Track Record #1
A month has passed since October 22, when we formed portfolios based on the three AVI strategies. No stocks were selected for the fourth strategy, YELLOW. It’s time to look at the initial results. They are as follows:
- The GREEN strategy saw its assets grow over the past month from $10,000 to $10,559.67. The monthly return was +5.60%.
- The INDIGO strategy saw its assets grow over the past month from $10,000 to $10,776.36. The monthly return was +7.76%.
- The ORANGE strategy saw its assets decrease over the past month from $10,000 to $9,821.00. The decline in assets was -1.79%.
- The YELLOW strategy: a month ago, not a single stock was selected for this strategy. Therefore, we remained in cash for the month, and the $10,000 has remained at $10,000 to this day. Assets neither increased nor decreased over the past month.
However, yesterday the YELLOW strategy did select a stock - albeit just one: AMAT. The price of this stock has fallen over the past month, and the YELLOW strategy added it to the portfolio as a promising investment. We bought it. We’ll keep an eye on how things develop.
So, all four of our portfolios now have holdings. And their composition will remain unchanged for another 23 months.
Comparison with the index
If an investor had held all four portfolios in their investment fund (as we did in reality), their assets would have grown from $40,000 to $41,157.03 over the past month. The monthly return was +2.89%.
Let’s compare our results with those of an investor who passively invests in the U.S. market index, the S&P 500. The S&P 500 index ETF is VOO: a month ago, one share of VOO cost 534.05. Today it costs 547.47. That investor’s assets grew by 2.51% over the month.
Note that investing in the GREEN and INDIGO strategies significantly outperformed the S&P 500. The ORANGE and YELLOW strategies, on the other hand, underperformed. Investing in all four strategies together yielded a result slightly better than that of VOO.
What does this tell us? Nothing. One month means absolutely nothing to a long-term investor.
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