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IanTHughes wrote:Last May six holdings were sold off in one fell swoop! The annual "churn" on this portfolio as usually reported here indicates to me that the strategy being employed is certainly nothing like "hold for eternity"? This , if it can be called a strategy, is barely a "hold for next year"!
Portfolio Churn (or Turnover) is relatively simple to test, the method I use is described here (with my own adjustments bolded):
https://www.sapling.com/5885771/calcula ... o-turnover
Step 1
Calculate your average portfolio size. For a given period, add the beginning and ending value of your portfolio (excluding cash), then divide the number by two. For example, suppose you want to calculate a monthly turnover in which the value is $22,000 on April 1 and $22,900 on April 30. The average portfolio size is $22,000 plus $22,900 divided by 2, or $22,450.
Step 2
Figure your purchases for the period. Add together the amounts you spent during the period to buy securities (including dealing cost and stamp duty for ease of calculation). Say, for this example, that you spent $2,000.
Step 3
Add up the total value of securities you sold during the period (including dealing cost for ease of calculation). For example, you might have sold $1,400 of securities in April.
Step 4
Divide the lesser of purchases and sales by the average portfolio value. In this example, you bought more than you sold, so divide the sold amount, $1,400, by the average value, $22,450. The result, 6.24 percent, is your monthly portfolio turnover. You can figure weekly or annual portfolio turnover in a similar way.
This can be applied to HYP "builders" and "drawers" alike, ie. one would expect both a LTBH HYP "drawer" and a "builder" who is topping up only to have zero turnover. Note that a LTBH "drawer" who is deaccumulating by regularly selling down holdings, whilst not strictly HYP, would also have zero turnover. And all the tinkerers would have somewhere between 0-100%.
I present my own numbers below, and invite others to do the same on this thread for comparison. How well do you follow the faith?