Portfolio Comparison: October 2011

During August and September, investors were finding themselves in the doghouse. I don’t mean a nice doghouse you might find in a suburban community. No, I’m talking more about the kind of doghouse you’d be horrified to discover in some kind of unholy alliance between Alfred Hitchcock and Tim Burton. The kind of doghouse that gives nightmares nightmares. Still, today, here in early November, we can look back on October with a gasp of relief, as we see that it really wasn’t all that bad. In fact, people who hopped into the market at the beginning of the month are probably patting themselves on their backs right about now.

Let’s explore this decidedly last ghastly month, beginning with the usual data:

Portfolio	Last Month	This Month	% Chg	Total Gain	CAGR
Precious Metals	$92784.58	$102765.04	+10.757%	+$2765.04	+7.012%
Caribou	$98941.93	$101759.31	+2.848%	+$1759.31	+4.429%
Savings Account	$100316.58	$100398.36	+0.082%	+$398.36	+0.993%
Permanent Portfolio	$93722.84	$100314.92	+7.034%	+$314.92	+0.784%
Decision Moose	$105037.21	$100111.42	-4.690%	+$111.42	+0.277%
U.S. Market	$87332.72	$97082.88	+11.164%	-$2917.12	-7.092%
Magic Formula	$86122.56	$95464.23	+10.847%	-$4535.77	-10.893%
Skunks of the Dow	$84728.61	$93456.09	+10.301%	-$6543.91	-15.478%
Mechanical Blend	$75384.15	$87739.07	+16.389%	-$12260.93	-27.747%
Sector Flow	$70473.51	$76675.52	+8.800%	-$23324.48	-48.309%

In a definite contrast to last month, only one portfolio wasn’t positive: the Decision Moose portfolio. Everything else had varying degrees of success, so here’s the quick rundown:

• Both silver and gold had good months, meaning the Precious Metals portfolio also did well, ultimately pushing the portfolio into first place in this comparison.
• With most of the market screaming upward, bonds took the fall on the other side of the coin, leaving the bond-heavy portfolios such as Caribou and Decision Moose lagging behind their stock counterparts. Nonetheless, their excellent performance several months ago has kept them in second and fifth place, respectively. Of course, if they continue to lag behind much longer, this distinction will undoubtedly no longer apply.
• In third place, we find the simple ING Direct Savings Account portfolio, continuing to trudge along at its paltry interest rate of nearly 1%. (ING lowered the rate during the month, leading the CAGR to drop below 1%.) In fourth place comes the Permanent Portfolio, which may as well be a savings account on steroids. Again, it trades a bit of volatility for (hopefully) better returns.
• Looking toward the bottom five, we find all five of the stock-based portfolios in the comparison. Granted, stocks had an excellent month, and this is reflected in the data. However, their absolutely abysmal performance in previous months has left them with quite a bit more ground to make up. It’s interesting to note that the best-performing stock portfolio is the U.S. Market. Trying to beat the market with all kinds of formulas and screens just isn’t cutting it at the moment. Perhaps it never will.

I have been incredibly lazy about finally getting this post written, so the rebalance date is, in fact, today. On the plus side, this means I already have determined what each of the portfolios will be doing. The Magic Formula portfolio will be adding CPLA and LMLP. Nothing is changing in the Skunks of the Dow portfolio, and the rest of the portfolios will be merely rebalanced. Both Caribou and Decision Moose have been in TLT for a few weeks, and haven’t signaled a change this week.

Disclaimer: This post is a description of my own forays into investing, offered as general market commentary, and should not be construed as investment advice or the recommendation of a particular security over any other.