October 2021 performance update
Hi friends, here with a monthly performance update. Here are the monthly numbers:
Prime: -0.35%
Select: +6.54%
S&P 500-tracking “SPY” ETF: +6.56%
Bogleheads: +4.93%
It was a great month for U.S. stocks broadly — the best month year-to-date so far for the S&P 500 — and that played out in the performance of the S&P 500-tracking SPY ETF performance and in the performance of our Select picks, which basically performed in-line with the market as a whole. Prime was deeply disappointing. Basically our top picks (HPQ and HPE) turned out a fine month, but a few picks deeply enmeshed in supply chain issues related to the global chip shortage were hit hard (e.g., WDC and INTC, down 8.31 percent and 8.66 percent, respectively). Both of those companies reported quarterly earnings during the month and actually crushed EPS expectations, but the forward-looking outlook apparently left something to be desired. Our algo likely picked them up because their prices seemed low relative to real-time fundamentals, but it really is forward-looking fundamentals that matter, of course, and in turbulent times like this extrapolating trailing fundamentals into the future isn’t a safe bet. In repeated monthly samples over a multi-year hold period, one expects/hopes that base rates play out.
The month ahead should be interesting. There is a big Fed meeting this week that augurs potentially significant policy changes that should effect risk premia across all asset classes, including stocks. It could be a wild ride. Stay tuned.
