The US corporate earnings season kicks into top gear this week, with a spate of big-name companies set to report their quarterly results, including Facebook, Microsoft and Amazon. More than a quarter of the companies in the S&P 500, in fact, will announce their earnings this week.
So far, more than three quarters of the companies that have already reported have beaten analyst expectations with their earnings, though the bar was set fairly low, a drop in forecasts overall having been expected.
The US stock market has advanced since the start of the earnings season — the S&P 500 index now stands within 1% of its all-time high, while the DJIA is about 1.6% from its record level.
The top trader we are training our eye on today has so far been wholly focussed on the Dow Jones and has been delivering solid results for over a year now. The account trades under the name Dowinvest and this is how things look for them right now:
We last reviewed this account back in November 2018, and at that time we commented positively on the steady stream of profits that they had managed to accrue. Six months on, and things are looking, if anything, even more positive on the whole. The risk score has improved, now at just 1, having been at a level of 2 previously, though the volatility has crept up from sub-1% to just over 2%. That’s still a low volatility score though.
The overall profit has improved substantially, rising to 14.84% from the less than 7% it was standing at the last time we caught up with this account. Hand in hand with this, though, has been a substantial increase in the maximum drawdown, which has ballooned to just above 10%, having been just 4% back in November. This is a bit of a concern, though it does still stack up favourably compared to the overall profit.
So how have they been performing month to month? Let’s see:
This is good going, but what it is also impressive is how they managed to produce positive numbers for many of the final months in 2018, alongside gains for the first few months of 2019. The end of 2018 was a time of great volatility on Wall Street and a time during which many investors struggled, as the stock market declined. Taken as a whole, this account still lost money in that final quarter of 2018, but not much.
With the subsequent bounce back in 2019, we have seen many investors reclaim their losses from the end of 2018, but not many who contained the losses so well in those difficult last few months of the year.
Finally, let’s look at their asset allocation:
There’s no change here from the last time we looked at this account — a 100% focus on the Dow Jones. While that doesn’t offer much diversification of risk, their track record does seem to suggest proficiency in dealing with this index. There is something to be said for trading what you know best.
In summary, this is an account with low risk metrics that has delivered consistent returns for over a year now. They don’t trade very frequently, but the trades they have placed so far have delivered some nice profits.