I’m Pat Rosenheim, a.k.a. the PandA Trader.
I was playing around with some charts and various symbols on stockcharts.com, using their free PerfCharts which shows performance of price change plus dividends over varying time periods. Their default time period is 200 days. It should be noted that when someone like me posts about stocks, CEFs, #markets, #index, etc. that there is a distinct difference between what a non-investor conceives of the time span of “days” vs. what an investor might be referring to when they mention #days.
You might have wondered why 200 days is important. That is the timeframe used in the 200 day moving average indicator, which is an indicator upon which stock price movement can be measured. It’s one of many…
Most people think of days as calendar days, such as 7 days in each week, 28-31 days in each month, and about 365 days in each year. When an investor talks about days they might be referring to calendar days or they might instead be referring to “trading” days, i.e.; days the stock markets are open. In that case a week is usually 5 calendar days, a month is approximately 21 calendar days, and a year is approximately 253 calendar days. It’s important, I think, to make the distinction and understand the difference.
Now, the charts I have and will be referring to use trading days as measure of time.
I’m glad that’s out of the way, so I can get to the focus of this post, and based on it’s title one could reasonably assume it might be about stock (and/or CEF, ETF, ETN, etc.) performance measured against the performance of an index, or indexes.
I’m going to be comparing against 3 indexes; Nasdaq Composite, Dow Jones Industrial Average, and the S&P 500.
And now, on with the show!
So, is it possible to “beat” the index?
YES! Given the right timeframe and the the “right” stock, it’s quite possible.
First, lets look at the 200 day PerfChart of the 3 indexes I mentioned. You’ll recall the PerfCharts use Total Performance which is price change plus dividends.
The first chart is just the indexes for the past 200 days;
Just as an aside, I would like to compare the indexes against their CEF tracking vehicles (BXMX, DIAX, QQQX, SPXX) over the same period;
Well, they seem to be tracking nicely, although QQQX is more than 4 basis points higher than COMPQ! Fair enough, but what about individual holdings?
Let’s see how NCLH, GF, AWP, MORL, IIF, PCM, GLU stack up against these three indexes;
Well, would you look at that! I see the three indexes with their performance between 13.76% – 21.55% compared against these seven individual holdings with performance ranging between 37.1% – 47.94% which is more than double the indexes performance as a group.
So, it is possible to beat the indexes! But, remember this is just a specific selection of holdings over a specific timeframe, and the results can differ dramatically with different selections and/or different timeframes. DO NOT BASE YOUR INVESTING DECISION(S) ON ONE CHART OR ONE TIMEFRAME. In fact, it’s often best to look at several different timeframes for each candidate. Yes, Stockcharts.com has a chart for that; GalleryView Charts in multiple time-frames to allow for simultaneous short, mid, and long-term analysis of a security.
I own 3 out of the top four in the last chart pictured (I don’t own New Germany Fund…yet!). I also own some securities that have performed abysmally, like PHK & PSEC, all visible on my spreadsheet linked on my blog; https://hyhrd.com/panda-traders-results-page/
I hope this helps and I also hope you learned something.
Have a great weekend!
PLEASE TAKE NOTE AND REMEMBER THIS!
I’m not telling anyone to buy anything or giving anyone any advice, because that’s illegal. You see, I have no letters after my name, like RIA, CFA, etc. I SIMPLY DO NOT GIVE ADVICE. I only tell (and show!) what I do. You, like me, are all alone in this.
And remember, always do your own due diligence!