Fool.com: The "Good" Dozens (Workshop) September 17, 1998

The "Good" Dozens

Akron, OH. (Sept. 17, 1998) -- Fools, on Monday I said that I'd be writing about Keystone, but I've since decided to update the Dozens portfolios and report back on them. For those of you unfamiliar with the Dozens portfolios, the idea came about when people asked: What do I do if I only have a little money each month to invest? We started to experiment with the notion of picking the top stock from your favorite screen and adding one stock a month to your portfolio.

In other words, if you chose Keystone as your screen of choice, then on the last day of each month, you'd run the numbers and buy the top Keystone stock with your smaller amount of money. At the end of a year, the oldest stock would get replaced with the newest. It makes great sense as a way for individuals to ease themselves in, diversify a bit, and in a way dollar cost average.

We started the experiment with 5 paper portfolios and added one along the way. Today, we'll look at three: Keystone, Formula 90, and Relative Strength. If you need explanations of how these screens are run, click here. Below are the various returns on these portfolios next to the return of the Standard & Poor's 500 had you bought the index instead of the stocks. It's obviously for comparative purposes only. Here are the returns:

 
 Keystone           +15.71% 
 Relative Strength  +14.12% 
 Formula 90         +11.43% 
 S&P 500             -4.10%

As you can see, these three screens are hammering the index so far this year. One big caveat is that while the individual screens (Keystone, Formula 90, etc.) have been backtested, the Dozens approach to these has NOT been backtested, and we really only have 8 months worth of data. So far so good, though. Soon, we'll hopefully have a spreadsheet with all of the stocks, when they were added, prices, etc. In the meantime, here are the stocks that were added to these portfolios as the end of August:

Keystone added Capital One Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COF)") else Response.Write("(NYSE: COF)") end if %>, 12 shares at $87.50.
Relative Strength added Recoton <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RCOT)") else Response.Write("(Nasdaq: RCOT)") end if %>, 42 shares at $23.50.
Formula 90 added Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>, 18 shares at $54.06.

All paper trades use closing prices and assume an $8 commission. On Monday, well go over returns for Dow Dozens, Dow Racers, and Low PSR.

Fool on!

Check out the latest file updates for the Workshop:
New Rankings | 1998 Returns | New Database

What Happened to Robert Sheard?