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:
- 10 Dividend Stocks From SeekingAlpha Readers
- 5 Stocks for the Next Three Decades
- SmartMoney Magazine Where to Invest 2011 12 Stocks
- Street 5 Dividend Stocks Rewarding Shareholders
- The Fools 5 Cheap Buffett Stocks
- The Street`s 10 Dividend Stocks
- 9 Stocks That Gain Every Earnings Day
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:
- Most Popular Stock Portfolio-- Total of $10K invested equally in each stock
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
| 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.
