Results and Review
by David Forrest ([email protected])
Alexandria, VA (Dec. 31, 1998) -- Happy New Year, Fools! This is gonna be a long one, so strap yourself in. We have a lot to go over today with all of the end-of-year results and the new portfolios to watch for 1999. Let's start by going over the changes to the Workshop tracking for 1999.
Changes for 1999 -- Always evolving based on our customers' interests, the Foolish Workshop will be following three new screens for 1999. The first new screen is the Spark 5, based on the work from our friend Sparfarkle. This screen combines price momentum and EPS growth.
The second new screen for 1999 is the PEG 5>. MChernick, another member of our community, developed this screen, which combines price momentum, projected EPS growth, and a dash of value investing.
Finally, we'll be hawking a Beta screen. Here we're simply trying to capture the upside volatility of Value Line's Timeliness # 1 ranked stocks. The screen isn't for the faint of heart. This was wrought from the imagination of yours truly and will no doubt turn the analytical world on its head! Okay, maybe that's a bit melodramatic. Apologies. :)
For a complete, updated explanation of all the screens, please click in here.
While we won't publish it weekly, we'll also be tracking a mock portfolio over at quote.fool.com designed to track the Value Line Investment Survey's Timeliness 1 stocks. Each week we'll add and delete based on Friday's close. This exercise will serve to monitor the performance of that group of stocks. We'll put equal allotments into each stock and rebalance appropriately.
"The Axe" -- In an effort to keep the Workshop publishing to a manageable level, we decided to stop following one screen, making it an even 10 for the year. After hearing reader feedback on AOL and the web, the vote is clear. Folks told us to get rid of the IFG - Relative Strength screen, and so we will.
Rankings! -- All of the new rankings are up and listed here. A few weeks back I asked the question "Is there any correlation between Dell Computer's (Nasdaq: DELL) incredible year and the fact that it was listed on the most screens last year?" Well, we don't know, but there's a new sheriff in town for 1999. The stock that appears on the most screens (7 of 10) is EMC Corp. (NYSE: EMC). We'll have to see if EMC is a drag or a boon for the Workshop screens this year.
New Model Ports -- Next week we'll have all of the NEW returns that reflect the 1999 models. In addition to monitoring the annual returns of these 10 screens, we'll also keep monthly tabs on UG5, RS-IBD, and IFG. As community member Charley pointed out, this wasn't presented well enough in our columns this past year. We'll try and do better this year.
Dozens -- Whoa! It's time to rebalance most of the Dozens ports! As Robert Sheard alluded to in his May 14 column from last year, rebalancing the Dozens can be a little tricky. Check out his column for the details. The way we'll do it is to add $1000 Fool bucks (remember, these are fictitious ports) to each of the dozens ports, divide the total portfolio value by 12, and add that much for the new stock. Here are the new additions to the Dozens portfolios:
Sell 18 shares of Fifth Third Bancorp (Nasdaq: FITB) @ $71.31
Buy 37 shares of Oracle Corp. (Nasdaq: ORCL) @ $43.125
Formula 90 Dozens
Sell 34 shares of Safeskin (Nasdaq: SFSK) @ $24.125
Buy 22 shares of Dycom (NYSE: DY) @ $57.125
Low PSR Dozens
Sell 36 shares of VWR Scientific (Nasdaq: VWRX) @ $17.375
Buy 19 shares of Safeway (NYSE: SWY) @ $60.94
RS -26 wk Dozens
Sell 54 shares of Best Buy (NYSE: BBY) @ $61.375
Buy 6 shares of Yahoo! (Nasdaq: YHOO) @ $236.94
Spark 5 Dozens
Buy 7 shares of Microsoft (Nasdaq: MSFT) @ $138.56
*Note: Spark 5 Dozens isn't a year old, so there is no sell.
1998 -- Year in Review
Four years running of 20% plus growth in the Standard & Poor's 500 Index. Even the staunchest of bears has to admit that we're in an unprecedented stock market environment. Some call it a bubble, some attribute it to the incredible gains we've seen technologically this decade. Some even go so far as to declare the last two decades a "Golden Age" similar to that of the Renaissance. An incredible time to be part of the equity markets. Congratulations!
The dramatic returns of the S&P 500 this year (28.70%, including dividends) were improved upon by several screens in the Workshop. In the final hour, even the weakest of screens managed to eke out a gain for the year. All eight of the Workshop models followed this year gained. Four bested the average, four fell short. Let's look at the returns for 1998:
39.90 RS - IBD
36.75 IFG - Classic
35.65 IFG - Relative Strength
28.70 S&P 500
21.78 Formula 90
9.11 Unemotional Growth
2.15 Low PSR
1.66 RS - 26 Week
In the short time we monitored it, the Beta Port was up 65.94% versus an S&P 500 up 20.12.
Sparfarkle reports that the Spark 5 returned 41.61%, versus an S&P 400 up 28.70% (including dividends).
Dozens Returns -- It was a decent year for the Dozens ports, too. Here is the rundown on the returns for the year. The S&P 500 returns vary slightly with each because of the fact that as each stock is bought, an equivalent amount of the S&P is fictitiously bought, as well. All but the Low PSR are soundly thwapping the S&P 500.
Keystone Dozens +62.70% versus 13.13% for the S&P 500
Formula 90 28.73% versus 14.21% for the S&P 500
Low PSR 5.46% versus 15.16% for the S&P 500
RS - 26-wk 50.63% versus 14.25% for the S&P 500
Conclusion -- Well, folks. It's been a great year. I hope that all of you have enjoyed even better returns than those seen here. Through your imagination and creativity, the Workshop has become one of the most vibrant communities of "open standard" investing on the 'Net. Congratulations to you all on a great year and my best wishes for a safe, happy, and prosperous New Year!