2023 isn’t over yet, so it’s not yet time to review the Asymmetric Portfolio’s performance quite yet.
But as I start to look at the index comparisons with a week to go, they’re a little difficult to wrap your head around. The Asymmetric Portfolio started on May 1, 2023, and since then the portfolio is up 9.76% compared to an 18.35% total return for the S&P 500 $S&P 500(.SPX)$ . Yikes!
Compare it to the $NASDAQ 100(NDX)$ (see above) and the comparison is even worse.
But are the S&P 500 or Nasadaq 100 the best comparisons?
Maybe not given what a weird year 2023 was.
2023 has been marked by a massive divergence between the Magnificent 7 and the Modest 493. If you aren’t familiar with the market’s latest buzz term, the Magnificent 7 are $Apple(AAPL)$ $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Amazon.com(AMZN)$ $Microsoft(MSFT)$ $Tesla Motors(TSLA)$ $Meta Platforms, Inc.(META)$ $NVIDIA Corp(NVDA)$.
You can see below that they’ve not only beaten the market overall in 2023, but these seven stocks have accounted for nearly all of the S&P 500’s gains.
The distortion is even more evident in the Nasaq 100, which adjusted its index weighting in July after the Magnificent 7 became 55% of the index weight.
There are several reasons for the outperformance of the Magnificent 7, but the biggest is plain as day: Multiple Expansion!
I’ll take my lumps in (likely) underperforming the S&P 500 and Nasdaq 100 in 2023 because the Asymmetric Portfolio wasn’t built on buying the biggest companies and hoping they get bigger.
As a constellation prize, it looks like I’ll outperform the S&P 493.
Happy Birthday Yes GIF
This overweighting to seven stocks will likely come out in the wash long-term and that’s why I’m not too worried about it. I’m comfortable buying smaller companies with 10x potential and riding the ebbs and flows of the market.
Looking forward to 2024, the comparison against the S&P 500 may work the opposite way if the Magnificent 7 sees multiple contractions, which will happen eventually.
This is just another wave (maybe a bubble) in the market. Ride it out and keep on swimming.
https://asymmetric-investing.beehiiv.com/p/magnificent-7
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