October 2026 Markets Review
Portfolio: -11.39%
S&P 500: -0.93%
NASDAQ: -5.28%
October was a tough month for the majority of tech stocks. The S&P 500 and Nasdaq both finished lower for the month but the Nasdaq was hit particularly hard, meaning it is now underperforming the S&P 500 for the year.
In fact, the tech sector is now at the lowest level since the bear-market low 4 years ago. The forward P/E is now just 0.1 pts above the S&P 500.
One of the primary reasons was the renewed scrutiny of AI spending. For me, the question is how much of the value created by AI will ultimately reach shareholders, and how much capital businesses must invest to earn it.
Disappointing results from Amazon and Intel added to concerns about AI spending and contributed to a sharp technology sell-off on the final trading day.
In September, we discussed how a relatively small group of technology companies had supported the indexes while much of the market declined. October was a reminder that those leaders can come under pressure too.
Portfolio
October was another difficult month for the portfolio. Following September’s 9.2% decline, we saw a further drawdown of approximately 11.9%, bringing the portfolio’s YTD return to -12.95%.
The portfolio has materially underperformed both indexes this year, and October has widened that gap. We will discuss more about the portfolio and individual businesses below.
Portfolio Performance (Since Inception)
(Portfolio Inception Date: 27th October 2023)
Portfolio: +158.73%
S&P 500: +83.22% (Outperformance: +75.51%)
NASDAQ: +106.27% (Outperformance: +52.46%)
Portfolio Performance (YTD)
Portfolio: -12.95%
S&P 500: +10.73% (Underperformance: -23.68%)
NASDAQ: +9.96% (Underperformance: -22.91%)
Personal Thoughts on the Market & Performance
In the September review, I discussed my concerns around oil prices, inflation and treasury yields. Most of those concerns carried into October and no doubt affected my portfolio.
However, I do not think it is useful to attribute all of the portfolio’s underperformance to macro.
When the portfolio is down almost 13% while the S&P 500 is up almost 11%, there are also questions to ask about stock selection, valuations and position sizing. However, I do not believe that a difficult period invalidates every thesis.
Much like how I described my ridiculous outperformance in October last year to be too early to tell, I do not believe this underperformance is indicative of how the businesses within the portfolio are doing.
In my mind, the key questions to ask are:
Has the competitive position weakened?
Are future earnings likely to be lower than I previously expected?
Will the business require more capital?
Or has the price investors are willing to pay simply fallen?
The answer will differ by company. I do not think “the market is wrong” is a sufficient explanation for every stock that declines.
Much of my research this month has focused on exactly these questions, particularly around Sea, AppLovin and AI infrastructure.
