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Looking back at two years of Sustained Momentum portfolio

By Robert Freedland

The Covestor Sustained Momentum portfolio has been a solid performer albeit not quite keeping up with the S&P 500 Index (SPX).

I have now finished up two full years managing this model and it has thus far returned an average of 19.4%, slightly behind the S&P 500 average of 22.8% over this same period. For 2013, this worked out to a 27.6% gain, next to the 32.4% gain of the S&P 500.

This is my first algorithmic investing model. In other words, I follow a group of about 50 stocks in a market simulation portfolio. These are all well-known growth stocks that I at one time believed had solid prospects.

From this group, I have chosen the top 10-12 performing stocks and stay with them through thick and thin unless they actually drop out of this selected group based on their own or a different stock’s performance. I generally check my larger portfolio nearly every day and check if any changes need to be made in the model itself.

Over time, trading volatility has been reduced and trades are often ‘at the edges’– that is, between the 12th and 13th position which often results in trades in and out of the same equity over a period of months.

Without a doubt, the strongest stocks in this group have been Valeant Pharmaceuticals (VRX) and Amazon (AMZN). The other two big performing stocks have been made by Disney (DIS) and Johnson Controls (JCI).

Besides having patience with large gains, I also sometimes overlook losses within the portfolio. For instance, my holding in Morningstar (MORN) experienced a small loss.

I look forward to watching this particular portfolio perform into 2014. I worry about stocks with large gains that I shall not be nimble enough to sell should they hit a rough spot. On the other hand, I shall not be shaken from a holding with some relatively meaningless news that might mean I continue to hold a winner longer-term.

May 2014 bring health and wealth to all of you!

DISCLAIMER: The investments discussed are held in client accounts as of December 31, 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. Past performance is no guarantee of future results.

Robert Freedland

Robert Freedland

Robert has over 40 years of investment experience and is a full-time optical surgeon. He uses his expertise in the

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