Friday, December 31st was the last trading of the month and the year. After being the top stock for four months straight, Nvidia has been replaced. Therefore, I sold the four shares of NVDA for $296.38 each for a total of $1,185.52. With the cash of $36.24 I have held since September 1st, I ended the year with a grand total of $1,221.76. I started testing this strategy with $1,001.66 on May 3, 2021 so this technique has earned a return of 22 percent over the last eight months. Please see the table below for a summary of the stocks used for each month, the balance at the end of each month and the return earned through the end of each month.
This strategy yielded losses through the first five months. On the other hand, it produced great returns in the final quarter of 2021. The following graph illustrates the growth of my initial investment of $1,001.66 over the last eight months.
Versus the S&P 500
The benchmark S&P 500 exchange traded fund (SPY) returned 14.6%, including dividends, over the same period. So clearly, the strategy outperformed the “market” as indicated by the following graph comparing the growth of the same $1,001.66 investment.
From this comparison, we see that the S&P 500 index is a relatively slow and steady investment while the modified strategy is fast and risky. But with greater risk, it achieved a greater return as predicted by portfolio theory.
The New Top Stock Going into the New Year
The new top performing stock of the S&P 100 for the last six months is Tesla Inc.
On Monday, January 3, 2022, I will buy one share of Tesla which closed on Friday at $1,056.78. I will keep you posted so make sure to check back on January 31.
