Monday, November 01, 2010

Returns by Market Cap

I am re-reading Ken Fisher's book "The Only Three Questions That Count". In it he comments how no one segment of the market outperforms over time. Kind of makes sense as in Mathematics we call it reversion to the mean. That being said, I thought people might like to see since 2006 how the stocks have performed by market cap in my tracking portfolios. As I suspected, there is no pattern:

Low High Return
- 160 5.96%
160 235 -3.64%
235 327 7.08%
327 435 4.63%
435 629 5.05%
629 866 6.52%
866 1,250 1.38%
1,250 2,445 14.82%
2,445 4,598 5.60%
4,598 Higher 8.49%

These are broken up into deciles, so the same number of stocks in 10 buckets. So the second row shows that stocks between 160m and 235m market caps have provided average annual returns of -3.64%... which is the worst bucket. Of course I am not saying to avoid stocks with those market caps.

My stocks had a bueno day, up about 0.8%. Largely driven by CCME which was up about 8%. We'll see tomorrow if my front running buy of NVMI was savvy. My portfolio is now ahead of the benchmark for the year and is about 15 points better inception to date:

MFI Annual Performance

ITD Annual
2006 10.74% 10.74%
2007 -6.57% -15.63%
2008 -41.60% -37.50%
2009 0.71% 72.47%
2010 9.42% 8.65%

IWV Annual Performance

ITD Annual
2006 11.23% 11.23%
2007 4.65% -5.91%
2008 -30.54% -33.63%
2009 -13.95% 23.87%
2010 -6.82% 8.29%

In Wilmington We Trust

I was browsing some NYT articles today and saw a stunner that I am surprised didn't rock the markets a bit more today (Wilmington Trust Deal May Be a Sign of Trouble). This is a mid sized bank
  • that was trading at $20 briefly this summer,
  • was at $7+ on Friday
  • was sold today by M&T for $3.85
I am surprised there wasn't a larger financial sell-off as this to me brings back bad memories of weekend shot-gun weddings in 2008. I think there are a lot of banks playing some liar's poker right now. The only bank I own is USB, though I am considering WBK.

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