In December of 2013, I looked at the 30 best stocks of the year to see what they had in common. I was pretty curious how they have done since the start of the year, because I am an advocate of momentum investing. The results don't look good, their performance as a group has lagged the index for in 2014:
Ticker Name Industry Gain in 2013 YTD gain Mkt cap
| Altisource Asset Management PTC Therapeutics, Inc. Zhone Technologies Inc. Canadian Solar Inc. China Information Technology, Globalstar Inc. Corporate Resource Services Gray Television Inc. Lannett Company, Inc. Inteliquent, Inc. Liberator Medical Holdings Revolution Lighting Technologies. Media General, Inc. INSYS Therapeutics, Inc. Himax Technologies, Inc. ACADIA Pharmaceuticals, Inc. Nexstar Broadcasting Group Inc. - SunPower Corporation China Distance Education Holdings - China Mobile Games and Entertainment B Communications Ltd Keryx Biopharmaceuticals Inc. Puma Biotechnology, Inc. Xerium Technologies Inc. Radio One Inc. BioCryst Pharmaceuticals, Inc. Adept Technology Inc. Power Solutions International, Inc. | Asset Management Biotechnology Communications Semiconductor Application Software Wireless Communications Staffing & Outsourcing Broadcasting - TV Drug Manufacturers Wireless Communications Medical Instruments Diversified Electronics Broadcasting - TV Biotechnology Semiconductor Biotechnology Broadcasting - TV - Semiconductor Education & Training - Software Communications Biotechnology Biotechnology Diversified Machinery Broadcasting - Radio Biotechnology Diversified Machinery Diversified Machinery | 1162% 1072% 881% 757% 655% 516% 509% 501% 495% 488% 479% 430% 429% 420% 416% 402% 401% 399% 397% 391% 390% 388% 378% 377% 376% 364% 360% 351% 350% 345% | -31% 48% -46% -7% -25% 54% -4% -14% 38% 24% -15% -24% -6% 10% -57% -14% -9% - 24% -8% - -41%4% 16% -36% -16% 22% 53% -43% -17% | 1434 753 93 1525 160 2872 399 731 1621 453 185 217 1880 973 1083 2134 1547 - 4843 599 - 467 541 1376 1985 213 220 835 125 671 |
If I bought or held the best stocks of 2013 also into 2014, my YTD return would be around -4.3%, which is lower than the S&P 500s 6.7% return. As you can see, 18 of the original 30 stocks went down this year, and 2 were bought out in acquisitions. So far it looks like buying the best stocks of the previous year is not a great idea, will see how they do for the rest of 2014. However, momentum investing (buying stocks at new highs) still works, provided you buy good undervalued growth stocks and use proper risk management.
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