January 2021 performance update
Hi folks, here with a quick January performance update. Here are the key numbers for the month:
Stoney Point Prime picks: -0.74%
Stoney Point Select picks: -1.70%
“The market” (S&P 500-tracking SPY ETF): -1.4%
“Bogleheads” (80% VTI, 20% BND): -0.71%
A few notes:
I’m booking this as a pretty solid result: Prime beat the market in a down month and Select was just behind. It’s nearly impossible to be positive every month unless you’re willing to accept really low expected returns (if you are, just buy munis or Treasuries and hold to maturity). For equities, the trick (in my view), is to not go too far below the market in the down months and crush it in the up months, on average, if what you care about is long-term risk-adjusted returns, which is what this community cares about I hope/I think.
It’s worthwhile to mention that Prime managed to outperform SPY even though Prime included TWTR this month. As I observed before, Twitter lost $5 billion in market value early in the month after the company banned former-president Trump from the platform. All told, TWTR’s monthly return was -7.27%.
It surely goes without saying, but the GME craziness in the past week doesn’t directly affect the numbers above. I suppose you could craft some theories about “sentiment” spillovers affecting supply/demand for unrelated stocks in the S&P 500 as a result of the non-stop GME news coverage, but I doubt any such effects would have a big systematic impact on asset prices. In any case, I’m not sure directionally how that would affect things. As I mentioned last week, the chaos did spark a thought that I should look into wrapping some sentiment indicators into my model. Still thinking on that.
As usual, you can check out the position-level January performance for our Prime and Select picks on our performance page and our picks for February here.
