Disclosure: This post is a bit dry. If you have no interest in how I calculate returns or what my returns are, please don't bother reading this. I decided to post this explanation first, because I plan on taking a hard look at how other people trade, and I am very likely going to "ruffle feathers" in the future. I thought it only fair that I post my results, both good and bad, and how I calculated them, for reference.

year	my returns	dow return	nasdaq return	S&P return	wilshire 5000
*2002	-14.80%	-17.20%	-32.52%	-23.80%	-20.90%
2003	36.38%	25.30%	48.70%	26.11%	29%
2004	20.06%	3.20%	8.60%	8.90%	12.60%
2005	7.70%	-0.61%	1.37%	3.01%	4.59%
2006	23.85%	13.73%	9.52%	13.62%	13.90%
2007	-8.62%	6.46%	9.46%	3.55%	3.90%
2008	-50.00%	-33.84%	-40.54%	-38.49%	-38.68%
2009	33.37%	18.82%	43.89%	23.45%	26.54%

Of course, these results are meaningless if you don't know how I got there. Here is a basic, if lengthy, summary of how I calculate my results each year.
First, I consider all money contributed throughout the year as having a full year to produce returns. For instance, If I start year 1 (Jan 1) with $10,000 and then contribute $2000 in August, all rate of return calculations will assume I had $12000 on January 1. In this case, if I end the year with $13000, my calculation gives me an 8.3% return for the year. Although some may try to annualize returns on different contributions throughout the year, I find the simplicity of this method to be preferable.
In addition, my returns are reflected net trading fees and end of the year taxes. Online investment advisers are always harping on investors not taking into account trading fees, but I can’t see how that is possible. Returns are reflected net fees in all “net gain/net loss” statements and account history displays I’ve seen on any brokerage site and it seems unlikely that anyone is adding up their trading fees and tacking that money on to their account balances to boost returns.

If I have any open option positions when I determine my returns, I account for them as follows:
A. Covered Call: If I have sold covered calls that are currently in the money, my assigned value for the underlying asset will not exceed the contract. For instance, If I have sold 1 option on SLW with a strike price of $16.00, and hold 200 shares of SLW (which trades at $20), than I consider the value of my SLW to be $3600.

B. Sold Puts: I do not factor in the amount of money I may have to use to purchase stock if the put is exercised. However, the money made from selling the put is immediately reflected in my returns. Therefore, any losses I sustain from selling puts are not reflected until the position is closed, but the full potential gain is reflected when the contract is written.

C. Options bought: I don’t try to include returns on my options in my overall portfolio return until the position is closed. This method may change if I begin to purchase more options, but as I rarely do, it has little impact on my return reporting.

I keep a personal tally of my returns against the S&P 500. Investment advisers would chastise me for my selection of the S&P 500 as a comparison because my portfolio isn’t representative in terms of risk and assets to the S&P (e.g. I hold foreign stocks, options etc). I don’t care. I chose this indexing because if I was investing passively (through the means of an index) I probably would have chosen S&P 500 index funds or ETFs.
As long as I’m beating the index I would have been investing in, and doing so despite fees, taxes etc (which I would still be paying with a fund, but which are not reflected in the S&P’s returns), I feel like it is worthwhile to invest/trade on my own.

In my upcoming posts, I'll try to summarize some of my investing philosophies, as well as some of my specific investing strategies. Bring on the spears!