After a decline of nearly 6% in the month of September, the Gad Winning Value Portfolio had a strong October, up nearly 10 percentage points, and sits up 3.2% for year. One month, however, is of no significance to me in investing. Even though the Winning Value Portfolio crushed the indices during the month, year to date, the portfolio trails the S&P 500 index by a healthy margin.
As of Oct. 31, 2014, the Winning Value Portfolio was up approximately 3.2%, compared with increases of 8.1% for the S&P 500 and 7.9% for the Wilshire 5000. In my comment last month, I indicated that volatility had re-entered the market. October saw even more market volatility with seemingly every day consisting of a triple-digit advance or decline in the Dow Jones Industrial Average.
For the Winning Value Portfolio, October was a month where the leading positions continued to lead and the lagging positions continued to lag. Small-cap Iridium Communications (IRDM) continued its surge and finds itself up nearly 60% so far in 2014.
On the opposite end in terms of market capitalization, Apple (AAPL), the most highly valued company in world, is also up an incredible 36% so far this year. With a current market cap of $640 billion, Apple's advance this year represents a more than $200 billion increase in market value alone.
Quietly, yet assuredly, Bank of America (BAC) now finds itself significantly outperforming the S&P 500 year to date. For the remainder of the year, I believe Bank of America could be a standout performer.
The portfolio's commodities holdings continued to be punished by declining prices. Natural gas giant Chesapeake Energy (CHK) is down 14%, while Potash Corp. (POT) slipped back during the month. Yet volatility is the friend of the patient investor and I believe that both Chesapeake and Potash represent very high quality long-term holdings for the patient investor.
With two months left, it's possible that the portfolio will underperform the S&P 500 for the first time since I started it four years ago. While that would be disappointing, the portfolio will likely finish in positive territory, satisfying our ultimate goal -- significant long-term capital appreciation with a focus on capital preservation.