October 2020 performance update
Happy Halloween, everybody! Let’s get right to it. Stoney Point had another solid month. Just as our Prime and Select picks beat the market in September, they did it again in October. By my calcs:
The Prime picks we announced on September 30 beat SPDR’s S&P 500-tracking “SPY” ETF by 3.14 percentage points in October (-0.16 percent return in the month for Prime, -3.30 percent for SPY).
The Select picks we announced on September 30 beat the SPY ETF by 0.29 percentage points in October (-3.01 percent return in the month for Select, -3.30 percent for SPY).
These are not small beats. On an annualized basis, they amount to beating the market by 42.5 percentage points for Prime and 3.3 percent for Select (based on 22 trading days in October and 252 in an average year: 0.425 = (1+0.0314)^(252/22)-1 and 0.033 = (1+0.0029)^(252/22)-1). Over 10 years, outperforming the market by these magnitudes on a monthly basis amounts to cumulative outperformance of a gargantuan 3,354.3 percent and an also-large 39.0 percent for Prime and Select, respectively (33.54 = (1+0.0314)^(10*252/22)-1 and 0.39 = (1+0.0029)^(10*252/22)-1). Being only six months into this endeavor, it’s certainly too early to quantify an expected average outperformance going forward or do any sort of forecasting; but these numbers do put the October returns in perspective.
It’s worth noting that these beats come in the face of some very turbulent market conditions as coronavirus infections surge in the U.S. and globally and as we inch closer daily to what is being billed as possibly one of, if not the, most contentious American presidential election in recent memory. Indeed, the CBOE’s “VIX” index—a forward looking measure of expected volatility derived from options prices—shot up in the last week of the month, indicating that investors anticipate choppy waters downstream for the stock market in November. At the same time, stocks in general had their worst week since March this past week.
The chart below shows the cumulative performance of Stoney Point’s picks against the SPY ETF and the hypothetical “Bogleheads” portfolio to date per my calculations. It’s not obvious from the chart, but Select seems to be coming back. Earlier this week it had returned to about parity with the SPY ETF before hitting a wall in the last two trading days of the month. Prime continues to crush the market, despite risk characteristics that suggest it should only be performing about as well as the market. Let’s hope for good things in November.
That’s all for now. You can check out the position-level October performance for our Prime and Select picks on our performance page and our picks for November here to get in on the action. Of course, if you haven’t already, follow Stoney Point on Twitter for the latest updates (@StoneyPointCap).
