Saturday, January 02, 2016

IBD Top 50 Stocks Strategy – 2015 Final!

Here is the IBD 50 stocks investing strategies vs. $SPY. We have a winner!  Buying and reallocating weekly to the IBD top 10 stocks outperfomed this last year.  This analysis is from 1/1/2015 through  12/31/2015.
I didn’t track and blog about these weekly or monthly in 2015, as my overall blogging activity fell off a cliff!  These stocks tend to be high beta, and at times the portfolio was significantly ahead of the index, only to underperform like crazy on any market pullback.  It seems like high beta gets punished the most when the market mood sours. 

image 2015 is over, and the SP500 underperformed most of the IBD 50 investing strategies.   The opposite of 2014.
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.
image The IBD monthly strategy also outperformed  the SP500 in most cases.  Holding and rebalancing each month into just the top 5 IBD stocks came out on top.
The more diversified portfolios were closer to the return of the SP500.
I will assume a $9.95 trading 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.
None of the above strategies are a recommendation to buy or sell stocks.  These are model portfolios constructed for entertainment only.
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.  The value for SPY is based on buying at the closing price the last trading day of the preceding year.
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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