Performance Review
Performance Review
Performance Review as at November 29.2024
We’ve been operating our strategy for 47 months and over that time the stock market has swung hard in each direction. We present an evaluation of how well we are doing when compared to the broad stock market and the benchmarks that best reflect the overall risk we take.
For more specific context, here are the last four years’ major stock market themes:
- 2021– post-pandemic rally with building worries about a recession
- 2022– inflation and rising interest rates knocked markets down with a very brief technical recession (3 months)
- 2023– the rise of generative AI reversed negative economic trends and formed a very narrow tech rally
- 2024– Interest rates are falling, stocks sit at record highs, and several valuation warnings are ringing loudly
All of these except for 2023 were unusual years that challenged our single risk trade-off strategy designed to capture 60% or more of market gains in very good years while avoiding 70% or more of losses in bad ones.
Note: To define a normal year, we looked at the S&P 500 index over the last 75 years where the index returned about 10% a year with about a 15% standard deviation. That means two out of every three years’ stock markets returns should fall somewhere between -5% and +25%.
The table below lays out (1) our performance each year from 2021 through November 29, 2024, (2) the cumulative return we’ve made over that time and (3) how well we captured the stock market’s upside and downside performance each year and cumulatively:
As Of 11/29/24 |
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Total Return |
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Cumulative Return 1 |
2024 2 |
2023 |
2022 |
2021 3 |
LUL Strategy |
155.67% |
16.60% |
17.60% |
-4.00% |
18.26% |
Segmented Benchmark |
103.76% |
8.70% |
8.10% |
-11.70% |
NA |
Class Blended Benchmark |
114.85% |
8.90% |
9.40% |
-3.60% |
NA |
S&P 500 (SPY) 4 |
160.32% |
26.84% |
23.11% |
-20.28% |
28.79% |
Equal Weight S&P 500 (RSP) 4 |
149.54% |
19.18% |
11.86% |
-13.36% |
29.47% |
LUL Strategy Capture |
Cumulative Capture 5 |
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Segmented |
150.04% |
190.80% |
217.28% |
292.50% |
NA |
Class Blended |
135.55% |
186.52% |
187.23% |
90.00% |
NA |
S&P 500 (SPY) |
97.10% |
61.85% |
76.16% |
507.00% |
63.42% |
Equal Weight S&P 500 (RSP) |
104.10% |
86.55% |
148.40% |
334.00% |
61.96% |
1 - Measures the cumulative value over time |
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2 - As of 11/29/24 |
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3 - Testing strategy before we launched LUL |
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4 - Source: Tradingview.com & Seeking Alpha |
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5 - 2021-2024 for SPY and RSP; 2022-2024 for Benchmark comparisons |
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Notes: |
· Segmented Benchmark measures the percent of each of the 11 sectors that comprise the S&P 500 against LUL holdings in each sector. |
· Class Blended Benchmark measures the percent of each type of security (common stock, preferred stock and bonds) against LUL holding in each class. |
· S&P 500 Index measures the value of 1 share of each stock in the index (stocks that grow faster overly influence this index.) |
· Equal Weight S&P 500 equalizes the value of each stock in the index so that no one stock overly influences results. |
Looking at Cumulative Return in the table’s upper lefthand side, we missed the S&P500 by a little while beating everything else. That’s pretty terrific when you consider how much less risk we took to get there.
For estimating our risk, we look to our segmented and class benchmarks for guidance. We believe each type captures risk in slightly different ways – the segmented benchmark looks at economic sectors whereas the class benchmark considers whether we bought stocks, bonds or something in between. In each case, we outperformed these benchmarks handily. In other words, for the overall risk and returns reflected by each benchmark, we did a lot better.
How well are we doing when compared to our competition? While we are too small to be tracked by anyone who would independently verify our performance, we estimate we rank somewhere in the top 15% of all money managers over that time according to data we’ve reviewed from Morningstar Data, Barrons and Charles Schwab.
How we do it is a combination of discipline, reasoned research and not letting our egos interfere with the process. Can we keep it up? There is never any guarantee that past performance will match or exceed the past 47 months, and we obsess over that. Our job is evaluating whether future risk mirrors the recent past or is changing, and that is more art than science – we do our best and like everyone else, we will make mistakes. The good news is that we share the same boat with all our clients because our portfolios also use our strategy, which gives us ample reason to stay highly vigilant.
Life UnLocked Partners, LLC is a Registered Investment Advisor (RIA) registered with the state of California, providing investment advisory services where registered or exempt from registration. Registration does not imply a certain level of skill or training. Investing involves risk, including potential loss of principal. Past performance is not indicative of future results. This material is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell securities. For more information, please request our Form ADV or visit www.lifeunlocked.partners.