(click the download icon above to get the spreadsheet with historical rankings)
Approach:
The Dollarian AI (Artificial Intelligence) analyzes historical fundamental and technical data for all S&P500 stocks and ranks them by the likelihood of outperforming the overall S&P500 index over the next month.
Definitions:
Days In = number of consecutive trading days the stock has been in the Dollarian portfolio
Power = probability of that stock rising more than the S&P500 over the next month
Portfolio Explanation:
The Dollarian portfolio is based on the top 15 ranked stocks in the S&P500 according to the Dollarian AI. Stocks are added and removed as the rankings change, typically 1-2 trades per day, and we 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.
The portfolio holdings don't always exactly match the top 15 ranked stocks in the Power Rankings, because the AI for building portfolios includes algorithms to minimize daily trades. It is also set to ensure a stock remains in the portfolio for at least 2 consecutive days to avoid good-faith violations in non-margin accounts (for example, in a 401k using Fidelity Brokeragelink) .
Our primary portfolios, including 401Ks where individual stocks can be traded (such as Fidelity Brokeragelink), use the Dollarian portfolio.
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.
