Did You Enjoy Our 92% Win Rate in 2020?
And just like that, we’re about to celebrate the one-year anniversary of Bauman Daily. What a year it has been!
Let’s look back at some of the stock recommendations we’ve shared with you. They tell an interesting story about the markets in this tumultuous year.
But first, a quick reminder…
Any recommendations Clint Lee or I make in Bauman Daily are not official Bauman Letter positions. We don’t track them formally. We simply present possible ways to play the opportunities we’ve identified.
As you know, we email this publication for free to anyone who asks for it, whether or not you pay to subscribe to The Bauman Letter or Profit Switch. We want to give prospective subscribers a taste of what’s in store if they choose to join the Bauman Letter family. But just as importantly, we want to make sure all our readers have the tools they need to succeed in the markets.
So did we meet that goal?
A Winning Year at Bauman Daily
Let’s start with a bird’s-eye view of how our unofficial Bauman Daily picks have performed…
- Of the 177 recommendations we made this year, all but 14 provided a positive return. That’s a 92% win rate.
- The average gain was 19.9%, with an average hold time of 162 days. That’s a 37% higher return than you’d have got by holding an index fund for the S&P 500 for the same periods.
- 28.5% of our recommendations exceeded S&P 500 returns by more than 10%. 15% exceeded the index by more than 20%, and 5% by more than 40%.
Thirty-nine of our recommendations gained more than 40%, and 18 gained more than 50%.
Here are the top 10:
That’s pretty darn good!
Pandemic Pains and Gains
The logic behind our top results isn’t hard to discern. After all, this was the year of the pandemic.
Half of the positions in the top 10 benefited from the stay-at-home trend.
One of our early picks, Dell, benefited massively from people equipping their home offices to work remotely. Wedbush Video Game Tech ETF (NYSEArca: GAMR) got a similar boost from people playing at home.
Three ETFs — FDN, ONLN, and XLK — hold companies that benefited from the trend towards remote shopping. So did CLOU, which contains many remote connectivity companies whose share prices soared as businesses sent their workers home for the duration of the lockdowns.
And, of course, the success of XBI, which holds biotechnology companies, is obvious.
Not all of these successful picks had such obvious tailwinds.
Consider the iShares U.S. Home Construction ETF (NYSEArca: ITB). It holds residential construction companies.
The housing sector was one of my first bull calls in 2020. I got a ton of push back from readers on that one! But I saw a confluence of several factors.
First, there was an incentive to move out of denser urban areas and into the suburbs to escape exposure to the virus and to create larger spaces to work from home. Those same households were saving tons of money on services like restaurants, entertainment and travel, freeing it up for investment in a new house.
But there was also a second, deeper force at work. Early on this year, I identified a stock pick in my Profit Switch service that specialized in providing an online entrée to the housing market. Its bundle of services allowed prospective buyers to shop for new homes, tour them virtually, connect with real estate agents and initiate purchases all from the comfort and safety of home.
I correctly anticipated that these factors would speed up the housing market boom and push up the valuations of residential construction firms.
Then there was the Invesco WilderHill Clean Energy ETF (NYSEArca: PBW) and the Invesco Solar ETF (NYSEArca: TAN), both plays on the renewable energy sector.
Renewable energy companies, especially those associated with solar power, have been enjoying long-term tailwinds. But the pandemic provided a powerful short-term impetus for investors to pour money into them this year.
The dramatic decline in the fossil fuel industry led to an exodus of money, which needed a new home. And as 2020 wore on, it became clear that President Trump was likely to lose the presidential election. So investors began to bet that a new administration would dramatically leap toward support for renewable energy.
Again, we were correct on both counts.
In 2021, I would like nothing better than to profit from the growth of companies that benefit from normal market and life conditions. It may not happen right away, but I’m convinced that we will be doing exactly that before midyear.
To that end, be sure to read my article next week … When I send out my predictions for the year ahead!
In the meantime, I wish you and yours Happy Holidays and a prosperous New Year.
Editor, The Bauman Letter