The Daily Workshop Report
by Robert Sheard (TMF Sheard)

When I started setting up the Workshop, I had to be careful not to try to include too much. With limited hours to maintain the site and infinite possibilities to examine, I opted to go with the most streamlined approach I could imagine. This meant using only pure screens based on single factors, with the exception of the original Investing for Growth model which launched the whole project.

But that leaves out one combination that has actually proven a very good, low-turnover approach. So I want to mention it here from time to time, and perhaps in time will even make a slot available for it in the Workshop.

When I was testing Unemotional Growth, I also tinkered with a much longer holding period for those investors whose portfolios can't sustain the trading costs associated with monthly updates for this approach.

I decided to run a quick test using the data I had already gathered and found that for an annual holding period, the Relative Strength screen was a very good starting point. The way I ran the test is to start with the same field of 100 top-ranked stocks from Value Line we use for the other growth screens. Then narrow that field down to those stocks with both EPS and RS rankings (earnings per share and relative strength) of 90 or better.

From that smaller list, then rank the stocks by RS rankings and select the top stocks. I tested both a five- and ten-stock variation, assuming equal-dollar amounts in each stock at the beginning of the year and the results were virtually identical, a compound growth rate from 1987 through 1996 of just over 35%.

If you're looking to add a growth component to your Dow portfolio, but don't have the $25,000 or $30,000 necessary to do a full-blown aggressive approach like Unemotional Growth, this screen might provide you with a field of stocks with which to start.

Now all we need is a name for the approach. It's not really an Unemotional Growth variation per se, since it uses a minimum cut-off for both EPS and RS and then sorts by RS. But an acronym disaster is something I want to avoid. If you've got a short, relevant name for it, please post it in the Workshop folder.

For those of you playing the Thoroughbred Stock Challenge, the new entry form for February's game is up on the website and ready for your submissions. I will accept entries (based on the date and time-stamp provided by the server, so leave yourself some room for slow connections) up until the opening bell rings on Monday, February 3.

Monthly Growth Screens
 (Jan. 3 to present)
23.02% Relative Strength
16.08% YPEG Potential
9.38% Low Price/Sales
3.85% Investing for Growth
3.01% S&P 500 Index
1.90% Unemotional Growth
0.09% EPS Plus RS

Annual Value Screens
(Jan. 1 to present)
4.17% Dogs of the Dow
3.85% Dow Jones Ind Avg
3.74% Beating the S&P
2.84% Dow Combo
1.41% Unemotional Value
1.41% Beating the Dow