Monday, January 02, 2017

IBD Top 50 Stocks Strategy – 2016 Final!

Here is the IBD 50 stocks investing strategies vs. $SPY. This analysis is from 1/1/2016 through  12/31/2016. 

The weekly strategy is investing $10,000 at the beginning of the year and then reallocating every week to the top 5, 10, 25 or 50 IBD50 stocks.

The monthly strategy is investing $10,000 at the beginning of the year and then reallocating on the last day of the month in the top 5, 10, 25, or 50 IBD stocks.

IBD went from Daily to Weekends only in the middle of 2016, so I did the best I could, using whatever the most recent IBD 50 rankings were every week and month when it was time to invest.

Quick analysis:  It’s tough to beat the unmanaged index.

imageThe Weekly Strategy total return for each strategy underperformed the SPY over the course of 2016.  Concentrating into fewer stocks was worse than using all 50 stocks.

All strategies exclude dividends in the calculations.

imageThe Monthly Strategy total return for each strategy also underperformed the SPY over the course of 2016.  But using the top IBD 10 stocks was at least close.

All strategies exclude dividends in the calculations.

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.

I apologize for any spreadsheet errors!

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