(click the download icon above to get the spreadsheet with historical rankings)
Definitions:
Ticker = stock symbol of each component of the S&P 500
Power = probability of that stock rising more than the S&P500 over the next month
How we use this information:
Our primary portfolios, including 401Ks where individual stocks can be traded (such as Fidelity Brokeragelink), are made up of the top 15 ranked stocks. We add and remove stocks as the rankings change, typically 1-2 trades per day, and always remain 100% invested in the top 15 stocks. We have determined that this provides the most acceptable risk profile for our long-term stock investments.
Performance:
With the methodology above, this portfolio has average annual returns of over 25% over the past 40 years. This compares to 10% for the S&P500 index. Returns are more volatile than the index, with deeper drawdowns during periods of sharp downturns. Recovery is quicker however, and outperformance during rising markets is substantial.
