Is the IBD 50 ETF underperforming the SPY a sign that growth stocks are priced more correctly now?

K

kmgilroy89

When IBD started tracking these stocks in 2003 they drastically outperformed the SPY. However, since the creation of the actual ETF 4 years ago, it's still underperforming the SPY. Is this a sign that CAN-SLIM is an outdated method to find stocks that can beat the market, because growth is more correctly reflected in a stock's price now? Since its inception, the ETF has been more volatile than the SPY (as expected), but there's been no trade off by out-performing, even with a SPY that's been up on average almost 9% per year during this period. One would expect the growth ETF to be up more when the SPY climbs higher than its historical average. We've seen a lot of methods that have worked in the past start to under-perform this decade, including the stock picks of Warren Buffett. I wonder if this is just the new normal as the explosion of available quantifiable data helps us price stocks more correctly.
 
Momentum in general has underperformed over the past 3-5 years. Overall positive market performance, but a couple of whipsaws hit stops and triggered sudden losses on the mo-mos. I have no opinion as to the future profitability of the IBD 50 or CANSLIM in general.

Interestingly, the leading pure momentum ETF (MTUM) has moderately outperformed the S&P 500 over the same period. It was tracking pretty close with the IBD 50 ETF until December, then the IBD 50 stocks were absolutely crushed.
 
have said many times - value investing, in the traditional sense, is long dead.

the name of the game is about grabbing market share... the way amzn does it.

the canslim underperformance perhaps just a random event... fact is so-called value stocks have all that value already priced in.

investors need to shift the mind set to the new game - technology.. computer speed doubling every 24 months.. AI revolution, big data.. the coming years/decades will not be about linear growth in the consumer economy... it's about technological exponential growth.
 
Instead of looking at the performance from the start date of the IBD 50,I took a look at
the relative performance of the IBD 50 vs SPY from the 2/8/16 lows.The IBD 50 outperformed the SPY by apx 18 percent. That includes the 33% selloff of the IBD 50 vs the 15 percent decline of the S&P from the highs,as well as the S&P making new highs in the last leg up while the IBD 50 remains 11 % off the highs..

Previous to the correction,the IBD 50 had run up close to 110 percent from the lows to the high compared with a 65 percent move in the S&P. IBD has definetly lagged in perfromance from the 12 lows. It appears that Small cap is taking a breather for the time being





kmgilroy89 said:
When IBD started tracking these stocks in 2003 they drastically outperformed the SPY. However, since the creation of the actual ETF 4 years ago, it's still underperforming the SPY. Is this a sign that CAN-SLIM is an outdated method to find stocks that can beat the market, because growth is more correctly reflected in a stock's price now? Since its inception, the ETF has been more volatile than the SPY (as expected), but there's been no trade off by out-performing, even with a SPY that's been up on average almost 9% per year during this period. One would expect the growth ETF to be up more when the SPY climbs higher than its historical average. We've seen a lot of methods that have worked in the past start to under-perform this decade, including the stock picks of Warren Buffett. I wonder if this is just the new normal as the explosion of available quantifiable data helps us price stocks more correctly.
More...
 
kmgilroy89 said:
When IBD started tracking these stocks in 2003 they drastically outperformed the SPY. However, since the creation of the actual ETF 4 years ago, it's still underperforming the SPY. Is this a sign that CAN-SLIM is an outdated method to find stocks that can beat the market, because growth is more correctly reflected in a stock's price now? Since its inception, the ETF has been more volatile than the SPY (as expected), but there's been no trade off by out-performing, even with a SPY that's been up on average almost 9% per year during this period. One would expect the growth ETF to be up more when the SPY climbs higher than its historical average. We've seen a lot of methods that have worked in the past start to under-perform this decade, including the stock picks of Warren Buffett. I wonder if this is just the new normal as the explosion of available quantifiable data helps us price stocks more correctly.
More...
%% OK KMG; i wonder what data are you using ?? FFTY is up way more than SPY, year to date. True FFTY is now below 50 dma , SPY above 50 dma; but YTD, FFTY is doing way >>>>>>>>SPY, both great trenders

Small caps still tend to do better than SPY; on day like today better on downside.LOL BUT still up way more YTD
 
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