Sunday, March 09, 2014

Update – The IBD Top 50 Stocks Strategy

Here’s an update on the IBD Top 50 stocks investing strategies vs. $SPY

image For the week, the IBD weekly strategy struggled against the $SPY. This time, maybe Russia gets the blame as QIWI fell sharply with the crisis in Ukraine.  Of course, the ability of the IBD 50 to adjust means that one gets thrown out at the close Friday (IBD had removed it earlier in the week).  So if the crisis ends, the stock could rebound quickly.  But if the crisis lingers and Russian stocks take the hit, Russian and emerging market stocks could continue to get hit.

For the week, there were 29 stocks up and 21 stocks down for the IBD 50.

The total return since 2/8/2014 remains impressive against the SP500.  It’s also interesting to note that the more diversified portfolios have played some catch up to just the handful of stocks in the IBD 5.

What will be interesting to see is how the higher concentration in the high flying stocks performs versus SPY in corrections and sideways moving markets.  Although the make up of the IBD 50 changes, and the top stocks should always be the outperformers. 

Of course, “always” and “never” are words that should be used with caution!

The portfolio is sold at the closing price Friday night, and rebalanced into the make-up of the IBD top 50.

image For the IBD monthly strategy, the strategy is left hanging on to the top 5 stock QIWI through the end of March.  Would you do that if you owned the portfolio?  Or would you sell it for something else?  This is where a mechanical system starts to butt heads with one’s emotions!

It will be interesting to see how the non-adjusted monthly portfolio performs against the weekly portfolio, especially with the month long exposure to stocks getting hit by the Russian crisis.


You can view the Top 25 holdings at Motif Investing.

None of the above strategies are a recommendation to buy or sell stocks.  These are model portfolios constructed for entertainment only.

This is the IBD portfolio performance for the week and since 2/8/2014.  Each portfolio begins with $10,000 and then invests an equal amount in the top 5, 10, 25 and 50 IBD stocks at the closing prices on Friday for the weekly model, and at the closing prices on the last trading day of the month for the monthly model.  Since IBD changes the make up of their top stocks daily, this will only rebalance on Fridays or end of month.  Daily changes in the IBD 50 or stock rankings are not considered.  Changes in IBD’s overall market views are not considered.  Stop loss orders or other market timing strategies are not considered. 

Based on a blog entry from Paladin Money.  See Investors Business Daily for more information on the IBD 50.  See Motif Investing for their IBD Top 25 portfolio, and the ability to construct your own portfolio of stocks.

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