and life circumstances, and that his goals have shifted from growth to capital preservation and wealth protection. Monish Pabrai and private investments (Priority: 4/5): Stig explains why he invested with Monish Pabrai, how the fee structure and philosophy align with his own, and why certain private/relationship-based opportunities are excluded from the reported track record. Biggest mistakes and biggest winners (Priority: 5/5): He walks through mistakes like Alibaba, Philips 66, and under-sizing Spotify, while highlighting winners such as Bitcoin, Alphabet, Berkshire Hathaway, and Spotify. Evolution of investment style (Priority: 5/5): Stig describes moving from cigar-butt/value bargain hunting toward high-quality businesses, fewer positions, and longer holding periods. Benchmarks and managing money for others (Priority: 4/5): The discussion covers why benchmarks can be useful for professional managers but stressful or misleading for private investors, and why Stig does not want to launch a fund. TIP mastermind and community building (Priority: 3/5): Clay and Stig discuss the growth of TIP’s mastermind community, live events, and the value of shared learning and network effects for serious investors.

Key Arguments: Stig’s 21.4% CAGR is impressive, but he stresses it is dollar-weighted, incomplete without context, and likely not repeatable. He attributes much of his outperformance to luck, timing, and an ability to add capital during favorable periods rather than pure forecasting skill. His financial goals have changed from maximizing growth to preserving purchasing power, which justifies lower-return assets like gold and broader diversification. Monish Pabrai was chosen because of his long track record, understandable process, aligned incentives, concentrated portfolio, and limited availability to outsiders. Private investments can distort performance measurement; some opportunities provided unique terms that are not replicable in normal public-market investing. Alibaba was a mistake primarily because he underestimated China/CCP regulatory risk, not just because the stock price fell. Under-sizing Spotify and selling winners too early show that missing large upside can be as costly as making explicit losses. Benchmarks are useful mainly for managers taking outside capital; for private investors, goals and risk tolerance matter more than beating an index. He prefers a life of subtraction and believes managing money for others would add stress, bureaucracy, and downside without enough personal benefit. Over time, he has shifted from many positions and low-quality bargains toward fewer holdings, higher quality, and letting winners run longer.

Data Points: Portfolio CAGR: 21.4% per year - Stig’s dollar-weighted return from Jan. 1, 2014 through Feb. 29, 2024. Benchmark return: 8.9% CAGR - MSCI All-Country World Index over the same 10-year period. US weight in benchmark: 63.8% - Clay notes the ACWI is market-cap weighted and heavily exposed to the US. Private fund fee structure: 0.625 / 6 / 25 - Stig describes Monish Pabrai’s fee model as 0.625% fixed, 6% watermark, and 25% above 6% return. Gold allocation: About 7% - Stig says he now holds physical gold as insurance amid geopolitical risk. Historical positions owned: 45 stocks/ETFs - Stig says he has owned 45 different equity positions since 2014. Current portfolio breadth: 5 stocks and 2 ETFs - He says his portfolio has become much more concentrated over time. Private deal return: 10x / 1,000% - He cites a private investment that generated roughly a 10x return upon signing the dotted line. Alibaba cost basis: $120 - Stig’s average purchase price for Alibaba. Alibaba current price (at recording): $73 - He cites this as evidence of one of his biggest mistakes. Philips 66 investment timing: 2015 - He says he bought Philips 66 while closely following Buffett’s move. Stas Group loss: 55% loss - He sold the Stas Group investment at a large percentage loss after a little over a year. Spotify purchase price: $78 - Stig started a Spotify position in December 2022. Spotify gain: 231% - He says Spotify rose sharply after his purchase, but his position was only about 1% of the portfolio. Alphabet purchase price: $54 split-adjusted - Stig says he began building Alphabet in 2018 near this level. Alphabet current price (at recording): $135 - He cites Alphabet as one of his strongest winners. Berkshire B share purchase price: $115 - He began building a Berkshire position in 2014. Berkshire current price (at recording): around $400 - Used to illustrate long-term compounding in a high-quality business. Portfolio review period: Jan. 1, 2014 to Feb. 29, 2024 - Time window used for the reported performance review.

Pivotal Quotes: "My returns from January 1st, 2014 to 29th of February, 2024 is 21.4% CAGR." — Stig Broderson: He opens the portfolio review with the headline performance number. "I certainly attribute most of my track record to luck." — Stig Broderson: He answers the skill-versus-luck question and frames his performance humbly. "I see a very limited upside from doing that and close to an unlimited downside." — Stig Broderson: His explanation for why he does not want to manage outside money or launch a fund.

Implications: Listeners should treat performance in context: goals, risk tolerance, and opportunity cost matter as much as returns. The episode reinforces concentrated quality investing, humility about luck, and why private investors should focus on process rather than cloning hosts or benchmarks.