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The ValueAligned Model portfolio (VAP) was up +22.8% in 2021, while the S&P 500 Index was up +28.1%, including dividends reinvested into the index. In the first three weeks of this year the VAP is down -7.6% while the S&P 500 is down -7.7%.

18 Wheeler

On January 11, we sold Old Dominion (ODFL, $293) from the VAP at about $325 because the price went over our Sell Above price. We waited until the new year to sell this three-year-old position to defer the substantial capital gains. We bought the stock of this great trucking company in 2018 for $94 and sold it for a gain of over +200%.

Tech stocks are crashing. Let’s review our ValueAligned Principles

You and we are long-term, goal-focused, plan-driven stock investors. We believe that the key to lifetime success in stock investing is to act continuously on a specific, written plan. Likewise, we believe substandard returns and even investment failure inevitably come from reacting to (let alone trying to anticipate) current economic and/or stock market events.

We understand that the economy cannot be consistently forecast, nor the markets consistently timed. Therefore, we believe that the only reliable way to capture the full long-term return of stocks of great companies is to ride out their frequent but historically always temporary declines.

Just in the last four decades or so, the average annual price decline from a peak to a trough in the S&P 500 exceeded -14%. The market is down -8% in January so far. The financial press and pundits who want your clicks and eyeballs are hyping this start to the year as a catastrophe. But now we know that the decline so far is only about half of the average expected annual peak to trough decline. As investors we would rather buy lower than higher. It’s not a catastrophe; it is an opportunity.

One year in five, the decline has averaged at least twice -14% number. And on two occasions (in 2000-02 and 2007-09), the Index fell by -50%, one-half. Yet the S&P 500 came into 1980 at 106 and went out of 2021 at 4,766; over those 42 years, its average annual compound rate of total return (that is, with dividends reinvested) was more than +12%. At that rate, despite all the turbulence in between, you would have doubled your money every 6 years or so.

These data underscore our conviction that the essential challenge to long-term successful stock investing is neither intellectual nor financial, but temperamental: it is how we react, or choose not to react, to market declines that make the biggest difference in our lifetime financial success.

These principles will continue to govern the essentially behavioral nature of our advice to you in the coming year…and beyond.

The Siren Song of “The Market’s Too High”

In this month’s Client’s Corner Nick Murray discusses what we should do when the talking heads and other assorted experts start singing that the market is too high. If you reread the above principles, you know that the answer is to ignore the seductions of the sirens and stick to your plan and try to put more money in when the market goes down. These interruptions of the permanent uptrend have been historically temporary. Use it as an opportunity or ignore the volatility.

Click here for this months Client’s Corner The SIren Song of “The Market’s Too High”

Important Disclosures About Performance Reports
Past Performance is not Indicative of Future Results.

No representation is being made that any investor will or is likely to achieve results like those shown. The results presented reflect past performance and should not and cannot be viewed as an indicator of future performance. The results shown are not an indicator of the returns a client would have realized or will realize in relying on any model mentioned.


ValueAligned® Model Portfolio (VAP)
Past performance does not guarantee future results. Performance of clients invested in accordance with the Model Portfolios will vary from the posted performance due to advisory fees, timing of the deduction of the advisory fee, market fluctuations, trading costs, portfolio cash flows, custodian fees, and frequency and precision of rebalancing. As with any other investment, there is potential for profit as well as the possibility of loss investing in our Model Portfolios. There are inherent limitations in model results, particularly the fact that such results did not represent actual trading and that they may not reflect the impact that material economic and market factors might have had on the adviser’s decision making if the adviser were managing clients’ money.

The ValueAligned® Model Portfolio (VAP) performance information presented and discussed pertains to a model portfolio available for clients of ValueAligned Partners, LLC on the Folio Institutional platform.

Performance is based on a model Folio and does not constitute a composite for purposes of GIPS reporting. Cash distributions (e.g., dividends, capital gains, returns on capital) earned in a model Folio are automatically reinvested into the securities that paid them. Models are not validated or audited.

Performance is calculated using a time‐weighted rate of return using daily valuations. Model Folio returns are calculated using the same methodology used on the Folio site to calculate performance for funded Folios in investor accounts—the Mid‐Weighted Dietz Method. At launch, each model Folio has a hypothetical market value, which then changes over time based on the changing value of the underlying holdings. Corporate actions such as dividends, splits, spin‐offs, etc., are processed in the same fashion as for funded Folios, with hypothetical money, and shares exchanged rather than real dollars or shares. Model corporate actions are not validated or audited, which may result in errors in the performance results presented. Cash distributions (i.e., dividends, capital gains, returns on capital) earned in a model Folio are automatically reinvested into the securities that paid them.

Model performance considers the payment of dividends and distributions. Performance calculations for ETFs and mutual funds are based on market value and net asset value, respectively. Model performance reflects the fees and expenses of the underlying mutual funds and ETFs.

While most of the clients have invested their portfolio in accordance with one or combination of our Model Portfolios, some clients have customized portfolios, which contain securities that differ from what is portrayed in our Model Portfolios. This may result in performance figures materially different from the figures portrayed in the model.

When Model Folios are rebalanced, buys and sells are calculated to return the model Folio to its target weights—these hypothetical transactions assume a full execution of the shares needed at the closing prices on the day of rebalance. When the buys and sells cannot be offset exactly the resulting cash difference is hypothetically invested into FDIC insured bank deposits. In most cases, this cash investment is a negligible portion of the model and will be hypothetically invested in the model holdings (if possible) in the next rebalance. For all model performance results, there are inherent limitations which investors should understand. Unlike an actual performance record, model results do not represent actual investment performance or trading. Since the trades have not been executed, the results may under‐ or over‐compensate for the impact, if any, of certain market factors, such as the effect of limited trading liquidity.

The S&P 500 Index: The performance and volatility of the S&P 500 may be materially different from the individual performance attained by a specific investor in the funds and accounts managed by ValueAligned Partners, LLC. Also, the funds’ and managed accounts’ holdings may differ significantly from the securities that comprise the S&P 500. The S&P 500 has not been selected to represent an appropriate benchmark to compare an investor’s performance, but rather is disclosed to allow for comparison of the investor’s performance to that of a well‐known and widely recognized index. You cannot invest directly in an index (although you can invest in an index fund that is designed to closely track such index). While model performance may have performed better than the benchmark for some or all the periods shown, the performance during any other period may not have, and there is no assurance that, model performance will perform better than the benchmark in the future.