Relative Strength IBD
BURLINGTON, VT (Sept. 9, 1999) -- How about an investment that's been doubling money in less than 12 months on average for about three years? A monthly version of the Relative Strength - IBD (Investor's Business Daily) mechanical stock screen boasts this record.
The last I knew, a complete backtest of this model was still being assembled by industrious message board contributor Sux2BeU -- thanks, Sux! In the meantime, many of us have liked the current results of the model so much that we can't resist saying "I'll take a large serving of RS-IBD monthly on the side, please."
As I mention in my Foolish Interview, this screen is what led to my "best investment" back in February of 1997. Dell Computer (Nasdaq: DELL) has since remained in my portfolio by way of the RS-IBD or Keystone screens, racking up gains to what is now about a ten-bagger. A few more stocks like that and I'll be spending way more time in the lower latitudes! Oops, not very unemotional there, sorry.
Getting back on track, I bring you an update of the monthly RS-IBD screen. The stocks for the model are picked as follows: Starting with the 100 stocks ranked #1 for timeliness in the Value Line Investment Survey, sort out the top 5 or 10 with the highest IBD relative strength scores. Break ties with the IBD earnings per share (EPS) score. Update once per month, replacing any stocks that no longer make the screen. Just like the Unemotional Growth model, the trades for the mock IBD-RS portfolio I track are based on the closing prices for the first Friday of the month.
Here are last month's stocks as listed in the August 6, 1999, current rankings, listed with their performances for August through last Friday:
Qualcomm Inc. (Nasdaq: QCOM) 10.58% VISX Inc. (Nasdaq: VISX) 2.65% JDS Uniphase (Nasdaq: JDSU) 35.43% PMC - Sierra Inc. (Nasdaq: PMCS) 20.40% IDEC Pharmaceuticals (Nasdaq: IDPH) 28.33% CTS Corp. (NYSE: CTS) 18.30% Xilinx Inc. (Nasdaq: XLNX) 19.36% Imunex Corp. (Nasdaq: IMNX) 22.08% American Freightways (Nasdaq: AFWY) -6.67% Best Buy Co. (NYSE: BBY) -10.35%Another fabulous month for the screen! That followed a swoon in July when the model returned -10.05% and -7.76% for the 5- and 10-stock versions, respectively. After an early backslide, it turned into a summer of love for the RS-IBD stocks. The year-to-date returns for RS-IBD monthly now stand at -- I swear I'm not making this up -- 108.09% for the RS-IBD5 and 70.94% for the RS-IBD10. A nice move from my last update of RS-IBD on July 8, 1999.
IBD-RS5 19.48% IBD-RS10 14.01% S&P 500 Dep Rcpts (AMEX: SPY) 4.29%
Remember, kids, that these are only hypothetical returns and do not account for real costs like commissions, taxes, and bid/ask spreads. Check out the current rankings for the latest picks from this screen.
Other contributors to the Workshop keep tabs on this model as well, and it's been pointed out to me that some of the returns differ widely from what I've been publishing. Although there's always the possibility I could have made a muff or two in my record keeping, I think most of the differences are due to the slightly different ways used to track the hypothetical trades and stock prices of the model. Please let me know if you notice a missed stock split or other possible flub.
I'm sure we'll be hearing much more about this crowd-pleasing screen in future Workshop episodes. For now, have a great weekend!