Alpha Power Investing NewsletterNovember 1, 2019
The Dawn of a New "Power Zone"
November 1st of each year marks the beginning of a new "Power Zone." For our flagship "all-weather" Alpha Mid-Cap Power Index Managed Account strategy, this period extends from November 1st each year through May 31st of the following year. During this period the strategy holds the S&P MidCap 400 Index. Historical results suggest that this is one of the most consistent plays an investor can make.
The Value of Consistency
To highlight the consistency of the S&P MidCap 400 Index during the Power Zone, consider the annual results highlighted in Figure 1. This table shows the yearly cumulative total return achieved by holding the S&P MidCap 400 Index from November 1 through May 31 for each of the past 38 years.
Figure 2 presents a quick summary of the 38 years of results presented in Figure 1.
Let's address what these numbers mean in terms of real-world investing:
An investor concerned about a decline by the S&P MidCap 400 Index during the Power Zone would be well served to consider the results displayed in Figure 3. Figure 3 displays the cumulative Power Zone returns for the S&P MidCap 400 Index over rolling three-year periods.
The most important thing to recognize in Figure 3 is that the 36 rolling three-year returns showed a gain 100% of the time. What this tells an investor is that patience pays off. Even if one year does not see a Power Zone gain, historically if one sticks with it over time, gains accumulate.
There are other reasons to be patient when it comes to holding mid-cap stocks during the Power Zone. From November 1, 1981 through May 31, 2019 during the Power Zone, the S&P MidCap 400 Index:
These are the kinds of consistent, market-beating performance results that most investors never achieve.
Disclosures and Disclaimers: Past performance is not a guarantee of future performance. The returns illustrated in the charts above do not represent actual trading and are not representative of the returns the Alpha Mid-Cap Power Index Managed Account strategy. The data does not include management fees or the cost of funds, trading, or other expenses. The illustrations are designed to quantify the effect of certain time periods (as specified) on the S&P MidCap 400 Index. Indexes are not investment vehicles and persons cannot invest directly in an index. Index funds/ETFs may vary somewhat from index returns due to management fees and portfolio structure. The S&P MidCap 400 Index is a market-weighted index of 400 mid-sized companies with total market capitalizations from roughly $750 million to $3 billion dollars. Stocks in this index represent companies from industries including information technology, energy, health care, financial, manufacturing, etc. The data used to construct the illustrations was obtained from third-party sources. While Alpha believes the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information.
Alpha Investment Management, Inc. is a SEC registered investment advisor located in the State of Ohio. Such registration does not imply a certain skill or training and no inference to the contrary should be made. The information and opinions expressed in this document are for informational purposes only. Any recommendation or opinion made in this document may not be suitable for all investors. The information contained herein does not constitute and should not be construed as investment advice, an offering of investment advisory services, or an offer to sell or a solicitation to buy any security.Alpha Power Investing Newsletter Archives
© 2019 Alpha Investment Management, Inc.