For the month of October the S&P 500 dropped 1.9%, following a slight 0.1%  decline in September. Quite frankly, I’m surprised the past month wasn’t worse than that given escalating tensions over the U.S. presidential race and the increasing likelihood that the Fed will bump interest rates again next month. Throw in the widely-held (but erroneous) belief that October is historically a bad year for the stock market, and you have all the necessary ingredients for a quick stock market correction like the one that occurred at the start of this year.

But October is also a critical month for quarterly earnings reports, since those numbers – plus the forward looking guidance that accompanies them – usually foretell what kind of a year it is going to be for most companies and U.S. economy overall. And so far those results have been a bit better than expected on the whole, forestalling what might have otherwise been a pretty ugly month. And so long as the employment numbers don’t start unraveling, we may be able to avoid altogether the market meltdown many are expecting.

We learned a long time ago not to try to time the stock market since the outcome of those types of events are impossible to predict. Instead, we focus on always owning stocks that appear more likely to outperform the market, wherever it may go. And right now that group of companies – summarized below – is starting to pull away from the pack. During the past week our portfolio has benefited from strong earnings reports from Ruth’s Hospitality, Valero Energy and LeMaitre Vascular, and rumors of a possible takeover of Michael Kors sent its stock soaring two weeks ago.

Of course, next week we will learn the outcome of the U.S. presidential election, so don’t be surprised if there is more market volatility surrounding that event. But volatility is not always a bad thing; usually it shakes out the weaker companies, resulting in more money flowing into shares of the stocks we already own. To find out why, please continue to the individual stock updates that follow.