Cherry-picking and Beating the S&P 500
Who doesn’t love, or at least pay homage, to the S&P 500? Whatever on thinks about large-caps in general, or these large-caps in particular, they are bellwether issues (i.e. needs for tactical exposure to U.S. equities provide a solid base of demand for shares, irrespective of company-specific considerations) and trading liquidity is as good as it gets. Still, this group can be infuriating to active investors and managers. It’s hard to beat this part of the market, especially if one doesn’t want to take undue risk. These stocks are so closely followed, that it’s really tough to final an angle that can catch Mr. Market by surprise.
Normally, for me, that’s no problem. I work with quantitative rules-based (screening and ranking) strategies and am happy to do much of what I do among the smaller-sized issues. Finding price inefficiencies is often much more do-able there. But sometimes, you need to go top-drawer when it comes to liquidity.
A couple of years ago, when looking to add high-liquidity models to Portfolio123’s roster of pre-set Ready-to-Go models, I came up with something that seemed promising that I make available for free to users of the Ready-to-Go platform. I’ve been investing real money in it since it went live on 4/9/13 and so far so good; from live inception through this week, the portfolio value is up 59.5% over all, versus a 37.5% gain in the S&P 500 Equal Weight Index, which I chose as a benchmark since the portfolio holds only 10 S&P 500 and is nowhere near being market cap weighted.
Details of the model are contained in the attached PDF.
The current positions are listed below (the model is refreshed weekly (on Mondays) and usually calls for one or two trades per week):
$AMP Ameriprise Financial Inc
$BBY Best Buy Co. Inc.
$GLW Corning Inc
$LNC Lincoln National Corp
$MPC Marathon Petroleum Corp
$TRV Travelers Companies Inc
$TSN Tyson Foods Inc.
$UNH Unitedhealth Group Inc
$VLO Valero Energy Corp
$WDC Western Digital Corp
Normally, for me, that’s no problem. I work with quantitative rules-based (screening and ranking) strategies and am happy to do much of what I do among the smaller-sized issues. Finding price inefficiencies is often much more do-able there. But sometimes, you need to go top-drawer when it comes to liquidity.
A couple of years ago, when looking to add high-liquidity models to Portfolio123’s roster of pre-set Ready-to-Go models, I came up with something that seemed promising that I make available for free to users of the Ready-to-Go platform. I’ve been investing real money in it since it went live on 4/9/13 and so far so good; from live inception through this week, the portfolio value is up 59.5% over all, versus a 37.5% gain in the S&P 500 Equal Weight Index, which I chose as a benchmark since the portfolio holds only 10 S&P 500 and is nowhere near being market cap weighted.
Details of the model are contained in the attached PDF.
The current positions are listed below (the model is refreshed weekly (on Mondays) and usually calls for one or two trades per week):
$AMP Ameriprise Financial Inc
$BBY Best Buy Co. Inc.
$GLW Corning Inc
$LNC Lincoln National Corp
$MPC Marathon Petroleum Corp
$TRV Travelers Companies Inc
$TSN Tyson Foods Inc.
$UNH Unitedhealth Group Inc
$VLO Valero Energy Corp
$WDC Western Digital Corp
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