Returns for week ending 2/13/09
Model portfolio, hypothetical returns for past…
1 week: +2.9%
26 weeks: +10.5%
52 weeks: +31.0%
Value of $10,000 invested at inception in 2003: $53,277
Saturday, February 14, 2009
Saturday, February 7, 2009
Semi-log Chart Shows Steady Rate-of-Growth
A traditional Equity Curve chart uses a linear axis. A linear axis has the effect of distorting the rate-of-change when equity is compounding over a long time period. That's why charts showing equity curves are sometimes called "mountain charts." Fund marketers love them! They are very flattering. The compounding effect makes it look like the returns are accelerating sharply, while the rate-of-change may actually be constant or even declining.
A better way to visualize the model's rate-of-change is a semi-log chart, used to visualize data that are changing with an exponential relationship as with a compounding return.
In this semi-log chart showing the equity curve, it is easy to see that the rate-of-growth for the model's equity has been fairly consistent over time.
Saturday, January 31, 2009
Worst January Ever
Stocks wrapped up their worst January on record with a final plunge on Friday.
The Dow Jones Industrial Average finished January down 8.84% on the month. Previously, the worst January for the Dow had been that of 1916, when it fell 8.64%. Friday, the Dow dropped 148.15 points to 8000.86 after briefly dipping below the 8000 mark. The Dow has fallen five straight months and in 12 of the last 15.
The S&P 500-stock index lost 2.28% Friday to end at 825.88, for cumulative losses in January of 8.57%. Until Friday, its worst January from 1929 onward occurred in 1970, when it lost 7.65%.
Both stock-market indexes are off by more than 40% from their 2007 highs.
Historically, stocks' January performance has been thought of as an informal indicator for the market's direction the rest of the year. When the S&P declines in January, the index loses an average of 2.4% in the next 11 months, according to data going back to 1950 from Ned Davis Research. When the S&P climbs in January, the index posts an average gain of 12.3% in the next period.
Subscribe to:
Posts (Atom)