A Workshop Portfolio?
by Ethan Haskel (Cormend@aol.com)
Baltimore, MD (Jan. 27, 1999) -- It's pretty amazing how the Workshop has blossomed since Robert Sheard founded it all slightly more than two years ago. We started with a handful of screens and a fairly limited audience. From these modest seeds, we've sprouted to encompass a wide variety of strategies and variations. The Workshop message board is second only to "Ask a Foolish Question" in the number of posts listed -- almost 4000 last month, or more than 100 per day. This output represents a heckuva lot of thoughtful minds scrutinizing the best ideas -- working them and then reworking them some more.
In a very short time, we've matured from the development of theoretical constructs to well-studied portfolios. Many of the best strategies can be, and have been, tested in the real world -- with real world cash. In fact, if so desired, one can build an entire diversified portfolio solely using a combination of these screens. A Workshop portfolio of portfolios, as it were.
How would one go about constructing such a "Workshop Portfolio?" One Fool's solution is supplied by Ben Goldman, longtime Foolish message board contributor. Ben started by analyzing the total and risk-adjusted returns for most of the Workshop's backtested strategies. He decided to go with a portfolio consisting of 25% value stocks and 75% growth stocks. Ben also chose to invest in 20 companies, a number that provided him a comfortable degree of diversification. The result: his "Killer Portfolio," which has returned 34% compound annual growth from 1987 to 1998.
Here's the complete listing of his stocks and the year to date returns (as of this past weekend):
Killer Portfolio +3.7% Standard & Poor's 500 Index -0.8% PEG Semi-Annual (ranked 1-5) 5.6% Owens & Minor (NYSE: OMI) -0.5% Amer. Eagle (Nasdaq: AEOS) -1.0% AnnTaylor Stores (NYSE: ANN) -5.7% Best Buy Co. (NYSE: BBY) 24.1% Biogen Inc. (Nasdaq: BGEN) 11.4% Keystone EPS (ranked 2,4-7) 1.4% America Online (NYSE: AOL) -6.4% Oracle Corp. (Nasdaq: ORCL) 14.7% Int'l Business Mach. (NYSE: IBM) -3.0% Cisco Systems (Nasdaq: CSCO) 7.9% Home Depot (NYSE: HD) -6.0% Spark (ranked 1-5) 9.2% Microsoft Corp. (Nasdaq: MSFT) 8.0% Dell Computer (Nasdaq: DELL) 12.0% Nokia Corp. ADR (NYSE: NOK.A) 12.7% EMC Corp. (NYSE: EMC) 11.8% Guidant Corp. (NYSE: GDT) 1.4% BSP (ranked 2-6) -1.5% Schlumberger Ltd. (NYSE: SLB) 8.1% Kimberly Clark Corp. (NYSE: KMB) -9.9% Campbell Soup Co. (NYSE: CPB) -19.1% Ford Motor Co. (NYSE: F) 4.9% BankAmerica Corp. (NYSE: BAC) 8.2%
I'd say, all in all, Ben's off to a very good start. His portfolio seems to be well balanced, including a healthy blend of small company and large company stocks, and not over-weighted in the high-flying tech sector. It'll be interesting to keep tabs on this real-money portfolio to see how it plays out over the year, through thick and thin. Look for regular updates, both in the Workshop message boards and in this column.
For explanations of these screens and more, check out Workshop Screen Explanations and the BSP Home Page.
Beating the S&P year to date returns (as of 01-26-99):
Schlumberger (NYSE: SLB) +3.5% Kimberly-Clark (NYSE: KMB) -9.6% Campbell Soup (NYSE: CPB) -19.4% Ford Motor Co. (NYSE: F) +5.3% BankAmerica (NYSE: BAC) +8.0% Beating the S&P -2.4% S&P 500 +1.9% Compound Annual Growth Rate from 1-2-87: Beating the S&P +20.4% S&P 500 +17.9% $10,000 invested on 1-2-87 now equals: Beating the S&P $93,100 S&P 500 $72,100