Performance Update: 11/30/2023

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December 1, 2023 by Matt McCracken

Performance Report: 11/30/2023

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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 11/30/2023.

Investment Strategy

MAP: Full ($500k+)

MAP: Mini

MAP: ETP (<150k)

S&P 500 Index2

Balanced (AOM)2

Global Balanced2

Oct. Return




























It's hard to say we had a lousy month when we experienced solid annualized gains, but our performance compared to the rest of the markets this month was lousy.  And I'm more than fine with that.  Typically, I would not be content with trailing the indexes as we did but this market appears very fragile.  While the stock market clocked a remarkable gain in November, the S&P 500 is still below both its July highs of this year and its all-time highs set in late 2021.  Conversely, my full-size strategy is more than 10% higher than where we stood at the end of 2021.  Despite trailing the indexes by a wide margin in November, my risk-adjusted gains since inception across all strategies have bested the S&P and outpaced our two benchmarks by a considerable margin.  

I concluded last month's update with the following:

While stock markets enter a seasonally strong period, there is ample justification for turning bullish on stocks.  But given the fundamental landscape of stubborn inflation, rising rates, and a consumer that is overleveraged, I am going to remain cautious.  I do expect that I'll buy some securities if my MAP system tells me to do so.  But I also expect I'll reduce the size and risk of each position, as I've been doing recently.  If the stock market continues higher, I expect to participate but in a limited way.   

The market moved higher as I thought it might and we participated in a limited fashion which was my goal.   In my Market Update, I'll cover in more detail how chasing this market may prove to be a "fool's errand".   I'm happy to be participating in any further upside in a limited way and continue to look for low-risk entry points.  While it could be different this time, the action in the stock markets is very similar to the fleeting days of every market bubble I've witnessed.  I'm not anxious to chase a rally that may quickly evaporate.    

As for my thesis, I am growing even more confident that the physical market for commodities is starting to impose its will on the paper market.  The commodity markets are seeing an increasing level of stress.  Volatility is spiking.  Geo-political forces are applying more pressure on commodity prices.  When the physical market overpowers the paper market, it will turn everything on Wall Street upside down.    

Market Update

WOW, what a month for both stocks and bonds.  While the FED has cautiously stopped short of claiming victory, Wall Street is screaming "Mission Accomplished".  Inflation is tamed and rates will come down much sooner than expected.  The FED can back off!  All is well.   Here are a couple of highlights from this month's financial media.  

Cathie Wood’s Innovation ETF is up 31% in November, notching its best month ever

U.S. bond index heads for best month of returns in almost 4 decades amid rate-cut hopes

If we scan out a bit, we find the situation is not quite as rosy as the media reports.  Let's consider Cathie Wood's "record-breaking" performance.  Yes, she had her best month ever.  But her fund is still down 70% from its peak in 2020.  The fund has been flat since the beginning of 2020 whereas most equity-oriented funds are up at least double digits in that timeframe.

As for bonds, November was the first time in 2 years that bonds closed above their prior month highs.  For two straight years, bonds traded either down or sideways.  TLT, the largest long-term US Treasury fund, is down 44% from its peak over 3 years ago.   Bonds funds were due for a bounce and bounce they did.  

Let's take a moment to put the November performance of the S&P 500 in perspective.  The S&P’s performance in this past month is the 7th best monthly performance for the index since 1992.   Here is a list of the six instances that were better than this past month.  

March 2000 – End of the bubble.  Stock valuations hit their all-time highs.  Textbook bubble "blow-off" top.  S&P 500 didn't return to its March 2000 level until 2007 - and then subsequently crashed again.  

April 2009 – US FED and Congress agree on $1T bank bailout program which essentially mitigated all risks from the housing bust.  The program allowed banks to dump underwater mortgage loans onto the FED (read: the US tax payer) for 100% of their original value.  

October 2011 – Full implementation of the Quantitative Easing program by the FED.  The FED can now, at will, create money out of thin air without interference from Congress or any other insitution.   

April 2020 – FED injects $5T into the banking system overnight to stem the Covid-induced sell-off.  Within the span of 24 hours, the FED increased the total number of dollars in circulation by 20%. 

November 2020 – Covid vaccine announced, approved, and begins rollout.  The pandemic that shut down the world was finally overcome.

July 2022 – “Dead-cat bounce” during the most severe bear market in US stocks in the past 14 years.  Gains were quickly erased over the next 2 months. 

In all of these instances, either something big and meaningful happened or the rally was short-lived and gains were quickly erased.  In April 2020, the FED magically created 20 cents for every single dollar in existence.  That kind of money surely would have an impact which it did.  In March of 2009, the FED created an entirely new mechanism for creating monetary inflation called quantitative easing (QE).  Five of the six biggest months over the past 30 years took place only once QE was initiated.  

In two of these six instances, March of 2000 and July of 2022, nothing big and meaningful happened.  And in both instances, gains were quickly erased.   Without a meaningful structural change to the economy or money supply, gains evaporated in short order.  Granted, a sample size of 2 is hardly statistically significant but it's all I have to go on.    

So what great, big, amazing thing happened this month to push stock prices 9% higher?  Basically, nothing.  The "good news" this month was that one of the methods the FED uses to measure consumer inflation came in 1/10th of 1% better than expectations.  All the other inflation measures were largely inline with expectations.  So, a largely subjective way of measuring inflation provides a figure that is slightly better than a group of "Ivory Tower" economists predicted, and, voila, stock markets clock one of their best months ever!

In the past, gains without a catalyst have failed and I am siding on the idea that this time will not be different.  I will proceed with extreme caution towards buying any cyclical equities.  I do plan on continuing to buy and hold various commodities and non-cyclical positions. 

Gold at All-time Highs 

On Friday, gold closed at an all-time high which is a development worth addressing.  $2100 has been a strong area of resistance for gold since the Covid-19 pandemic.  In the past three years, gold has hit this resistance area and quickly retreated.  Here is the chart:

Chart of gold at new highs

Gold is a battleground security.  It is the FED's kryptonite.  The FED desperately wants investors to ignore gold as a safehaven.  Conversely, a host of investors referred to as "gold bugs" view gold as the ultimate safehaven.  The battlefield is the capital markets and currently, it appears the gold bugs are winning and the FED is losing.  But the FED won't go down without a fight.     

There are not many investors who are agnostic towards gold.  Most fall into one of two categories.  Either gold is the ultimate fool's bet as it doesn't pay dividends, it does not generate any utility, and it's expensive to store.  Warren Buffett is famously in this camp.  Conversely, the gold bugs fervently hold the idea that gold has always maintained its value withstanding the test of time, outlasting every single currency throughout history.  Even the almighty US dollar has lost over 99% of its value relative to gold in the past 100 years.  I like to point out that Gold was first mentioned as a store of value in the second chapter of Genesis.   Jim Rogers would fall into this camp.  

I fall somewhere in between.  I do believe gold has a place in a portfolio and we have owned more gold and mining stocks than most.  But I also believe there are other ways to hedge a catastrophe that provide better and more consistent gains.  So we own gold, silver, and mining stocks but we have not carried an excessive allocation to the precious metals.  

Both gold and the Dow Jones industrial index (DOW) have been on quite a tear recently.  The DOW has been stealing most of the headlines but gold has been quietly appreciating in a meaningful way for the past two months. 

Let's take a moment to compare how these two securities have historically performed.  Currently, gold stands at just under $2100, a 6000% gain compared to where it stood when Nixon closed the gold window in 1971.  By contrast, the Dow Jones has only increased 4022% in the same timeframe.  Warren Buffett would point out that these returns do not include dividends and if we include dividends, the DOW wins in a landslide.  But Jim Rogers may point out that if one bought gold in the leveraged futures market and invested the balance of the portfolio in US Treasuries, then gold would have trounced the DOW and its dividends by a remarkable margin.    From 1970 through 1990, the DOW index would have paid about a 4% dividend yield.  During that span, the average yield in a laddered US Treasury portfolio would have been north of 10% thus giving gold the advantage. 

When Wall Street and the financial media ignore the salient truth about a security, in this case gold, it typically represents an attractive opportunity.  At present, both the DOW and gold are overbought and are sitting at strong levels of resistance.  I would not be surprised to see both fall for a bit.  And I know the FED is going to defend the $2100 level for gold.  I wouldn't be surprised to hear some hawkish FED speak over the next two weeks.  With everything at extremely overbought levels, I don't think it will take too much jaw-boning to get markets to fall.   

We have held a decent allocation to gold and silver the past couple of months and have done well with it.  However, I have already closed some of our precious metals exposure and the MAP is directing me to close even more if the metals experience any weakness.  We won't go broke taking profits and I plan on doing so in the precious metals.  Over the long-term, if gold can maintain the $2000 - $2100 level and eventually break through it, it could go much, much higher.   The pent-up demand for precious metals is strong and if hedge funds and retail investors start buying, the upper limit for gold could be substantially higher.     


While all eyes are on the impressive stock market rally, I'm seeing some things break our way in the commodity markets.  Gold at all-time highs may be the most telling development.  And there are a host of other commodity contracts that are generating strong gains.  Coffee, a commodity that I do not trade due to size and inherent volatility, capitulated in early October and experienced its best two-month gain in over two years.  We have first-hand familiarity with how OJ has performed this year returning over 100%.  At the other end of the performance spectrum are things like corn, wheat, and crude oil.  These commodities have performed poorly this year but appear to be forming a formidable bottom.  Grains like corn and wheat bounced off areas of support and have seen a measurable amount of appreciation.    

I believe, and I don't think I can overstate this, that it should only take the physical market for a single commodity to bust the paper market for all commodities.  There is a well-known adage on Wall Street which is "he who panics first, panics best".  Once the paper market is busted in any one commodity, speculators should liquidate short positions across all commodities.  Nothing scares a speculator more than a margin call.  Margin calls can quickly snowball, and they strip the speculator of all his power and control.  Once one security breaks higher resulting in margin calls, there will be a race to liquidate exposure across all markets.  And when that happens, there will be a short-covering rally like we haven't seen in our lifetimes. 

I realize I see the world and the capital markets according to my own biases and prejudices.  I try to be objective but it's hard for anyone, including myself, to be truly objective.  I see what I want to see.  But the MAP is truly objective.  And it sees many commodities either continuing their strong trend or putting in a formidable bottom.  OJ, rice, and precious metals are currently scoring very high on my momentum model while corn, wheat, and oil have generated buys using my capitulation model.  Given the various cycles I track coupled with the impact of seasonality, commodity markets may be on the verge of the short-covering rally that I have long suspected would happen.     

As always, please do not hesitate to call me at 512-553-5151 if I can be of assistance. 


Matt McCracken   

1) Inception date of 4/30/2019

2) All benchmark prices are obtained through the Yahoo!Finance website.  S&P 500 Index is calculated using the index price.  AOM is the iShares Core Moderate Allocation ETF.  Global Balanced is calculated using a 40% allocation to the S&P 500, a 40% allocation to BND, and a 20% allocation to IEFA.

3) VORR is our "Value over Risk Ratio":  Calculated by taking the total return divided by the sum total of all negative months.  Ideally, the ratio represents how much loss an investor has to endure to get X gain.  A negative RORR score implies there is more risk in the investment than return.