- The last few months have been characterized by even more momentum than the already impressive first half of the year. The first rate cuts by the Fed, coupled with the Republicans’ landslide victory in the U.S. presidential election, have caused great enthusiasm in the financial markets.
- In this article, we will look at how the Everest Formula has performed relative to the U.S. indices, while also examining the market outlook for the months ahead.
A review of the last three months
As we head into the final month of 2024, the bullish sentiment that characterized the first part of the year continues to propel equity markets. The S&P500 index has touched 6,000 points for the first time in history, and few analysts as of now believe it will come to a halt.
We can point to two main reasons that are propelling the market now:
- The Fed’s more accommodative monetary policy. Indeed, the institution has begun to reduce interest rates in order to support the labor market and stimulate the economy, also accomplice to an inflation that has returned within the range desired by the Fed’s top management.
- The decisive outcome of the U.S. elections removed a source of uncertainty for markets, with stocks posting their best post-election rally ever. Republicans won a strong mandate by winning the presidency, the Senate, and the House. Investors are confident that the Republican Party’s likely tax cuts and deregulation could further stimulate economic growth, supporting corporate profits and the rally in stocks.
How has Everest Formula performed in this environment? After a first half of the year in which the strategy, albeit with positive returns, failed to keep up with the market (we discussed this extensively in this article), we are pleased to report strong gains over the past 4 1/2 months: the 3-stock strategy achieved a gain of +27.3% from July 1 to November 13, while the 10-stock strategy gained a more limited +17.1%, but with less volatility. In the same period, the S&P500 index has registered a performance of +9.7%.
Even broadening the horizon to the whole of 2024, the 3-stock and 10-stock strategies record a performance of +29.3% and +16.9%, respectively, against a gain of +25.7% for the U.S. index. The Everest Formula with its value stocks has thus managed, albeit in today’s exuberant market, to match and even outperform the S&P500, at least in its 3-stock version.
One of the main reasons for this change of course is to be found in the market itself: whereas in the first half of the year, as discussed in the dedicated article, the rise was led by a handful of large-cap stocks such as NVIDIA and a few others, the second half of the year was marked by a general rise in all stocks that were part of the market, which allowed the value companies screened by the Everest Formula to emerge.
What is the outlook for the coming months?
Few as of now seem to speculate that the stock market may have a setback in the immediate future. It should be noted, however, that recessions and bearish periods have often occurred without premonitory signs and quickly following moments of euphoria such as the current one. We therefore recommend focusing on long-term fundamentals rather than reacting exclusively to recent political and monetary changes. A well-diversified portfolio can withstand a range of potential scenarios, helping investors make steady progress toward their financial goals.
What about the Everest Formula? Looking at the backtests, we can see that the Everest Formula has performed well both in times of exuberance and during recessions and bearish periods. We cannot guarantee that the Everest Formula will beat the market every month, but we firmly believe that selecting good companies at a bargain price will always be a good investment strategy that will outperform the market and fulfill investors’ financial goals.
If you want to find the best profitable and undervalued stocks in the market, join us now.
