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February Changes to the SSR Portfolio

We have posted our monthly changes to the SSR tracking portfolio. For more information on this month’s deletion and addition, read the February SSR Monthly Report.

January Market Recap

With only two trading days remaining in the month, U.S. stocks are on pace for their best January in four years. Through the close on Friday, January 27, the iShares DJ U.S. ETF (IYY) gained 2.7% for the month. This is in sharp contrast to January 2016, when the index fund fell 5.5% on a total return basis on news of the slowest annual GDP growth in China in 25 years, falling oil prices and the cloud of monetary tightening by the Federal Reserve. For this January, the SSR tracking portfolio outperformed the benchmark slightly month-to-date, adding 2.9% through the 27th.

The 2.9% total return for the SSR tracking portfolio month-to-date is its best January performance since 2013 when it gained 5.6%. Last January, the portfolio dropped 6.8%. Through the January 26 close, 28 of the 36 SSR stocks posted a monthly gain. The portfolio was led by Skyworks Solutions (Group 2: SWKS), which gained 21.9% in January through the 26th.

Much of the strength in stocks this month is attributable to the “Trump Rally” that began following Election Day. From the market close on Election Day, November 8, 2016, through the close on Friday, January 20, the S&P 500 index gained 6.2%. This is well above the average post-election return of 0.44%, dating back to 1937, when Inauguration Day was moved from March 4 to January 20. The post-election momentum has also pushed the Dow Jones industrial average above the 20,000 mark. See this month’s Portfolio Corner at the Articles section of the SSR website for more on this.

January 20 also marked the end of eight years in the White House for President Barack Obama, during which he presided over the third-highest S&P 500 compound annual growth since World War II at 12.0% (from December 31, 2008, through December 31, 2016), according to CFRA. The highest was Gerald Ford’s term, with an average annual return of 18.6%; Bill Clinton’s term came in second at 14.9%.

Obama was also the fourth Democratic president to avoid a recession while in office since 1900. In a historical footnote that does not bode well for President Trump, every Republican president since 1900 has experienced a recession in their first term in office.

In terms of economic expansion, however, the Obama years weren’t as robust as his predecessors. The 1.7% average annual growth in U.S. gross domestic product (GDP) while Obama was in office ranks as the lowest since 1949, according to CFRA, falling short of the 1.8% average annual growth during the presidency of George W. Bush.

SSR Portfolio

For 2017, the SSR tracking portfolio has gained 2.9% through the close on January 27 while the iShares DJ U.S. ETF (IYY) is up 2.7%. Since inception, the iShares DJ U.S. ETF has gained 180.6%, while the SSR tracking portfolio has gained 227.2%.

Wayne A. Thorp, CFA
Senior Financial Analyst, AAII
SSR Investment Committee

Click here for news on the current SSR holdings and weekly performance data.

The Stock Superstars Report (SSR) publication was developed to educate individual investors on how to build a stock portfolio using a mix of strategies. The SSR is designed to provide all the information you need to manage a stock portfolio as well as to teach you about timely investment principles relating to the SSR portfolio and stock investing in general.

 

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