The Market Today

After rising 0.0016% yesterday, the S&P 500 fell 0.64% today while our Buy List gave back 0.43%. For the month of November, the Buy List was up 5.88% and the S&P 500 was up 3.52%.
For monthly tracking purposing, I’m going to rebalance the entire Buy List based on today’s closing pricing. I’m going to equally weight all 25 stocks. Then on January 1, we’ll start tracking the 2006 Buy List (which I’ll have for you in about two weeks).
Our worst performer today was the best performer for the month. Quality Systems (QSII) gained 21.3% during November despite giving back 8% today. The best stock today was Donaldson (DCI) which jumped nearly 6% to a new 52-week high.
Looking over today’s GDP, here are some thoughts about interest rates and the economy. Over the last 10 quarters, the U.S. economy has grown by 17.6% (including inflation). That’s about 6.7% on an annualized basis. That’s very good.
At the beginning of that period, a 10-year Treasury bond yielded about 4%—so you can see that borrowing has really paid off (for now). My concern is that the Treasury market will soon start demanding a larger piece of the action, and rates will rise. If you were loaning money and saw your borrower making such nice returns, wouldn’t you want some of it? I would.
Here’s your odd stat for the day, along with a small lesson. There are only eight stocks that have beaten the S&P 500 for the last seven straight calendar years. That’s a lot lower than what I would have guessed.
If we assume that every stock has a 50-50 chance of beating the market each year, then seven straight victories would be 1-in-128 (one over two to the seventh). Given that a few thousand stocks have traded continuously over that time, I would have guessed that a few dozen stocks had seven-year win streaks. Over 500 stocks have beaten the market the last five years. What happened? 1999. The S&P 500 was up a lot that year, but most stocks weren’t. The reason is that the index is weighted by market value. The bigger you are, the more say you have. And the big boys were soaring that year. For everyone else, 1999 wasn’t much fun. The median return was 0%.
The eight stocks that beat the S&P 500 from 1998 through 2004 are Canterbury Park (ECP), Chico’s FAS (CHS), Cohesant Technologies (COHT), Electronic Arts (ERTS), FactSet Research Systems (FDS), K-Swiss (KSWS), Oshkosh Truck (OSK) and Rare Hospitality (RARE).
Here’s how the eight are doing so far this year:
Chico’s FAS 93.76%
Oshkosh Truck 32.21%
K-Swiss 7.68%
Rare Hospitality International 0.53%
FactSet Research Systems -0.03%
Electronic Arts -8.63%
Canterbury Park Holding -25.93%
Cohesant Technologies -27.23%
The S&P 500 is up about 3.1% for the year, so it looks like Chico’s and Oshkosh will keep their streaks alive, while a few more are on the fence.
Beating the market one year isn’t so hard. Doing so consistently is very tough.
Today’s Link: John Mugarian.

Posted by on November 30th, 2005 at 7:11 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.