Workshop Portfolio

<FOOLISH WORKSHOP>

Timeliness Rankings, Part 1      

by Jim Stevens (JimStevens@aol.com)

Burlington, VT (May 17, 1999) -- One of the questions that pops up early and often from Workshop visitors goes like this: "The backtested returns of the WOW5 screen look phat, dude, now what the heck is a stock ranked number 1 or 2 for Timeliness?" Today we review everything you always wanted to know about Timely stocks and were hardly ever afraid to ask!

A critical ingredient of any mechanical investment strategy is a nice crisp group of good, sound stocks that the mechanical screen can set out to beat -- a "universe" of possible screen candidates, if you will. For example, The Dow Dividend strategies start with the thirty Dow Jones Industrial Average stocks. A strategy that selects from a limited number stocks is much easier to backtest and implement than one that attempts to mechanically screen the entire stock market. "What's a backtest," you say? Hang on. We'll explain backtesting in a future episode.

Back to this Timeliness thing. It turns out that there are groups of stocks out there that already beat the market. So beating them pretty much guarantees a market-beating strategy. One such group is comprised of stocks ranked high for "Timeliness" by the busy folks at The Value Line Investment Survey. These revved-up growth stocks are quite a different breed from the relatively stodgy Dow stocks, which makes a screen of them a nice complement to a Foolish Four portfolio for someone who wants to expand into growth companies.

The Value Line Investment Survey is a printed subscription publication that analyzes and reports on quantitative financial data for 1700 stocks every week. It has also been available as an "electronic" subscription for a few years -- you can download their data right to your computer. Reportedly, these 1700 stocks represent about 94% of the combined total of equity trading volume on all U.S. markets. So we are starting with a pretty good "universe" of stocks, although many very small companies that could be great growth prospects are not included.

Timeliness Rank is Value Line's main measure of a stock's "probable price performance during the next six to 12 months on a scale from 1 (highest) to 5 (lowest)."

While the actual formula for Value Line's ranking system remains their trade secret, they do say that it is generated with a computer program whose input is only "actual and known data." In other words: numbers only -- no opinions. They do share the inputs to the ranking program, which according to the Guide to Using The Value Line Investment Survey are long-term trends of earnings, prices, recent earnings/price momentum, and earnings surprises.

The five Timeliness Rank categories don't include equal numbers of stocks. There are 100 companies in rank 1 (highest), 300 in rank 2 (above average) and then 900, 300, and 100 ranked in the 3 (average), 4 (below average), and 5 (lowest) categories, respectively.

Each week, for the price of a subscription or the gas to get to the library (much cheaper!), you can see how Value Line ranks their 1700 stocks. Most of our screens start with the stocks ranked 1 or 2 for Timeliness. So a typical screen might start with 400 of the largest companies traded in the U.S. that have the "best numbers" for future growth. Then we look for ways to pick just 5 or 10 really good possibilities from that group.

Tune in Thursday, when we will review the performance history of the 5 groups. I think you'll see why the stocks ranked high for Timeliness are a good place to start when developing our Workshop strategies.

Have a great week!

New Rankings | Workshop Returns


Workshop Portfolio


9/28/01 as of ~5:30:00 PM EDT

Ticker Company Price
Change
Daily Price
% Change
Price
AETAETNA INC NEW0.943.36%28.94
BABOEING CO(1.04)(3.02%)33.36
CATCATERPILLAR INC1.112.53%44.91
COGCABOT OIL & GAS 'A'0.693.59%19.90
DDDU PONT (EI) DE NEMOURS0.992.74%37.14
DGXQUEST DIAGNOSTICS(0.45)(0.73%)61.42
EKEASTMAN KODAK0.421.31%32.49
GMGENERAL MOTORS1.393.38%42.55
LHLABORATORY CORP AMER HLDG(NEW)1.141.42%81.21
MOPHILIP MORRIS COS(0.76)(1.55%)48.24
NEWPNEWPORT CORP0.261.90%13.97
NVRNVR INC(0.54)(0.38%)140.41
PKXPOHANG IRON & STEEL ADS1.097.51%15.61
PVNPROVIDIAN FINANCIAL1.075.64%20.04
QCOMQUALCOMM INC(0.40)(0.84%)47.16
RJRRJ REYNOLDS TOBACCO HLDGS(0.69)(1.19%)57.31
SLESARA LEE CORPUnchg.Unchg.21.09
UNFIUNITED NATURAL FOODS0.563.18%18.15
WMIWASTE MANAGEMENT(0.01)(0.04%)26.74

Overall Return -- total % Gained (Lost)
  Day Week Month Year
To Date
Since
Inception
(12/24/1998)
Workshop1.30%7.32%(12.02%)(20.66%)(18.91%)
Comparable S&P 500n/an/an/an/a(19.07%)
S&P 500 (DA)1.95%7.48%(8.33%)(21.22%)(14.88%)
NASDAQ2.02%4.71%(17.46%)(39.68%)(31.41%)
DJIA (DA)1.68%7.07%(11.07%)(17.86%)(2.22%)

Internal Rate of Return -- Annualized Rate of % Gained (Lost)
  Since Inception (12/24/1998)
Workshop(17.62%)
vs. S&P 500(17.63%)

Trade Date # Shares Ticker Cost/Share Price Total % Ret
1/8/0126MO40.9448.2417.82%
1/8/0122RJR50.1057.3114.39%
1/8/0167UNFI16.4518.1510.34%
12/24/9824CAT43.0844.914.24%
1/8/018NVR136.63140.412.77%
1/8/0140WMI27.4426.74(2.54%)
1/8/0150SLE22.5421.09(6.42%)
1/8/0161PKX17.8315.61(12.46%)
1/8/0115DD48.8337.14(23.95%)
1/8/0129AET38.1728.94(24.19%)
1/8/0139COG28.7519.90(30.79%)
1/8/0114QCOM75.5447.16(37.57%)
1/8/018LH134.6981.21(39.70%)
12/27/9918GM73.2642.55(41.92%)
1/8/0118BA59.5333.36(43.96%)
1/8/019DGX114.4961.42(46.35%)
12/27/9920EK65.0932.49(50.08%)
1/8/0120PVN55.5020.04(63.89%)
1/8/0115NEWP74.9613.97(81.36%)

Trade Date # Shares Ticker Total Cost Current Value Total Gain
1/8/0126MO$1,064.50$1,254.24$189.74
1/8/0122RJR$1,102.25$1,260.82$158.57
1/8/0167UNFI$1,102.12$1,216.05$113.93
12/24/9824CAT$1,034.00$1,077.84$43.84
1/8/018NVR$1,093.00$1,123.28$30.28
1/8/0140WMI$1,097.50$1,069.60($27.90)
1/8/0150SLE$1,126.88$1,054.50($72.38)
1/8/0161PKX$1,087.75$952.21($135.54)
1/8/0115DD$732.50$557.10($175.40)
1/8/0129AET$1,107.00$839.26($267.74)
1/8/0139COG$1,121.37$776.10($345.28)
1/8/0114QCOM$1,057.62$660.24($397.39)
1/8/018LH$1,077.50$649.68($427.82)
1/8/0118BA$1,071.50$600.48($471.02)
1/8/019DGX$1,030.44$552.78($477.66)
12/27/9918GM$1,318.62$765.90($552.73)
12/27/9920EK$1,301.75$649.80($651.95)
1/8/0120PVN$1,110.00$400.80($709.20)
1/8/0115NEWP$1,124.37$209.55($914.83)
 
Cash: 
Total: 
$10.80
$15,681.03
 

Key
• S&P 500 (DA) = dividend adjusted. Dividends have been added to the total return of the index.
• DJIA (DA) = dividend adjusted. Dividends have been added to the total return of the DJIA.

Note
Note: The Workshop Portfolio was launched on December 24, 1998, with $4,000 which was invested in the Foolish Four strategy. Approximately $15,000 was added on January 8, 2001, to support five additional mechanical strategies. At that time approximately $1000 was transfered out of the Foolish Four strategy to bring the Foolish Four into balance with the other strategies. (That's why the Foolish Four's overall return is not consistent with stock values.) Such rebalancing will take place each year among the strategies so that each will start out with approximately the same value at the begining of the year. No more cash additions are planned. The first four tables above show the overall performance of the portfolio. Below that we also track the performance of each component strategy. All transactions are announced publicly before being made, and returns are compared daily to the S&P 500 and the Dow. (Dividends are included in the yearly, historic and annualized returns.) Stocks are chosen using strategies developed by the Workshop community.