Tag Archives: IBD

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.

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Excellent and revealing study on market timing

11 Feb

If you spend money on third-party services, you should read this comparison of market timing systems from our good pal Don over at Dark-Liquidity:

 http://www.dark-liquidity.com/2011MarketTimingPerformance.php

It’s an eye-opener.

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IBD 50 Project Update – FAIL?

28 Feb

I have had it in mind to check the IBD 5o Project portfolio against the original  IBD 50 list top 10 stocks for a while.  But as I had to sell and replace five stocks tonight on the weekly update, for a total of ten trades, I was pushed into doing it tonight.  Fact is, if we used IBD’s original ranking we in maintaining a top-10 portfolio we would have made a lot more money and made a lot less trades which is not only less work but also less spent in trading costs.

Although I made a slight variation to the  IBD Top-10, I concluded that this would be a good portfolio for folk starting out with self-directed investing.  You would only need to buy the paper on Saturday. I can hear the folks over at Investors’ Business Daily yelling “Yes! Of course!” from here.

Well, it seemed like a good idea at the time, but first let’s take a look at the IBD 50 Project portfolio composition.  We took the IBD 50 list of stocks and downloaded it from the Investors’ Business Daily website.  We next imported it into Vectorvest and sorted the list of fifty stocks by VST-Vector descending.  VST Vector is an overall measure combining valuation, safety and timing (momentum), so we were hopeful that this re-sort or filter might give better results than the original IBD ranking.  Each week we performed the same exercise and sold positions that dropped off the list and purchased their replacements at the open on the Monday morning following the publication of the list, which happens every Saturday.  The project started on January 24th, or roughly a month ago, with a $50,000 initial investment.  We ended up with a gain of $2,831 or 5.66%, which isn’t shabby on an annualized basis.  Our portfolio really got hammered this last ten days or so, as on February 17th we had a gain of $5,621 or 11.24%.  The best performing stock in the portfolio is Tractor Supply (TSCO) in which I happen to own a position. Following is a list of the positions as of tonight, and the equity graph:

The summary report for the project shows how much trading went into maintaining the portfolio.  It is more work than a starting self-directed investor would want to undertake, in my judgement.  If the returns were there, it might be worth it, but there was more money to be made in the period for a lot less work, so we’ll look at that next.

You’ll see that we racked up nearly $500 in trading costs although this could be halved by using a less costly brokerage like Trade King .  A brokerage like Trade King, with minimal costs but decent service is probably a good place for those starting out, as trading costs can be a significant consideration.

Now let’s look at the unadulterated portfolio derived from the top-10 positions as ranked by Investors’ Business Daily in their IBD 50 stock screen and list which is published each Saturday.

Again we imported the top-10 list into Vectorvest for tracking purposes.  If a stock fell out of the top ten then we sold it at the open on the following Monday morning, and purchased its replacement at the same time with the proceeds of sale.

The first thing I noticed is that there was a lot less stock turnover in this model.  However some stocks were sold one week only to be repurchased the next, which was also not always financially advantageous looking at it after the event, when, of course, it is easy to be wise.  This is how our positions ended up after our transactions this morning , together with the equity curve  going back to January 24th.  We again started with a $50,000 portfolio which I believe would be appropriate for someone starting out or who is relatively new to investing: Continue reading →

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The IBD project

14 Feb

Some people just have too much time on their hands………

I take two print newspapers to do with Investing, Investors’ Business Daily and Barrons.  They are both on my recommended list and also make a good online resource.  Long story short, for a few weeks I have loading the weekly IBD lists into Vectorvest for a bit of analysis.  Basic quick tests of Relative Timing versus VST Vector sorts have shown that the VST descending sort does best for results.

So, I set about setting up a portfolio of the top 10 each week, starting with 10 stocks bought at the open on Monday morning.  If a stock doesn’t make it to the next week’s list sorted VSC Desc from the IBD 50 list, I sell it at the open on Monday morning and replace it from that Saturday’s new sorted list.  The project now encompasses four lists and three trading weeks.

So far the project has returned 11.4% in the three weeks, which isn’t shabby although I’m the first to admit that these have been good weeks to be investing.  Only four stocks have survived to live onto next Saturday: TSCO, IDCC, AAPL and DECK.  XEC made it through Saturday but didn’t make the cut to continue even though it has returned 11.1% over three weeks.  Of the seven stocks that have been replaced five were at a loss, two at a profit.  All told they lost $115 between them.

Three more stocks, XEC, SINA and APKT were replaced at the open today by AIXG, NOG and ARW.  If these three rejects are thrown into the mix, on average, the rejects have actually returned a profit!  I assumed a $50,000 initial investment to model the average investor and started out the week with an extra $5,609.10 in the bank before trading costs of ~$200.  This strategy calls for an account at TradeKing or somewhere similar to minimize trading costs.

I did run a simple backtest in Vectorvest to see how close a buy and hope strategy with a 10%trailing stop would do.  I came in at +8.59% with one trade.  I leave you to decide if the work is worth the extra return.

Reading this seems like a lot of work but it’s not too bad done weekly on a Saturday.  I’ll keep you posted on this project continues.

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