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<< Part I

We have been reviewing a series of stock portfolios to see how they compare with an asset allocation portfolio of benchmark ETFs. There is usually wisdom in the counsel of many and we are reviewing which stocks are selected to see which are the most popular to see if we can create a portfolio of the most popular stocks. The first seven portfolios we have covered:

This gave us a leader board of:

PEP (PepsiCo Inc) 3
PG (Procter and Gamble) 3
OPNT (OPNET Technologies Inc.) 2
ORCL (Oracle) 2
TJX (The TJX Companies, Inc.) 2
WMT (Walmart) 2



We now examine:

Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
P Tom Gardner`s Top 5 Watchlist 57% 175% 30% 95%
P The Streets 9 Diversified Stocks With 100% Buy Ratings 2
57% 143%
P Barrington Updates Best Stock Picks for 2011 32% 104%
P The Fools You Should Own These 7 Dividend Triplers 26% 113%
P 10 Dividend Stocks Increasing Payouts 24% 132%
Next 5 Dividend Stocks Rewarding Shareholders 22% 103% 3% 8% 3% 6%

When we examine the stock selections, we find that none of them are repeated within this group, but there are some that are repeated from the previous group and those are:

JNJ, MCD, ORCL, PEP, UTX.

This gives us a final leader board of:

PEP (PepsiCo Inc) 4
PG (Procter and Gamble) 3
OPNT (OPNET Technologies Inc.) 2
ORCL (Oracle) 3
TJX (The TJX Companies, Inc.) 2
JNJ (Johnson and Johnson) 2
UTX (United Technologies) 2
MCD (MacDonald's) 2

PEP, PG, JNJ, MCD are all long term household names. Oracle is almost there (or perhaps it is because the author has a silicon valley bias) but the others are less well known.

When we create a portfolio of these equities and compare this against out retirement benchmark:

Portfolio Performance Comparison
Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
Most Popular Stock Portfolio 42% 274% 18% 75% 17% 73%
Retirement Income ETFs Strategic Asset Allocation Moderate 20% 208% 3% 14% 6% 25%
Retirement Income ETFs Tactical Asset Allocation Moderate 14% 152% 9% 71% 11% 72%


Full details including charts


We can see that the combination of the most popular stocks give consistently strong results with good Sharpe ratios. It turns out that there is wisdom in the counsel of many.

Disclosure: We do not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical. We have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Selecting the Most Popular Equities for Smart Investing Part II