For individual screens, I liked the BlueCheaps screen, it made sense.
Performance (last time I was able to easily check) - Meh
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BlueCheaps is such a wonderful idea and I would love to use it, but the performance doesn’t make it worth it.
Yes, it is a disappointment. Certainly a high earnings yield has not been the key to riches in recent years.
Maybe that’s the reason for the dreary returns, or more likely the good returns prior to that were more like a fluke.
I think the later attempt is much better, the “LargeCapCash” screen, introduced here https://discussion.fool.com/a-spy-alternative-screen-34516863.as…
It’s intended as an alternative to SPY.
“The goal is a screen which is as safe as the S&P 500 but with the hope of somewhat higher returns over the long run.”
This has indeed beat the S&P by a small amount since its introduction 2.2 years ago, with a high correlation.
So, in that sense it’s meeting its goals: so far so good, anyway.
General description: An equally weighted slate of 40 large cap dividend payers with high ROE and lots of cash on hand.
There are two variations mentioned in the kickoff post, with and without dividends.
Perhaps to my surprise, the one which requires dividends from all picks has always tested just a little better, and this remains the case.
There are more elaborations later in the thread, but the version I track is one of the simplest:
Start from the Value Line 1700 set of stocks.
Eliminate stocks with no “Timeliness” rating (just a sanity check to skip those just listed or in the middle of M&A).
Eliminate any stocks that don’t pay a dividend
Of those remaining with a reported ROE, take the top 30% or 32% sorted on ROE.
For each stock remaining, calculate its cash balance in excess of long term debt and sort on that.
(Note: this uses largest cash balances in absolute terms, not largest cash balances as fraction of market cap…that’s why it’s a large cap screen)
Buy equal dollar amounts of the top 40 sorted on [cash-debt], hold two months, repeat.
Since the criteria don’t change often, there isn’t much trading.
Rebalance all positions to equal weight annually.
It has had a very unpleasant stretch since around the start of November, but still market beating overall so far by 2.91%/year after trading costs.
Of course 2.2 years isn’t enough to draw any firm conclusions, but at least it has not taken the opportunity to blow up.
The backtest January 1989 to April 2000 showed outperformance of 5.15%/year, which is as always probably too optimistic.
Top picks this year have generally included Microsoft, TSMC, Cisco, Nvidia, Accenture, Costco.
Microsoft has been the top pick every month since 2009.
But, as this is equally weighted, it doesn’t really matter: unlike an index fund, there is no concentration in the top pick.
Jim