Portfolio Update: January

What January effect?

There’s a well-known pattern in finance called the January effect. It states that stock prices, especially small market-cap stocks, tend to rise more in January than in other months. Some speculators buy cheap stocks in anticipation of selling during the month’s rally.

That might not have worked so well this year.

It hasn’t been a great month for our portfolio performance. We trail the S&P 500 by 1.5%. In hindsight, this should have been expected. A lot has happened in the world lately, and so many things are uncertain. No one can confidently say what the world will look like by mid-year, let alone year-end. Our portfolio has 30 shares against the benchmark 500. So volatility hit us harder.

The fundamental thesis for our portfolio still holds strong. Some have reported strong earnings but are threatened by AI, reciprocal tariffs, and commodity prices, to name a few. I expect our portfolio to remain volatile in the coming months. Long-term, I think we are diversified enough to at least keep pace with the market while avoiding concentration risk in the Magnificent 7.

More importantly, all of our holdings remain Shariah-compliant, according to Zoya.