Since we announced our latest portfolio “draft” selections, one Model Portfolio stock – Tesla (TSLA) – has been flying. Even after some recent profit taking, TSLA was higher by 25.6% from our November 19th selection to Thursday’s close. Out of our 10 equal-weighted stocks in our Model Portfolio, however, TSLA astoundingly ranked only 3rd best. Our investing strategy is simple and based on momentum. We want to own the best stocks – 10 leading stocks from 10 different leading industry groups – for 90 days (one earnings cycle). Then rinse and repeat.
Leadership is key. That’s where Wall Street gravitates and institutional accumulation results in higher prices. Our Model Portfolio vs. the S&P 500 has performed as follows for the past 8 quarters:
In the current quarter (11/19 through 12/10), our Model Portfolio is once again crushing the S&P 500, +13.49% vs. +2.41%. Our cumulative gains since inception (covering 2 years and 21 days) is now +201.86% vs. the S&P 500’s gain of +36.32% over the same time frame. That’s a TRIPLING of your money is just over two years!
TSLA remains a leader in autos ($DJUSAU), but our biggest winner thus far has been Roku, Inc. (ROKU), which has climbed a slightly higher +25.94%. Here’s the current chart of ROKU:
Leadership comes with a price. Many look at a chart like ROKU and believe it can’t go any higher. Many thought that on November 19th, before the latest surge in price. 9 of our 10 Model Portfolio component stocks are beating the S&P 500 this quarter, 5 of them by more than 10 percentage points, including both TSLA and ROKU.
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Happy trading!
Tom Bowley, Chief Market Strategist, EarningsBeats.com