My title points to it being a great month, and it was for the models. It was also a great month for the service. We launched a new model for the first time since the summer of 2008, gained new subscribers, held on to most of our existing ones, and continued to make enhancements to our newly redesigned website. We are as confident as ever as we approach our 3rd anniversary of the Top 20 launch later this month that we are all headed in the right direction with our service, which is designed to enable individual investors who prefer to direct their own investments to invest more confidently and enjoy superior investment performance at an affordable all-in cost. Speaking of superior investment performance:
Top 20 had a good week, increasing 2.3% compared to the S&P 500 rallying 2%. My marketing department suggested that just because I do this weekly doesn't mean I should just discuss changes only over the week. In the spirit of this being a month-end, I will highlight that we had a fantastic month - 4.5% compared to 3% for the S&P 500. The marketing department is calling - hold on. Sorry. Let's step back further. The model is now up 14.5% YTD, which is almost 5.4% better than the S&P 500. Over the past year, it's up a stunning 40.6%, 23% better than the S&P 500. As I said before, we are about to turn three. Most of those months have been good ones, but we started off in an abyss. Since the launch, with dividends, the S&P 500 is up almost 6%. Hey, that's more than most bank accounts have paid, but kind of paltry compared to the compound growth of Top 20: + 113%. OK, enough tooting the horn!
Looking at this past month, I am pleased to have continued the strong performance. The overall averages didn't favor small companies or companies classified as "value", so we overcame some headwinds since we have lots of those. We did well mainly because of security selection and the fact that we were low in Energy exposure, which was a drag for the overall market. It's just a month-end and not a quarter-end, so I won't spend too much time, but I will call out our biggest contributors: JNJ and INTC, both up more than 10%. We had many stocks up more than 5% too. Only two stocks declined more than 5%.
Conservative Growth/Balanced had a good week too, improving 1.8% compared to the stock/bond index increasing 1.5%. For the month of April, the model gained 3.75%, which was well ahead of the 2.3% stock/bond return. Over the past year, the model is up 25.2%, which is almost double the 13.0% return of the benchmark, but let's not neglect to realize that it's up more than the S&P 500 by far (almost 8% better). The model is less risky, but continues to return more. Since inception, it has returned an annualized 12% above its benchmark. The very strong month was mainly a function of the performance of our Healthcare stocks.
Next week, I will begin updating the SECTOR SELECTOR ETF model portfolio results. FYI, our launch today enables us to have a complete month beginning in May. I am sorry for the short-notice for those of you who might have wanted more than a few minutes to get on board!
Outlook
Let me be frank: There was no chance to change my outlook this week. Between the two models, we had 6 of our 29 companies report, but the percentage of my watchlist was even greater (something like 30 out of 100). I felt like an air traffic controller or a triage nurse. Luckily not too much triage! So, keeping it brief, I remain bullish. We are slighly ahead of pace in my view, as the 9.1% S&P 500 return annualizes out more than the 20% or so I expect this year. I am not too cautious in the near-term, but we still continue to have a lot of extended stocks. I don't expect May to be as strong as April was and I see resistance at 1375 or so on the S&P 500 - not too far at all. Not to worry - the models can perform well in quiet consolidating markets.
Articles
- Negative on Energy (Seeking Alpha)
- EZPW Rocks (Seeking Alpha)
Live Webinar - Tuesday May 3rd at 5PM EST
On Tuesday, I will be conducting an interactive webinar on TradeKing's website - please feel free to join us in my initial attempt at "talking" to investors. The topic will be the exact same as the one I am presenting the following week at Money Show in Las Vegas: Targets. The time is 5PM EST, and here is the link if you care to listen live (register in advance). There is also an archive that will be available a few days later - I will post that next week.
Have a nice weekend!
Alan Brochstein
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