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Is Investor’s Business Daily Leaderboard a good stock picking service?
How do you actually use IBD Leaderboard?
Also, how about its past performance records?
Lastly, can you actually make money with IBD Leaderboard?
After trying out IBD Leaderboard, I would like to share with you everything that I’ve found out and help you make a more informed decision.
How IBD Leaderboard Works
So, how does Investor’s Business Daily Leaderboard work?
When you subscribe to IBD Leaderboard, you would get access to a hand-selected portfolio of top growth stocks by IBD’s Leaderboard team.
They also call it the Leaders List.
The Leaders List is divided into two sections:
- Leaders Near A Buy Point
The “Leaders Near A Buy Point” shows you a list of stocks that are within its recommended buy price range, while “Leaders” show you a list of stocks that are extended in price.
For the stocks that are extended in price, it means that it’s probably wise to wait for the stock price to retrace before getting in.
Now, let’s take a closer look at the “Leaders Near A Buy Point” list.
Below is a screenshot of one of the stocks near a buy point.
When you click on the stock, you will see its “Buy Point”, “Position Size” and “Buy Range”.
The size of a full position on Leaderboard is 10% of your entire portfolio.
That means a half position is 5%, while a quarter position is 2.5%.
Ten full positions at 10% each would mean we’re fully invested.
When you click on “Analysis”, it will give you a brief technical as well as fundamental explanation for the buy recommendation.
When you click on “Charts”, it will show you “Daily”, “Weekly”, “Monthly” and “Intraday” with the stock’s market & industry performance and fundamental performance on the left side.
Below is the Daily Chart.
As you can see that, it shows you all the entry points on its weekly chart.
Apart from the “Leaders” list, there is also a “Leaders Watchlist”.
The Leaderboard team continually the market for the best prospects to add to the Leaders List.
The stocks on the watchlist are those fundamentally superior stocks that could become buys if they show a robust breakout from a proper base.
IBD’s Leaderboard Stock-Picking Strategy
So, how exactly Investor’s Business Daily Leaderboard team pick stocks for the “Leaders” List?
First of all, they would identify strongest stocks poised for big gains using the CAN SLIM strategy as well as advanced algorithms.
CAN SLIM is an investment strategy that investors use to identify stocks that are poised to grow faster than average. Each letter in the acronym stands for a key attribute.
- C: Current quarterly earnings per share growth of at least over 20% from the same quarter in the prior year with
- A: Annual EPS growth of at least 20% over the last three to five years
- N: New products, management, or positive new events
- S: Scarce supply (e.g. share buyback and insider buying)
- L: Laggard stocks are preferred within the same industry (An RSI reading below 30 suggests that the stock is oversold while a reading of above 70 suggests that a stock could be overbought)
- I: Pick stocks that have institutional sponsorship by a few institutions with recent above-average performance
- M – Determine general market direction (CANSLIM stocks perform well in bull markets)
Then, they would hand pick the best 10 to 15 stocks for the “LEADERS” list for position trading with specific buy price range.
Okay, what is position trading?
Position trading is basically trend trading.
That means you find a stock that is about to go on an uptrend in the medium term, and get in at the start of the trend and get out when the trend peaks.
Generally, you hold your stocks for at least days or even weeks or months, depending on how long the trend lasts.
Now, how do they identify the trend and decide what is the proper buy point?
The answer is to use technical analysis.
Let’s look at one example.
As you can see from the annotation on the weekly chart of a “LEADER” stock, they identify possible bullish breakout patterns using support & resistance levels and also indicators such as moving averages.
Generally, they divide the “trend” into 3 stages.
The first stage usually has the least risk because the trend has the highest probability of success at this point in time.
The “Buy” signal is triggered when the stock is coming out of a base formation and move above the 10 week moving average.
Normally, profit target is 20% from its entry price point.
From the chart below, you can see the multiple entry points each time after it breaks out of its base.
So, when do you sell?
For every entry, there is a fixed profit target of 20%.
As you can see that, position is usually trimmed to take profit when profit target is reached.
Then, you add to your position when a proper buy point appears again.
What if the trade did not work out as planned?
A “Sell” signal is triggered either by “7%” fall from its previous entry point or dip below its 50-day moving average.
As you can see from the chart below, the stock ABNB tanked more than 7% from the $211.44 entry price and thus triggered the 7% sell rule.
IBD Leaderboard has a mobile app.
It provides real-time push notifications whenever a new position is added, increased, reduced or removed.
IBD Leaderboard Past Performance
When you want to find out if a stock picking service or trading alert service is good or not good, one of the first things you should look at is its past performance.
Has IBD Leaderboard been outperforming the market consistently over the past years?
If not, it is really not worth paying so much to get it because you would be much better off investing your money in market index ETFs such as S&P 500.
So far, I could find the performance comparison for the year 2020 only, as shown below.
As you probably know, the stock market in 2020 is very bullish after a sharp yet short correction in late Feb 2020.
IBD Leaderboard’s strategy works the best in a bullish market (i.e. in a strong uptrend).
But, the problem is that the market is not going to be bullish all the time.
When the market is going sideways or bearish, then you would be seeing very different results.
So, I would like to see its performance over the past five years or even 10 years because it’s very easy to make money in the stock market when almost everything is going up.
IBD Leaderboard Pricing
So, how much does IBD Leaderboard cost?
There are currently three different pricing plans:
- Trial for 3 weeks at $9.95
- Monthly at $69/month
- Yearly Plan at $699/year
Personally, I feel it’s a bit expensive compared to other stock picking services out there.
For example, Motley Fool Stock Advisor is priced at $199/year.
Right now, there is a limited time offer to try Motley Fool Stock Advisor for just $79/year (new members only), which is 60% off the usual price.
So, one month subscription of IBD Leaderboard could almost get you one full year’s subscription of Motley Fool Stock Advisor.
IBD Leaderboard Vs Motley Fool
Now, let’s compare IBD Leaderboard with Motley Fool.
Motley Fool Stock Advisor is a stock picking service that is focused on helping you find high quality companies with long term growth potential for long term investment.
On the other hand, IBD Leaderboard is more of a stock trading alert service that helps you trend trade high growth stocks.
In terms of performance track record, Motley Fool Stock Advisor has a proven track record of beating the market consistently.
Below is the performance comparison between Motley Fool Stock Advisor and S&P 500 between 2002 and June 2021.
As of June 2021, average Motley Fool Stock Advisor recommendations have returned over 592.5% since inception while S&P 500 has returned 132.3%
So, what does that mean?
If you had invested $10,000 in the stocks recommended by Motley Fool Stock Advisor, your investment portfolio would be worth more than $300,000.
On the other hand, if you had invested $10,000 in S&P 500 index funds, your portfolio would be worth about $50,000.
In short, the Motley Fool Stock Advisor has beat the market 5 to 1.
That’s a HUGE difference in returns.
Now, what about the performance comparison between Motley Fool Stock Advisor and S&P 500 for the past 5 years?
|Year||Motley Fool Stock Advisor
(Average Return to 23 Jul 2021)
(Average Return to 23 Jul 2021)
But, what about its individual stock picks?So, in terms of overall performance, the Motley Fool Stock Advisor has beat the market every single year for the past 5 years. (Note: Performance is calculated from 1st Jan of each year to 12th Feb 2021)
This metric is important because you might not be buying every single stock recommendation made by Stock Advisor.
Below is a table that shows you the performance of individual stock picks over the years.
As of June 2021, Motley Fool Stock Advisor has had 191 stock recommendations with 100%+returns.
What that means is that you would have easily doubled your money if you had invested in any of the 191 stock picks by Stock Advisor.
On the other hand, I could only find the performance of IBD Leaderboard for the year 2020.
So, I would have more confidence to recommend Motley Fool Stock Advisor over IBD Leaderboard.
In terms of pricing, Motley Fool Stock Advisor is also much more affordable than IBD Leaderboard.
Usually, Motley Fool Stock Advisor is priced at $199/year.
Right now, you could get unlimited access to Stock Advisor for just $79/year. (This special offer is for a limited time only).
Is IBD Leaderboard Right For You?
So, is IBD Leaderboard right for you?
Essentially, IBD Leaderboard is just like a trading alert service for trend trading.
Personally, I think there is a lot of money to be made from trading IF you are a very good trader with profitable trading strategies and good risk and money management.
However, the reality is that majority of traders lose money.
Also, one trading strategy is NOT going to work in all types of market conditions.
Just like, trend following strategy is not going to work well in bearish market or sideways market.
Personally, I would prefer investing to trading because it’s less time consuming and less risky and it also aligns with my financial goals.
So, if you are risk averse and don’t have a lot of time to monitor all your trades, then I would not recommend IBD Leaderboard.