October 2025 BGH Portfolio Update: Steady Discipline in a Shifting Market
October reminded us why the Blue Grasshopper (BGH) strategy works. While markets moved in fits and starts, our rules-based approach kept us invested in leadership areas, avoided unnecessary trades, and reinforced our edge: with less drama and less risk than a typical Target Date 2050 fund.
Market Backdrop
The S&P 500 rose modestly in September, with large-cap growth and momentum sectors leading the charge. The NASDAQ 100 posted another strong month thanks to resilient tech earnings, while international markets lagged amid weak European data and persistent concerns in China.
On the bond side, the story was mixed. Short-term yields stayed firm as the Federal Reserve reiterated its “higher for longer” stance, while longer bonds remained volatile. Inflation data came in cooler than expected but not enough to shift Fed policy.
For investors, this environment underscores why chasing headlines doesn’t work. A disciplined, data-driven strategy does.
How BGH Responded
The Blue Grasshopper strategy is simple at its core:
- Follow the leaders. We overweight funds showing strong, persistent performance.
- Avoid churn. We don’t sell just because of a dip in rankings if the fund is still in Buy or Hold territory.
- Respect taxes. In taxable accounts, we minimize short-term gains and avoid unnecessary turnover.
- Stay diversified. We balance growth exposure with stabilizers in fixed income and alternatives.
This month, the signals tell us to hold steady. Momentum remained strong, growth stayed on top, and our bond allocations continued to provide ballast. Because no fund triggered a Sell signal and none had been held long enough to justify a replacement, the BGH portfolios stayed intact.
Why That Matters
Most investors underperform not because they choose bad investments, but because they trade too much at the wrong time. The BGH strategy enforces patience:
- In 401(k)s, this means letting winners run for at least three months before re-evaluating.
- In taxable accounts, it means holding positions for at least a year to lock in favorable long-term capital gains treatment.
- Across all accounts, it means using objective rankings to guide when to step in or step aside — never gut feel.
The result: smoother performance, fewer mistakes, and more tax-efficient compounding over time.
Looking Ahead
With volatility still muted and Fed policy dominating headlines, investors may be lulled into complacency. But BGH thrives in all environments because it doesn’t predict; it adapts. If leadership shifts, our portfolios will shift too — automatically, and only when the evidence is clear.
Final Takeaway
September 2025 was another quiet month where doing less achieved more. By letting the rules lead, we:
• Stayed aligned with market leaders.
• Avoided taxable short-term gains.
• Reduced unnecessary turnover.
• Kept risk lower than traditional Target Date funds.
That’s the strength of BGH: in noisy markets, discipline is the real alpha.
Guillaume Decalf
Founder & CEO of Bluegrasshopper