The 4% plus gain the S&P 500 managed to glue together for October was a bit deceiving. October was a curmudgeon anyway you look at it. In fact, it was difficult enough that you could get the direction of the market right, but still end up with a flat month.
This was the first time in 5 months that my managed portfolios underperformed the S&P 500. They did it in spectacular fashion, allowing a near 500 basis point catch up for the S&P.
Nobody cared about my investments during October. That’s the gist of what occurred. I sat and watched what amounted to a snails pace trajectory of lowered bids and offers. CIDM, which managed a 19% gain for the month, couldn’t gain its footing beyond one vertical day which caused a majority of the gains. The company announced that it is on its way to becoming a leader in the world of digital entertainment to a chorus of crickets. That’s what a 19% gain is in contrast to their merger and glistening new business model. The tone of the CEO alone during the conference call following the merger announcement made me want to keep clicking the buy button until my mouse broke. But then I remembered he was just granted a tidy stock compensation package just a month before the merger was announced. Not a coincidence. In fact, it is a testimony to the fact that he knew following this merger the stock wouldn’t see 1.50 again, which is the strike price of his options. It’s a transformative move. Management knew it. And I think they expected more pop in the price to at least $2 by this point. I know I did.
The S&P got a chance to catch up to me this month. But who was leading that parade? And is it a parade that I should be jealous of not being invited to or glad that I didn’t get an invitation?
Let’s look at the leaders over the past month:
- Greece was up 19%
- Basic materials were up 5% for the month
- Real estate index up 4% for the month
- Healthcare was another leading gainer
- Utilities and Consumer Goods round it out
Big cap tech and retail were also in that list. As we all know, big cap tech was selective and choppy during the month. The rotation from the new school of momentum into the old school of momentum caught a lot of investors off-guard.
Once in awhile a retiree that reads Investor’s Business Daily religiously is going to make me look like a rank amateur just by sitting on Proctor & Gamble and PG&E. The market gives everyone their opportunity when judged under a microscope. It is when you zoom out, the story changes.
