Archive Category: Infinite Momentum Alert Archive

When an investor can compound capital at an annual rate north of 30%, the long-run returns become truly eye-popping. Do that for 25 years, and you’re talking about a total return in excess of 150,000%. That’s enough to turn a $10,000 starting stake into $15 million.

In last week’s Performance Review note, we ended with an open question about whether concentration in a single sector or industry group is a good or bad idea. The question emerged as we learned that, although we beat our blended benchmark (+2.8% vs. +1.9%) last month, we might have done even better had we not owned three “shipping” stocks, which lost 10.7%, 10.9%, and 15.6% during the four-week holding period in focus.

As you’ll see in the table below, our 10-stock portfolio netted a 2.8% return over the four-week holding period between June 28 and July 26. A positive return is always good — but how good is it? Whether or not the quote is accurately attributed, I often think of what Einstein (supposedly) said about relativity:

Last week, I promised we’d have a look at one of our current holdings, American Superconductor Corp. (Nasdaq: AMSC), through the lens of our three-factor Infinite Momentum system. Shares of AMSC are up an incredible 168% year-to-date, far outpacing the already-strong performance of the S&P 500. Have a look:

In recent portfolio reviews, we’ve made detailed observations about divergences between the performances of our Infinite Momentum Alert portfolio and the broad market benchmarks. Last month, I noted how the market was up while our portfolio was up more. The month before that, we witnessed our portfolio being up while the market was down.