Archive | IBD50 RSS feed for this section

IBD market calls. How effective are they versus buy and hold? Using VTI, +71%.

9 Mar

On February 10th this year, we wrote a piece that graphically represented IBD’s market calls (“uptrend” and “correction” only, “under pressure” omitted) against the equity graph of our IBD50 Top-10 model portfolio.  Based on that review, I concluded that in that application these market timing signals might not be the best signals to enter or leave the market.

In the real world I am still favoring a system that uses trailing stops of 7% or 8% set on individual stocks for exits, but using market calls to determine if replacements will be made.

That said, last week I took a list of IBD market calls beginning with the “market resumes uptrend” call on 1/26/11 (after close) and purchased Vanguard’s total stock market ETF VTI. I held the ETF until the next “market in correction” call and sold at the open the next day. Positions were replaced at the open following the next “uptrend” call, and so on. I ran the model through to the last “market in correction” call on February 25th this year.

The period was 761 days long.  The model would have held VTI for 494 days or 65% of the time.  The longest holding period was 106 days (+13.6%), the shortest 1 day (-2.0%) with an average of 45 days.

The best profit was +13.6%, the worst loss -2.8% with the average result being a gain of 2.2%.  Given this period covered some significant down periods, I like the way downsides were limited.

There were 11 holding periods.  7 resulted in a profit, which is 64% of the time.

Compounding the results for each of the periods the total gain obtained was 25.6%.  Buy and hold for the same period would have yielded 15%.  So, the strategy beat buy and hold by 71%.  Not shabby.  FYI, for the same period, SPX, COMPEX and RUT returned 14.8%, 13.8% and 12.9% respectively.

CONCLUSION: IBD’s market timers can be used as a market timing guide, and, based on the results we obtained, can beat a buy and hold strategy.  Using different instruments will return different results.


Tags: ,

IBD 50 Top-10 portfolio market timing. Mixed results.

10 Feb

Those of you who follow our Investors’ Business Daily IBD50 Top-10 portfolio results regularly will know that we are always long the portfolio, we don’t market time or use money management in the model or illustrative portfolio we track.  Just over two years after inception with an original investment of $50,000, the portfolio has a value of $67,604 or an increase of 38%.  Nice numbers but one has to feel that some market timing or money management might improve results.

The following chart, illustrates where IBD market calls of “correction” or “uptrend” were made.  Please note we have only shown the original calls and have ignored the “under pressure” and subsequent “uptrend” or “uptrend resumes” calls.  Please ignore the portfolio value number on the graphic.  I printed the chart without regard to that item and actually inserted the arrows during a transatlantic flight, so sorry, it is what it is.  I think the instant conclusion is that 2011 was a hard year for market timers where a lot of the calls end up putting investors in or out of the market at pretty similar levels.  We see about five major moves made, but based purely on a visual review of the calls and the graph, I would have to say that other strategies might be better.  I personally lean to a 7=8% trailing stop with replacements purchased off the IBD T-10 (e.g., highest ranked not already held)  if the market is in uptrend according to the IBD..

We obtained the timing data from the Dark Liquidity website as IBD does not provide archived data.  The DL website has lots of other useful data points.  Click the individual graphics if you wish to view them full-size.

ibd calls

As a cross-check we also used market calls up/down from a major subscription service for individual investors.  The calls are based on whole-market trends, so one could argue that they are not directly applicable to the “leading” or “momentum” stocks followed in the IBD 50.  Three major market moves were captured, otherwise I’d repeat my observation about 2011 being a bad year for market timers and add, based purely on a review of the graph and the calls that other than the three big good calls, that one would likely have been better off betting against the calls as issued as they translated into movements in the IBD T-10 portfolio.  This is definitely not a good choice for calling leading IBD stocks.

ibd vv calls

This is clearly going to be a work in progress so we will archive this series in a new page under our IBD portfolio head.

Tags: , ,

Superpicks 2012: +28.3%. Doubles IBD50 Top-10 performance.

29 Dec

The IntersectionX and Superpicks watchlists are up to date and may be viewed HERE.  There are only two Superpicks this week.  DDD drops as it is no longer rated #1 at Zacks.

Using consistent scoring from prior weeks, this is how our lists look.  It isn’t pretty after a good week last week.  The only ETF of the list we follow that was in the black last week was Emerging Markets, small caps, especially value, getting the worst treatment.  The IBD50 Top-10 list had 0% winners last week.  Usually this would imply an up week next week, however, with the short trading week and that fiscal cliff I am making no encouraging recommendations.

results

However, it should be remembered that we only started our Superpicks watchlist on week commencing 2/4/12. The numbers for all the other lists above are a full year.  If we make an like-to-like comparison, this is how the numbers stack up:

results yr

Those first few weeks of 2012 made a difference.  Our Superpicks have made 28.33% from inception which doubles the return from the IBD50 Top-10 for the same period.  As the Superpicks has fewer holdings, its volatility as measured by standard deviation is higher.  These numbers have no money management in them.  What is interesting is that the Superpicks have had a very few blow-out weeks driven by one stock (and a few sorry weeks driven by the same) which show how missing (or avoiding) those weeks could make a big difference.

For example on the week of 7/14, the Superpicks were up 15.5% on average aided by a 35% jump in Melanox (MLNX).  MLNX actually hit higher numbers during that week.  What goes up often comes down and MLNX is now priced lower than it was at the start of that week.  The worst week in the Superpicks was a -8.4% week the week of 10/13. In that week (yes it was MLNX)  Mellanox sold off 25.5%.  Align (ALGN) was close behind with a 24.3% sell-off.

To keep it simple, for those looking for timing signals (I happen to think trailing stops work well here, pick your own %age) consider being out of the market when IBD says the uptrend is under pressure and certainly be out when they say the market is in correction.

A quick recap on how we figure our numbers. Score is kept by Google Finance, Friday close to Friday close.  I use VectorVest quick tests for the index performance, same time period.  I average the +% and -% of each watchlist for the weekly performance.  The numbers of stocks in the IntersectionX and Superpicks changes.  These weekly averages are compounded weekly to arrive at the YTD performance. Others are simple averages — yearly and four week — of those averages.  It may not be perfect but it is consistent and, I think, resaonably indicative of the results an individual might achieve.

A happy and successful 2013 to you, the efforts of our elected representatives to the contrary nothwithstanding.

Tags: , ,

IBD50 Top-10 model portfolio updated

15 Dec

Our IBD model portfolio project is now up to date HERE.

Lots of buying and selling; -6.115% of portfolio value lost since the general election, still trending down.

Tags: , ,

IBD50 one year on

11 Nov

We pay quite a bit of attention to the IBD50, so I thought it would be interesting to see what happened to the stocks that were listed one year ago.

Of the socks in the IBD50 a year ago, only eight are there today — which does not mean they haven’t rotated in and out betweentimes:

Of the other forty-two, fifteen are in the black today.  The best performers are ALXN +42%, TSCO +24% and AUY, ULTA and BIIB tied for third with +22%.  I cannot help but note that ALXN has been up 100% since last year.

Of the twenty-seven losers, some are just terrible.  RMBS -76%, DECK – 72% and AH -58%.

If there’s a lesson or two here, they might be that i) The IBD50 = rotation and ii) trailing and protective stops are there for a reason.

Tags:

Market commentary: Have we hit bottom? — IBD50, Stocktwits50, IntersectionX

17 Jun

Our IntersectionX watchlist and its related Superpicks has been updated.  It may be viewed on its page : http://paladinmoney.com/intersection-50/intersection-50-list/

Last week was the first week in seven when the four-week weekly average of profits and losses on the IBD50 and ST50 turned positive.  The broader lists both did better than their top-10s too.

If you had asked me two days ago, I would have told you that I thought recent bullish days were driven largely by speculation driven by expectations of more easing by national banks.  I may still have been right.  However as I write this it appears that the pro-bailout parties in Greece will get the first chance to form a government.  If this hint of stability is viewed bullishly, which I expect it to be, then we may see a short period of rising prices, particularly in the so-called “leading stocks” on our watchlists.

Be that as it may, the underlying situation in Europe remains troubling leading me to believe that caution should continue to be the watchword.

Tags:

Interesting yield stock off IBD50: TAL

4 Feb

This was an interesting stock that popped out of my screen using Vectorvest’s VST*RT screen on the combined IBD50 and ST50 stocks for the week. It’s the highest yielding stock on the IBD50 by far.  It has a 6% yield!  Not what you expect necessarily from these lists.  Interesting company if you read its summary from Yahoo! finance carefully. They have two business lines.  Certainly on the ups lately, which appears contradicted by the falling Baltic dry goods index:

TAL International Group, Inc. engages in leasing intermodal containers and chassis worldwide. It operates through two segments, Equipment Leasing and Equipment Trading. The Equipment Leasing segment involves in the acquisition, lease, re-lease, and sale of various intermodal transportation equipment, such as dry freight containers, which are used for general cargo, including manufactured component parts, consumer staples, electronics, and apparel; refrigerated containers that are used for perishable items, such as fresh and frozen foods; and special containers, which are used for heavy and oversized cargo that consists of marble slabs, building products, and machinery. This segment also leases chassis that are used for the transportation of containers and tank containers, which are used to transport bulk liquid products, such as chemicals. The Equipment Trading segment purchases containers from shipping line customers and other sellers of containers, and resell these containers to container traders and users of containers for storage and one-way shipments. As of June 30, 2011, the company had a fleet of 991,807 containers and chassis, including 27,299 containers under management for third parties, representing 1,621,465 twenty-foot equivalent units. TAL International Group, Inc. was founded in 1963 and is headquartered in Purchase, New York

Looks to me as if it may be about to take a bit of a breather but OTOH we are right at the point of the 50-day SMA crossing up past the 200-day SMA.  I will be looking at this stock a bit more closely.  Make your own decisions and do your own due diligence.  http://www.talinternational.com/

Tags: , , , ,

2011 IBD50 monthly portfolio lookback.

1 Jan

Rather than spit out some Silly Season stats for the week I thought I would take a look back at how the IBD50 monthly portfolio has fared through year end.  Recapping for those new to the project, we started close to the end of January 2011 investing a virtual $5,000 in each of the top-10 stocks in the Investors Business Daily IBD50 watchlist.  Each month, we sold the stocks that fell out of the top 10 and replaced them.  There is no money management.   In the beginning I also tried a week;ly updated portfolio but it really didn’t outperform the monthly and was too much trading.    At one point in the year, July 8th, we were up $17,946 or 37%, which puts the year end gain of $3,284 or 6.7% into perspective.  Had we just bought and held the original list of ten we would currently be down 6.5%:

As you can see there were definite winners and losers!  I literally just traded out LULU, the last of the original ten today when I refreshed the list.  Looking at the numbers above, and how much money I left on the table with LULU clearly in real life the portfolio could have benefitted from some money management.  That is easier said than done though.  A couple of other investors worked on optimizing this portfolio with money management.  As critics of stops will tell you, getting out isn’t the hard part.  When to repurchase is.  And there’s a lesson there.  You will see that most of the gains in this portfolio came from two roughly 2-week periods.  Miss them and most of the gains are gone too.  In real life I would still approach this portfolio with protective, not trading stops.

Definitely a year of two halves.  If you had sold up at the fourth of July weekend and gone fishing you would have been very happy.  Otherwise, not so much.  And, bearing in mind that this is supposed to be a portfolio of the top-10 leading stocks picked by a respected financial newspaper it will not be lost on anyone that the peaks of the highs have been trending down since September.  As I have observed in my recent weekly commentaries on the IBD50 and the Stocktwits50, the top-10 selections from these watchlists have significantly underperformed.  Quite what this augurs for 2012 I do not know.  But the lessons of the gain-producing 2-3 week periods is not lost on me.  I think we may see the same thing this year, and I would hate to miss them.

Happy New Year all.

 

Tags: ,

Christmas cheers; stock pickers wilt.

25 Dec

A Merry Christmas to all!  While the run-up to Christmas was generally cheery, indeed, if I had a dollar for every predictable reference I have read to the “Santa Claus rally” I could retire today, the watchlists we follow underperformed the broader markets again.

As you will observe, the ST50 handily outperformed the IBD50, but both lists fell behind the average market move, which we define as the mean of the week’s change on the S&P500 and the Nasdaq composite.  Although the Top-10 lists from each watchlist exceeded the return of the main list (IBD) or came close (ST50) the lists and their top tens were beaten by both the S&P and the Nasdaq, but much more so by the S&P.  If we go back over the twenty weeks we have been keeping this score each watchlist has only beaten our market average 30% of the time.  The IBD50 has not beaten the market since the end of October.  From our calculation of weekly compounded returns, the market has produced a 5.6% profit.  Using the same basis, both watchlists are at a loss of between 5% (IBD) and 10% (ST).  To cap it off, it is worthy of note that of the top five performers from both the IBD and the ST lists, only one out of the top five performers from either list came from its top ten selection.  And the others were generally from some way down the lists too.  A simple buy-and-hold in the large-cap ETF DIA would have yielded you 7.33% over the same period.  So we can conclude that maybe large cap stocks are better in favor as the cap-weighted SPY beat equal weight RSP over the same period by an 11% margin.  But it is also an inescapable, although unseasonal  observation that our watchlist writers just can’t get ahead just now.

Using our Vanguard ETfs as proxies, financials and energy beat the broader markets.  It should be lost on no-one that the broader markets, and in the case of VTI, that’s really the broader market, gave the rest of the sectors a Santa Claus asswhuppin.  It shouldn’t be lost on anyone that REITs are moving up again.  Not shown, RWR, the SPDR REIT ETF moved up 4.12% this week.  As a point of note, according to ETFDb.com. VNQ is the larget REIT ETF by assets if not volume traded.

Dividend ETFs moved back up the list this week, with the equal weight S&P ETF leading the pack.

The large-cap value stocks did best in style, and indeed, a quick scan using TC2000confirms that in December, large cap value ETFs have generally done well.  Which not only brings us back to the Dogs of The Dow question, but also whether the Dogs of The S&P might not have some merit.

Tags: , ,

A discouraging week. Are the Dogs back?

18 Dec

10% discount code PROTECTME5

Looking back a couple of weeks and the expression of my vain hope that the market had changed character for the better, it is clear now that  it was either a temporary respite or the markets had conspired to make an absolute liar out of me.  I suppose that it matters not other than to my ego, but we are once again in an unhappy place in the markets, where, apparently, we cannot hold an open to the upside.

Although my IntersectionX list (those stocks on both the IBD and ST 50s) held its own this week versus the other watchlists, the performance of the two main watchlists was pretty dismal.  The percentages of losers completely overwhelmed the winners.  12% winners in the IBD and 16% in the ST50.  The overall markets also bested not only the lists but also their top-10 choices.  The Christmas Silly Season is upon us as well, so I will be watching my stops like a hawk and sitting the rest of the year out, with the exception of monitoring opportunities in gold.

As I write, I am unseasonably pessimistic about the immediate prospects for the markets which I think may just give us more of the same with volatility.  It is time, I think, to dust off some of my options textbooks.  Otherwise, the sidelines are looking pretty good right now.

I have posted my thoughts on gold separately, so I will not repeat them here.  I will say that running through the charts of the commodity ETFs, it is clear that there are substantial opportunities building,  just not yet.    One metal that is attracting my attention for a future purchase is platinum.  I am not much interested in its industrial alternate, palladium, as I think there is too much retail interest in PALL which, in my opinion,  has recently contributed to its volatility.  Platinum is currently cheaper than gold and has sold off substantially this year.  It probably has some room to the downside but PPLT is on my watchlist. I check it every day.

Looking at our Vanguard ETFs which we use as proxies for various views of the market, our sector winners were certainly in the defensive end of the spectrum.  REITs topped the list and made a strong showing from Wednesday morning, adding 3.4% from Tuesday’s close:

The interesting action though, at least to my eyes, was in what I call the segments.  High yield dividend stocks were the clear winners and not by a small margin.   This is also apparent in my watchlist of dividend ETFs where ticker FDL, First Trust Morningstar Dividend Leaders ETF has lost least since December 7th, with Wisdom Tree’s high yield dividend ETF, DHS,  hot on its heels.  I started my self-directed investing life way back with the Motley Fools when they were pursuing a dogs of the Dow strategy, and I have been thinking for some time that that Dog may be about to have its day again.

Value is back in vogue on the style side. Looks to support the high-yield argument.

I may miss next week, so in case, a Merry Christmas to you all.

 

Tags: , , , , ,

← Older Entries

Follow

Get every new post delivered to your Inbox.

Join 161 other followers