Update The IBD Top 50 Stocks Strategy

Heres a late update on the IBD Top 50 stocks investing strategies vs. $SPY

25255B1%25255D.png?imgmax=800 /% The IBD weekly strategy ending 5/9/2014 underperformed the SP500 by quite a bit.  For the week, there were 41 stocks down and 9 stocks up for the IBD 50. 

GMCR led the IBD 50 with a return of over 19% for the week.  The biggest loser for the IBD 50 was UBNT, down over 23%.  UBNT reported earnings and the stock sold off hard.  Only one stock in the IBD 5 was positive for the week!

The total return since 2/8/2014 is underperforming the SP500.  None of the IBD models has a positive return for 2014.  The more diversified model (with 50 stocks) is performing better than the less-diversified models.  The market index is near an all time high, but the growth stocks have been sold off in favor of the larger cap Dow names.  (This is not usually a good sign, by the way).

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 $248.75.

25255B3%25255D.png?imgmax=800 /% The IBD monthly strategy kicked off a new month hovering near the returns of the SP500.  The IBD 5 was the only model to have a positive return, while the more diversified IBD 50 came in last. 

The total returns for the monthly models are struggling to match the SP500, and are trailing by quite a bit.  While it may seem as if all hope is lost, the models consist of growth stocks.  If growth stocks ever see cash inflow again, these stocks could once again take the lead.

Thats not happening now!

With just over a week of trading in the books, the IBD 50 has 14 gainers and 36 losers. 

Trading costs $29.85.

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 weeks or last months 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 IBDs 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.