Here’s my 2006 Investment Performance update. My individual stock picks broke their 4 year winning streak versus the S&P500 and overall (including my 403b), I lagged the market by a couple percentage points. That makes for a pretty lousy year overall. So, is it time to switch tactics? Give in and stick all my money in an index fund? Some would say yes (or more like “YES, you IDIOT!"). I knew when I started this approach that there would be times where I would underperform, even for long periods of time, meaning 1-2 years. But, on the whole, I would come out ahead. Small cheap companies have always outperformed over the long run. I still believe that and will continue with this approach, at least until 2009, at which point I will have a 5 year track record to analyze. In the meantime, I’m not going to cry too much about a 12.8% gain.

Date	Me	VFINX
1996-2006	7.6%	8.6%
1996	22.7%	35.7%
1997	15.3%	28.6%
1998	15.1%	24.9%
1999	66.0%	26.1%
2000	-25.8%	-7.4%
2001	-33.1%	-12.3%
2002	-21.1%	-22.1%
2003	31.7%	30.1%
[2004](http://kurup.org/blog/one-entry?entry%5fid=17065)	13.5%	11.7%
[2005](http://kurup.org/blog/2006/01/04/investment-performance-1996-2005)	13.2%	4.7%
2006	12.8%	16.0%

Notes: These are calculated using the XIRR function in OpenOffice. The XIRR function takes a series of cash flows in or out of an account and returns the internal rate of return for that account. It’s the best way to compare portfolio returns when investments or withdrawals are made on an irregular basis. The VFINX column shows how I would have done if I had simply invested all my money into VFINX, a low-cost mutual fund which tracks the S&P 500. This number will not match numbers you see posted for VFINX for a given year because it depends on the timing of my investments. Note that I include the cost of commissions in my performance, but not in VFINX’s.