Performance Report: 09/30/2026
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 09/30/2026
Investment Strategy
MAP - Full ($500k+)
MAP - Plus
MAP - Balanced
S&P 500 Index2
Mod Alloc(AOM)2
Growth Alloc (AOR)2
Sept Return
(5.8%)
(5.8%)
(2.1%)
(0.5%)
(2.0%)
(1.7%)
YTD
7.0%
1.3%
3.5%
11.0%
3.3%
6.2%
Inception1
111.9%
N/A
N/A
160.0%
53.2%
79.2%
Sortino3
1.13
N/A
N/A
0.87
0.52
0.68
(Disclosure: We added performance figures for our new strategies solely on a month-to-month and YTD 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
September was a bad month for us. I've never experieced a rut such as the current one. After a nice month in August, I gave back all of our gains in September. I guess the best advice at this point is, "when you're in a rut, quit digging." So, we are in a whole lot of cash and guaranteed bonds. I'm taking steps to proceed as conservatively as possible while still having some exposure to capitalize on low-risk opportunities. The market has seen a lot of unprecedented developments, which I'll cover below. First, let's look at what went wrong this past month.
1) The profitable investments from August associated with fertilizer stocks, precious metals, and drone manufacturers "retraced" a lot, or in some cases, all of their gains in September. This is actually healthy for our strategy long-term. All my primary themes appreciated on strong volume in July and August and then fell on weaker volume this month. As I alluded to in past updates, my investment themes need to climb a "Wall of Worry," and that appears to be happening in the here and now. I remain confident in these themes despite recent losses. In 5 years, I know we will be very thankful that our portfolios are filled with these securities.
2) Oil and Gas stocks: The losses in this space really stymied me. My team members will tell you that every so often I say to them, "The market is telling me exactly what it's about to do." And that is precisely what happened this month in oil prices. I knew, almost beyond a doubt, that oil prices would continue higher. When I see a combination of three factors, I can say with a high degree of confidence that prices will continue higher and all three of those factors were in place for oil. And as expected, oil did go up quite a bit, but oil stocks did not, sharply diverging from their underlying product.
The Dec. '26 crude oil contract appreciated 7.9% in September. However, IYE, the largest oil and gas ETF, fell in value 4.1%. In my four decades of stock market experience, I have never seen oil stocks fail to track oil prices, much less underperform by 12% in a single month. (For clients with futures trading permission, we do own a long-dated futures contract that did appreciate, but it's a small allocation.) Further, we owned MLPs, which are oil and gas pipelines. AMLP, the largest MLP ETF, fell over 10% this past month despite profit margins increasing as the pipelines get paid a percentage of their product throughput. Every single MLP we owned this month was stopped out despite the very product it transports going up in a significant way.
Monday-Morning QBs will point out that when interest rates rise, as they did this month, energy stocks would lag as they pay a hefty dividend. Dow Theory states that dividend-paying stocks will be sold off when interest rates rise, as bonds become more attractive. Investors simply sell risky income in exchange for risk-free income. And I agree with all this; however, junk bonds should have suffered a far worse fate, as rising interest rates coupled with rising fuel costs should have an adverse impact on the most vulnerable companies in the US economy. Yet, HYG, the largest junk bond fund, only lost 2% in September. So why did oil stocks fall 4% when oil went up 8%, but junk bonds only went down 2%?
3) Overweighting Precious Metals: Towards the end of the month, I was too aggressive buying gold and silver mining stocks. My thesis was simple. US Treasuries nosedived all month. The most likely culprit is that foreign central banks are selling US Treasuries in droves. We know China is liquidating its portfolio of US Treasury debt, and it appears many others must be as well.
So I asked myself, "If foreign central banks are selling US Treasuries, what are they buying with the proceeds?" Central banks typically buy only three securities: their own sovereign debt, US Treasuries, and gold. So I theorized that if they are selling US Treasuries, they must be buying their own debt and gold. But I was wrong, at least on the gold part. And I had overweighted the precious metals more than I should have. The market wasn't suggesting that gold buying was taking place; in fact, it was telling me quite the opposite. But I didn't listen to the market; I listened to my own intuition, and it contributed to our negative returns.
I can live with the first two issues. Our investment themes should continue higher; this month was just a healthy retracement. Securities have been behaving in such a way for hundreds of years. And no one in the capital markets could have predicted oil stocks would fall in value when oil prices jumped 8% in just a month. That is a wild anomaly that I can live with. But the third issue is all on me. It's just a mistake I shouldn't make.
Stock Market Update
The stock market exhibited some incredibly odd and rare behavior in September. And when I say "rare", I mean I've never seen anything like it in all my studies. In past updates, I've covered technical indicators such as "Breadth" and "Leadership." These indicators tell us whether a stock market advance is healthy or unhealthy. Granted, Breadth and Leadership have been weak on and off for much of this decade. But in September, both collapsed. It would be very easy to make the case that this bull market is on its very last legs.
Breadth measures how many stocks move higher or lower in a given period. In September, when the S&P 500 index was essentially flat, far more stocks fell than rose. Of the 2300 or so stocks that trade on the NYSE, about 1380 declined while only 920 appreciated. For every stock that rose, 1.5 stocks fell. That is atrocious breadth, the likes I've never seen. But the lack of breadth is nothing compared to the lack of leadership.
Leadership is measured by the number of stocks hitting 52-week highs versus stocks hitting 52-week lows. In the middle of the month, the S&P leaped higher by nearly 3% in just 3 days. At that point, the S&P 500 was just 2% below its 52-week and all-time high. Conversely, the S&P 500 was 23% above its 52-week low. Common sense would suggest far more stocks should hit new highs than new lows in such an environment. However, on September 21st, as the S&P 500 had just completed a 3-day, 3% rally and closed within 2% of its all-time high, 155 stocks hit a 52-week low while only 27 hit a 52-week high. Six times as many stocks hit new lows versus new highs! And this statistic was not an outlier. For the rest of the month, as the S&P 500 traded sideways, an average of 321 stocks hit a 52-week low each day, while only an average of 23 hit a 52-week high. This development should have everyone's attention, yet it has not even earned a headline on any financial website or news outlet I follow.
For years, tactical investors touted a "can't miss" indicator called the Hindenburg Omen, which combined breadth and leadership to create a sharp predictor of stock market mayhem. It was named after the Hindenburg Airship that went down in flames. The idea is simple: whenever this stock market indicator is triggered, "watch out below." Before 2015, this indicator had unreal accuracy, with a 80% success rate in identifying a 10% correction. Specifically, it signaled the 1987 Black Monday crash, the 2001 dot.bomb bear market, and the 2008 Financial Crisis. (To my knowledge, the stock market never fell 20+% without a Hindenburg Omen until 2020. There have been false positives over the past 40+ years, but every stock market decline of note triggered a Hindenburg Omen prior to this decade.)
The Omen requires 4 events to take place.
1) The stock market is trending higher. Check, yes, that is currently taking place.
2) The McClellan Oscillator, which is a measure of market breadth, is negative. Check, we just covered that.
However, the last criteria are not met, because they are far worse than the creator of the Hindenburg Omen ever thought they could be.
3) The daily number of 52-week highs and 52-week lows exceeds 2.8% of the total shares traded on the same trading day. This is negative only because the number of new highs is insufficient! In September, the number of new highs never exceeded 1.2% of the total shares traded despite the index being just 2% from its all-time high. However, the number of new lows ranged from 6.2% all the way up to 20% of all shares traded during the last two weeks of the month.
4) The number of new highs cannot be more than two times the number of new lows. On this metric, the current market would trigger a Hindenburg Omen as the number of highs was less than 1/5 the number of new lows. Rather than new highs being twice as many, the new lows were six times as many.
What we are witnessing is not the Hindenburg Airship going down in flames; we are witnessing the Hindenburg Airship with an atomic bomb strapped to it. At any other point in US stock market history, anyone paying attention would be running as fast as they can away from this stock market. But Quantitative Easing (QE) is a wonderful thing and can keep the market moving higher far longer than anyone would think possible.
As I write this, it does appear the stock market has a better-than-decent chance of pushing higher, at least one more time. A 17-year long bull market isn't going to stop on dime. Since QE was established in late 2010, the FED and Wall Street have overcome some incredible obstacles. The two obstacles, which are related, they cannot overcome is a failure of the USD and persistent inflation. The FED is not entirely out of bullets just yet. At any moment, the FED could initiate another "Operation Twist" where they buy down long-term rates. I imagine this would send stocks soaring. Or, if there was some meaningful resolution to the War with Iran, stocks would likely catch a large bid higher. I see the former taking place before the latter, but either could provide meaningful gains.
As I've covered in past updates, the fundamental story for stocks is lousy. Valuations are at all-time highs. Interest rates are at multi-decade highs. Inflation is at generational highs. Government debt that needs to be serviced has ballooned out of control, and someday the bill will come due.
But for the first time since 2022, and 2008 prior to that, the technical picture for stocks is equally as bleak. Can the FED's QE machine continue to push stocks higher? Will higher interest rates and stubborn inflation finally tame the stock market? In time, we'll find out.
Moving Forward
Given the dire fundamental and technical outlook for the stock market, I'm going to position us more defensively. I know I've expressed a similar sentiment in the past, and now I'm taking deliberate measures to that end.
I'm taking the following steps to grow more conservative in my approach.
1) The MAP has several primary setups. One setup is a momentum indicator. Everyone who does technical analysis uses momentum indicators. In fact, use momentum indicators exclusively. However, if the stock market is peaking and set to decline, momentum indicators will likely fail. So I'm eliminating them from the MAP unless a security is non-correlated with the S&P 500, which a good number of our securities fit that description.
2) The MAP also uses a capitulation signal. What Wall Street refers to as "Buy the Dip." Capitulation is when investors "just give up on a stock" and sell in massive quantities. For the past 17 years, the stock market has gone up far more often than it has gone down. So any signal has worked, but my capitulation signal gave me opportunities that were a) low risk and b) could possibly outperform the benchmarks as the capitulation event clears out all the weak hands. But in a down or Bear market, my capitulation signal likely won't work as well, or at all. So, I'm turning off my capitulation indicator as well. If the market moves higher, yes, we'll miss some gains, but given the intermediate-term technical outlook, I assume we should play it safe.
3) Finally, the MAP has two different "lie detectors". These identify points in time where price movements diverge from money flows. When prices are flat to down, but money flows are bullish and constructive, the MAP has the ability to call the market's bluff. When law enforcement interrogates criminals, they look for discrepancies or inconsistencies. And the MAP does the same for the stock market. Much like the capitulation indicator, these signals offer low-risk entry points. But unlike the capitulation indicator, the stock is typically not trending lower. In a way, these two indicators marry the best of the momentum trades with the advantages of the capitulation signal.
The two lie detector signals provide the most lucrative risk/reward scenario. Sometimes this signal does fail, as it did with FNV last month. But over time, they have proven to be consistently reliable. Historically, these two signals alone were insufficient to build an entire portfolio. However, I have added a few more securities to the system that just pick up the two lie detector signals. Further, my objective at this point, given the risk of a sell-off, is to take less risk. We should do just fine with few equity positions and a large cash/bond allocation.
Conclusion
My singular promise has never been to always beat our benchmark on a risk-adjusted basis, but rather to be ever diligent in my effort to beat our benchmark on a risk-adjusted basis. This summer has been a setback. My Core MAP strategy is still beating its benchmark YTD. And since inception, my returns are nearly 50% higher with a Sortino score of nearly double AOR. Anyone who has been with us for more than 12 months has experienced outsized risk-adjusted gains. But for those whose accounts came over after February of this year, I have failed you thus far. But I promise I will be relentless in pursuing my promise to you.
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.