Ugly Day for Our Buy List

Although Friday was a quiet day for the stock market, I’m afraid that it was an unusually poor day for the relative performance of our Buy List (please note the words “relative performance.”)

While the S&P 500 lost 0.29% on Friday, our Buy List dropped 0.96%. That’s an underperformance of 0.67%. That’s our worst daily underperformance in nearly a year. While lagging days are to be expected, I roughly estimate that a day like Friday should come along every six months.

Let me throw out another “relative.” This was our worst daily relative performance relative to what we’re trying to do. Guys in the options or futures markets would laugh at the idea of trialing the market by two-thirds of a percent as being unusually bad.

Since our portfolio is a broad-based and mostly made of mid- and large-cap stocks, we’re bound to track the market pretty closely each day, and we do. In this market, we stay within 20 basis points of the S&P 500 most days. Our outperformance only shows up in the longer term.

Since we don’t take on any weird macro bets, I honestly don’t know what caused Friday’s debacle. Perhaps there was no cause, it just…happened. Sixteen of our 20 stocks trailed the market, and nine stocks were down more than 1%. Seemingly unrelated stocks such as CA Technologies ($CA) and DirecTV ($DTV) got hit pretty hard. The only common link I can find is that they’re on our Buy List.

As you might guess, I’m not at all worried. Our strategy is conservative, and if Friday was bad by that standard, then we’re doing something right. I always want to be up front about what’s happening with our stocks, so I need to be frank with the bad news as well.

Let’s shake this off and get ready for next week.

Posted by Eddy Elfenbein on March 22nd, 2014 at 7:33 pm

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.