The SotM 100 brings together the market's top rated stocks from each of the 10 industry sectors. But instead of focusing on the biggest companies, as the S&P 500 does, the SotM 100 includes only the best stocks from each sector.
While inclusion in the S&P 500 is based on the size of a company alone, the 100 Portfolio focuses on those companies that have displayed the key ingredients for success. The qualities necessary for consideration in the 100 include (but are definitely not limited to) strong earnings growth and company outperformance compared to its peers.
This approach forces the portfolio to "own the best and ignore the rest" in terms of stock selection and to continously "focus on the leaders" in terms of asset allocation.
Ask yourself a few simple questions. First, why would you want to own a stock that isn't one of the market's leaders? Next, does the size of a company really matter? And finally, doesn't it make sense to own the market's top rated stocks?
These companies have the best earnings strength. They are in the Top Ranked industry groups. They have strong fundamentals. These stocks also have great technical set-ups. From our perspective, the top rated put the odds in your favor before you even make a trade. So why would anyone want to own anything else?
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