Performance Report: 10/31/2025
All performance data for our strategies is net of all fees and expenses. All performance data for indexes or other securities is from sources we believe to be reliable. All data is as of 10/31/2025.
Investment Strategy
MAP - Full ($500k+)
MAP - Plus
MAP - Balanced
S&P 500 Index2
Mod Alloc(AOM)2
Growth Alloc (AOR)2
July Return
1.0%
1.3%
0.4%
2.3%
1.2%
1.5%
YTD
28.1%
N/A
N/A
16.3%
12.4%
15.4%
Inception1
90.3%
N/A
N/A
132.4%
46.7%
66.4%
Sortino3
1.14
N/A
N/A
0.85
0.55
0.68
(Disclosure: We added performance figures for our new strategies solely on a month-to-month basis as any prior data will be inconsistent and potentially misleading. We will post continuous data for our full-size MAP Strategy since its inception on 5/1/2019. We use AOM and AOR as our benchmarks as they are low-cost index funds that model the exposure of the majority of retail investors. Our risk measures are aligned closely with these funds. It is important to note that individual account performance varies and your account may perform better or worse than its model. The model's performance is simply the average performance of all accounts participating in the model.)
Performance Update
October was a solid month for us with most of our accounts appreciating around 1%. We trailed our benchmarks this month but we are still outperforming by a large margin YTD. Over the last six months, our returns have been astounding, and, as I mentioned in last month's update, it was time to start pairing back some risk. Which I did. We went from nearly fully invested at the beginning of the month to less than 25% invested in a matter of days. In the process, I gave back some of our gains but I managed to eek out a respectable return for the month. Had I not been as aggressive in liquidating profitable positions, we would have been seeing red this month.
It's hard to determine when to lock in gains when securities are tearing higher. Our portfolios had become too volatile the past couple of months. Of course, volatility on the way up is a wonder, but on the way down, it can be gut-wrenching. And we had both this past month.
We were blessed to get out of the majority of our gold and silver positions right near the top. Some of the mining stocks we were in have fallen nearly 20%. Molycorp (MP), one of our best performers YTD, is down over 40% from its peak. I don't think the rally in metals, either precious, base, or rare, is over for good but it's possible there will be another swing lower before the weak hands get shaken out.
Uranium is the other theme that has driven our profits this year, and, right now, these stocks are in no-man's land. Our exposure to uranium is as light as it has been all year and I don't know if I'll be rebuilding our exposure anytime soon.
Market Commentary
I think it's clear in most people's minds that every day we are one day closer to the precipice of an incredibly massive bubble in financial assets. By every single measure, stocks are more expensive than they have ever been at any point in history, including 1929 and 1999. It has been fueled by an endless source of liquidity from the Federal Reserve (FED), some of which they have acknowledged, but much of which has taken place in the shadows. I'm very concerned about how stocks will perform over the balance of the decade.
Conversely, I have reminded some of our clients and our team, we are entering the most bullish season of the year. The period between Thanksgiving through the last of the 12 days of Christmas (Jan 5th) tends to provide strong returns for the S&P 500. So, while the long-term prospects for US equities is dire, the short-term could be promising. Thus, equities are in a terribly odd place at this moment in time with such a terrific disparity between the long and short-term outlooks.
Last month, I addressed the idea that the government shutdown could be lengthy, which proved precise. We are currently on day 35 which is equal to the longest shutdown in history. Given that progress has been fairly slow, this shutdown will indeed go down as our nation's longest. Yet, despite a bit of fearmongering by the financial media, the stock market has continued to march higher. There was a time, not too long ago, that a government shutdown was said to bring our economy to its knees. But thus far, this one hasn't impacted capital markets adversely in any way. In fact, the shutdown has been like so many other rumored "do-or-die" situations that garner a lot of headlines but eventually are just swept under the rug by the FED's liberal monetary policies.
Regarding the shutdown, I wrote last month:
I would argue the key items to watch will be the reaction in the currency markets (i.e. does the USD drop precipitously), the reaction of the US Treasury market (i.e. do rates go up), and, finally, the reaction of the ever-important junk bond market. As I've stated in the past, if the economy is going to sour, junk bonds should be the first thing investors dump. At this junction, the junk bond market is showing a slight bearish divergence, but it is far too slight to make any sort of conclusive decision. I'm keeping an eye on it and, if junk bonds weaken, it may be a precurser to a large downturn in US equities. Thus far, neither the US Treasury market or currency markets have shown any sort of knee-jerk reaction to the shutdown. For now, "all is well."
Well, it turned out that "all was well" after all. The US dollar actually appreciated after the shutdown, gaining about 2% relative to its peers, and the US Treasury market also appreciated with TLT, a 20-year US Treasury bond ETF, appreciating 1.4%. About the only security class I mentioned that didn't do so well was junk bonds which were flat for the month. I have contended for a long time, and will continue to do so, nothing truly bad will happen in the capital markets until junk bonds start to underperform. And last month, I mentioned that junk bonds were starting to show signs of underperformance but the disparity was so slight, it wasn't sufficient to base any sort of investment decision. And that is still the case today. If you want to play along at home, watch the junk bond market. The two big ETFs in the space are HYG and JNK. If these funds hit new multi-week lows before hitting new highs, while the stock market is still at new highs, then it will be time to start getting really defensive. There are other possible clues but keeping an eye on the relative performance of junk bonds seems like the most obvious "canary in a coal mine" at this juncture.
Occasionally, I tell folks, "It's rare, but often enough to make a difference, 'Mr. Market' tells us exactly what it is about to do." Well, that was the case the past few months in gold, uranium, and rare earths, but, right now, Mr. Market is being more discreet so I'll be more conservative. When junk bonds start to fail, that will be Mr. Market's way of whispering to us that we should no longer be neutral but rather looking to "head for the exits."
Conclusion
Given the bi-polar nature of the equity markets, I will proceed in maintaining exposure, but will be acutely aware of any impending risks. On one hand, I've never known anyone to successfully chase the waning moments of a bubble and succeed. On the other hand, at the end of bubbles, there are some once-in-a-lifetime opportunities to be had, some of which we have experienced first-hand in our portfolios this year. I feel wonderfully blessed to be sitting on our YTD gains and my desire to hold onto those gains is stronger than my desire to add to them. I will continue to be diligent in employing my MAP system in identifying low-risk opportunities while patiently waiting for Mr. Market to become a little more transparent.
As always, please don't hesitate to call us at 512-553-5151 if we can be of any assistance.
Best,
Matt McCracken
1) Inception date of 4/30/2019
2) All benchmark prices and returns are obtained through IBKR's PortfolioAnalyst reporting tool. S&P 500 Index is calculated using the index price. AOM is the iShares Core 40/60 Moderate Allocation ETF. AOR is the iShares Core 60/40 Balanced Allocation ETF. These benchmarks were chosen as they represent the prevailing investment strategies of retail advisors.
3) The Sortino ratio is a commonly used measure of "alpha" or the value a manager adds to a portfolio. It is similar to the Sharpe ratio. The Sortino ratio does emphasize the negative impact of downside volatility more than the Sharpe ratio which is why we use it as our primary measure of alpha.