Fool.com: UG Monthly Update (Workshop) November 9, 1998

UG Monthly Update

Burlington, VT (November 9, 1998) -- Wow, after a week's vacation I returned to see the markets continuing to rally. I half expected to check my accounts and find they had gone through the same sort of drop that I did when my 5 year old son dragged me on to MGM Studio's Tower of Terror ride! My stomach wouldn't have done well with another perilous fall.

Today's topic: Unemotional Growth. Last Friday marked the end of the month for the official UG monthly model, so it's time to update the historical returns with the most recent month's performance. In October, both the UG5 and UG10 made money, but the top 5 lagged the bottom 5, and both were way behind the overall market.

For the period of October 2 through November 6, the Unemotional Growth five stock approach returned 2.88% and the ten stock model posted a 7.50% return. The Standard & Poor's 500 Index managed to rise 13.80% over the same time. Here's how the individual companies' performances looked:

 
 Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>     4.79% 
 Staples <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %>          25.87% 
 HBO & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HBOC)") else Response.Write("(Nasdaq: HBOC)") end if %>        -5.61% 
 Anchor Gaming <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SLOT)") else Response.Write("(Nasdaq: SLOT)") end if %>    -0.24% 
 CKE Restaurants <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CKR)") else Response.Write("(NYSE: CKR)") end if %>    -10.42% 
 Lexmark Int'l 'A' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LXK)") else Response.Write("(NYSE: LXK)") end if %>    7.21% 
 Arterial Vasc <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVEI)") else Response.Write("(Nasdaq: AVEI)") end if %>   -11.46% 
 Dollar Tree <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLTR)") else Response.Write("(Nasdaq: DLTR)") end if %>      30.30% 
 Robert Half Int'l <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RHI)") else Response.Write("(NYSE: RHI)") end if %>   19.65% 
 Keane Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: KEA)") else Response.Write("(AMEX: KEA)") end if %>         14.89%

With the exception of Staples in the number two position, all the market-beating stocks were in the bottom 5 -- the last three positions, actually. Of course, one month, or one year, does not a model make. The historical returns for the UG still indicate that this method is a likely candidate to outperform the market averages, if an investor can weather the volatility and deal with the frequent trading.

Since the first update of 1998, the 5 stock model has returned 3.72% and the UG10 has lost 8.58%, while the S&P 500 is up 17.03%. Since January of 1987, the compound annual growth rates now stand at 35.12% for the UG5 and 26.33% for the UG10. Check the UG History page for the complete numbers.

Last week's rankings show the current UG stocks as follows (these will be the official UG monthly holdings for November):

Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>
Staples Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %>
Arterial Vascular <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVEI)") else Response.Write("(Nasdaq: AVEI)") end if %>
Lexmark Int'l 'A' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LXK)") else Response.Write("(NYSE: LXK)") end if %>
Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %>
Vitesse Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VTSS)") else Response.Write("(Nasdaq: VTSS)") end if %>
Keane Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: KEA)") else Response.Write("(AMEX: KEA)") end if %>
Paychex Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PAYX)") else Response.Write("(Nasdaq: PAYX)") end if %>
U.S. Foodservice <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UFS)") else Response.Write("(NYSE: UFS)") end if %>
Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>
The Gap <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>

My sorting of this week's database showed the Gap tied with Cisco Systems for the tenth spot -- identical Investor's Business Daily EPS and RS rankings. I believe Robert Sheard carried both stocks in the event of such a tie in his backtest -- I'll check with him before next month's returns update. For real world investing, you can use the tiebreaker of choice. Some have suggested the IBD Accumulation/Distribution rank. In that case, it would be the Gap winning out.

Have a great week.

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