You've probably hear the story about the monkey throwing darts at a newspaper and beating Wall Street pros. On one hand, I like that study-especially during possible volatile days like today where tariffs and geopolitical shifts make short-term price action feel completely disconnected from reality. It's a great reminder of how much 'noise' influences complex systems. On the other hand, it made me wonder; can picking a stock based on specific fundamental parameters and data points actually outperform the chaos?
I wanted to see if giving companies a 'fundamental score' based on data, fair value calulation, and industry trends could consistently beat the s&p500. I run a backtest from 2020 through full 2025.. Here are the results of it vs the s&p 500.
|**Period**|**Portfolio Average Return**|**S&P 500 Return**|
|:-|:-|:-|
|**2020–2025**|**+253.51%**|\+108.00%|
|**2021–2025**|**+149.02%**|\+83.00%|
|**2022–2025**|**+104.47%**|\+46.00%|
|**2023–2025**|**+116.16%**|\+75.00%|
In every period tested, this approach outperforms the s&p500. It also maintained a 90% win rate.
The Methodology: My background is in Mathematics, and I've spent time studding mathematical Finance. This project was born from a desire to apply a more systematic, quantitive approach to value investing rather than just following 'gut feelings' or market hype. Also I want to be transparent about the math and methods that drove these results. I will put the full backtest data, the scoring logic in a comment below to keep this post shorter. Moreover I'm planning to deep-dive into more parameters (portfolio weighting, volatility tracking, etc..) soon, so this should keep evolving so I'd like to hear your feedback- is this level of outperformance sustainable, or am I missing a key risk factor?
TL;DR Backtested a fundamental scoring model form 2020-2025. It beat the s&p500 in every window with a 90% win rate. Trying to determine if this is a fluke or if data-driven value investing is still the king.