The Sustained Momentum Model continues to closely track the S&P 500 performance, trailing the index by approximately 3% at month-end, and is my newest of my three Covestor Models. (The other two portfolios are the Buy and Hold, Value and Healthcare).
This model is based on my Marketocracy Model, which is a stock market "game" website that allows individual investors to develop their own strategies in investing with simulated investments that track the performance of a theoretical $1 million portfolio. I have been a Marketocracy participant since March 7, 2004.
I currently have 53 different holdings in my Marketocracy portfolio. These stocks have been selected by me on the belief that they would each outperform the overall market.
From these 53 I have chosen to include the top 11 holdings in my real Covestor account that actually in a sense mirrors my Marketocracy account. As the top 11 holdings change in my simulated portfolio, I reflect these changes in my real-life Covestor account.
It is well known that individual investors over-trade their accounts. I am no exception. I find that my own enthusiasm grows as a stock price and the market climbs and I share in the general malaise as a holding declines in price or the overall market sells off.
To avoid this emotional roller coaster, I have set up this Covestor Model to respond in a more mechanical fashion to price changes trying very hard to take out the emotional component. Simply put, if the stock stays in the top 11 holdings, it stays in the portfolio. It is only removed if it drops out and one of the other 42 of the stocks I track replaces it.
Since February 1, 2013, the only change has been the sale of Ford (F) which due to a price decline, found itself replaced by Colgate Palmolive (CL) which not because of any personal bias but because of the underlying strength of the stock itself muscled its way into the top 11 of the holdings.
As of this date (March 6, 2013), the 5 stocks in the wings (occupying positions 12-16) were Ford (F), Microsoft (MSFT), Apple (AAPL), McDonald's (MCD) and MWI Veterinary (MWIV). Time will tell whether they will be included.
This model, while perhaps not as easily explained as the other, may well represent an opportunity to see if by concentrating on my strongest performing holdings, not my favorite stocks, I can manage to keep up or outperform the S&P 500. Thus far, I am still 'in the running'. I hope to report further positive results in the future.
The investments discussed are held in client accounts as of March 1, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.
Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.