Reversal of Fortune
by Ethan Haskel ([email protected])
Baltimore, MD (April 21, 1999) -- What a difference a fortnight makes! Just two weeks after our quarterly Beating the S&P (BSP) performance review, in which we lamented the weak start for 1999, we're now king of the hill again. Here's the comparison for the individual year-to-date stock returns as of the close of the two periods:
4/06/99 4/20/99 BSP 2 Schlumberger (NYSE: SLB) +25.2% +31.1% BSP 3 Kimberly-Clark (NYSE: KMB) -9.3% +0.1% BSP 4 Campbell Soup (NYSE: CPB) -24.4% -20.8% BSP 5 Ford Motor (NYSE: F) +0.0% +9.6% BSP 6 BankAmerica (NYSE: BAC) +16.5% +22.8% BSP2-6 (Official BSP Portfolio) +1.6% +8.6% Standard & Poor's 500 Index +7.5% +6.7% Dow Jones Industrial Average +8.9% +14.2% Nasdaq +16.9% +9.9%
Ten short trading days ago, BSP was almost six full percentage points behind the S&P 500, our prime benchmark. The comeback kid has now leapfrogged the index and is ahead by nearly two percentage points. On Monday, when the Nasdaq was off more than 5% and the S&P lost about half that much, the BSP Portfolio had gained over one percent.
The turnaround for BSP didn't come from any one stock. Each and every BSP stock gained during the period while the market lost ground.
This reversal of fortune epitomizes why it's important to unemotionally stick with a strategy even though it may not be this week's shining star. More than a few of my acquaintances had abandoned the so-called "value" approaches of high yield investing to reach for Internet immortality. Recent days have provided a good gut-check and proof of the importance of having both value and growth stocks in a healthy portfolio.
Compound Annual Growth Rate from 1-2-87:
Beating the S&P +21.0%
S&P 500 +17.9%
$10,000 invested on 1-2-87 now equals:
Beating the S&P $103,600
S&P 500 $75,500