June's UG Loss
(TMF Sheard)
LEXINGTON, KY. (July 6, 1998) -- The Unemotional Growth model broke its five-month winning streak in June, chiefly the result of a 50% haircut in a single stock. For the monthly cycle model, June will record a loss of 8.08%. The 10-stock model was also down, 7.66%. Meanwhile, the Standard & Poor's 500 Index gained 2.92%.
For the year, the 5-stock Unemotional Growth approach is up 22.56% and the 10-stock version is up 15.65%. That brings the annualized return for the 5-stock version down to 38.00% a year since the beginning of 1987. The 10-stock version has returned 29.61% a year.
The big culprit last month was Parametric Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMTC)") else Response.Write("(Nasdaq: PMTC)") end if %>, which lost 50.10%. If ever there were a perfect example to support my long-held contention that risk insurance is best achieved by a diversified portfolio of stocks (20 holdings), this type of implosion is it. If all of your money is in five UG stocks, the Parametric loss cost one's portfolio an overall hit of 10%. But with a 20-stock portfolio, the loss in a single stock drops your portfolio only 2.5%.
The other four stocks last month had a net gain. Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> gained 9.83%. Anchor Gaming <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SLOT)") else Response.Write("(Nasdaq: SLOT)") end if %> lost 15.88%. HBO & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HBOC)") else Response.Write("(Nasdaq: HBOC)") end if %> gained 19.02%. And PeopleSoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSFT)") else Response.Write("(Nasdaq: PSFT)") end if %> lost 3.27%.
By virtue of a terrific month (up 16.42%), and its consequent rise in relative strength score (RS), Cambridge Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CATP)") else Response.Write("(Nasdaq: CATP)") end if %> joins the Unemotional Growth Five for July. Parametric Technology is still officially in the UG rankings at number six, but my speculation is that next week's Value Line rankings will drop it from their top-ranked group, effectively kicking it out of the UG rankings. For the full set of Workshop screen rankings, please visit our latest Current Rankings update.
The UG5 for July, then, are: Dell Computer, HBO & Co., Cambridge Technology, PeopleSoft, and Anchor Gaming.
Positions six through ten are: Parametric Technology, Robert Half Int'l <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RHI)") else Response.Write("(NYSE: RHI)") end if %>, CKE Restaurants <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CKR)") else Response.Write("(NYSE: CKR)") end if %>, Quintiles Transn'l <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QTRN)") else Response.Write("(Nasdaq: QTRN)") end if %>, Papa John's Int'l <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PZZA)") else Response.Write("(Nasdaq: PZZA)") end if %>.
To see the full monthly UG results since 1987, please visit our UG History File.
Check out the latest file updates for the Workshop:
New Rankings
| 1998 Returns
| New Database
[Robert Sheard is the author of the The Unemotional Investor (Simon & Schuster, 1998) available now at Amazon.com and your local bookseller.]