Sunday, June 15, 2014

Update – The IBD Top 50 Stocks Strategy

Here is the latest on the IBD 50 stocks investing strategies vs. $SPY

imageThis last week was a mixed performance for the IBD 50 models.  The market struggled with the violence in Iraq and the Eric Cantor defeat (so they say).  For the week, there were 18 stocks up and 32 stocks down for the IBD 50. 

UBNT led the IBD 50 with a return of 13.8% for the week.  The biggest loser for the IBD 50 was AL down 10.6%.

The total return since 2/8/2014 is underperforming the SP500.  While none of the IBD 50 models are outperforming the SP500, the more diversified model (with 50 stocks) is performing better than the less-diversified models. 

The portfolio is sold at the closing price Friday night, and rebalanced into the make-up of the IBD top 50.  Dividends are excluded from total returns.

Trading costs $348.25.

image The IBD monthly strategy is also lagging the SP500 for the month of June. 

The total returns for all monthly models continue to trail the SP500.  Fear in the Middle East may hamper growth stocks for the time being.

FANG leads the monthly IBD 50 models with a 16.5% return.  On the downside, VRX has fallen 8.85%.

For the month of June, the IBD 50 has 28 gainers and 22 losers. 


Trading costs $69.65.

As I have been reading reviews of investing and rebalancing into model portfolios, the trading costs of rebalancing weekly or monthly is often discussed.  Going forward, I will list the “in and out” rebalancing costs for each strategy.  I will assume a $9.95 cost to sell last week’s or last month’s portfolio, and $9.95 to buy the new weekly or monthly portfolio.  (Imagine the costs of doing this with individual stocks, compared to using Motif.  Note that Motif limits the size of portfolios to 30 stocks).

The Top 25 holdings are listed at at Motif Investing.  (A check as of 3/31/2014 shows that the ability to view all holdings is limited to Motif members and IBD subscribers).

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 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.  It is assumed that trading costs are $9.95 to “buy” a model portfolio, and $9.95 to “sell” a model portfolio.  Thus, each weekly or monthly rebalance out of the previous portfolio and into the new portfolio costs $19.90.  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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