Main Street Stocks
A new index gives amateur stock pickers a benchmark.
Coming soon to an investment shop near you: a mutual fund or exchange-traded fund based on a collection of stocks favored by America's investment clubs. Each year, BetterInvesting, a nonprofit umbrella group for the nation's 13,000 investment clubs, lists the 100 stocks held by the largest number of clubs. Last April, the list became the BetterInvesting 100 index, quoted daily on Nasdaq. Expect derivative trading products by year-end, says Peter Breen, a consultant to BetterInvesting.
The index is equal-weighted, meaning that all companies count the same. Two returns are calculated daily: One reflects price changes only (symbol BIXX) and the other represents the total return BIXR), including cash dividends. The index will be updated annually to reflect club members' current favorites. That's often enough, considering that clubs typically hold stocks for five to nine years. This year's top picks include Home Depot (HD), General Electric (GE), Walgreen (WAG), Lowe's Cos. (LOW) and Microsoft (MSFT).
The index has appeal, given the organization's focus on sound investment principles. But an academic study in the '90s found that the majority of investment clubs lagged the market for most of that decade. Okay, a lot of us did. Still, the clubs' recent history isn't perfect, with eight of the ten most-popular stocks trailing the market this year. Since its debut, the index is up 4% to June 11, even with the S&P 500 but behind the Dow Jones industrial average, up 7%.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.
-
Earn Delta SkyMiles Worth Up to $1,800 with an AMEX Business Card
Delta SkyMiles and American Express offer 150,000 on business credit card for new cardholders.
By Ellen Kennedy Published
-
Stock Market Today: Markets Soar Amid Strong Earnings for Big Tech
Equities ended the week on an up note thanks to some of the market's biggest names.
By Dan Burrows Published
-
Stock Market Today: Markets Soar Amid Strong Earnings for Big Tech
Equities ended the week on an up note thanks to some of the market's biggest names.
By Dan Burrows Published
-
Stock Market Today: Markets Tumble Amid Slower Economic Growth and Rising Prices
Disappointing readings on GDP and inflation helped tank equities.
By Dan Burrows Published
-
Stock Market Today: Stocks Run Out of Steam Ahead of Meta Earnings
The Dow Jones Industrial Average snapped a four-day winning streak after Boeing's first-quarter results.
By Karee Venema Published
-
Stock Market Today: Nasdaq Soars Ahead of Tesla Earnings
The EV stock rose nearly 2% ahead of its highly anticipated Q1 earnings report, due after tonight's close.
By Karee Venema Published
-
Stock Market Today: Markets Rebound Ahead of Big Week for Earnings
Equities rallied on easing geopolitical tensions, upcoming quarterly results.
By Dan Burrows Published
-
Stock Market Today: Nasdaq Spirals as Netflix Nosedives
A big earnings boom for credit card giant American Express helped the Dow notch another win.
By Karee Venema Published
-
Stock Market Today: S&P 500, Nasdaq Extend Losing Streaks
The two indexes have closed lower for five straight sessions.
By Karee Venema Published
-
Stock Market Today: Dow Slips After Travelers' Earnings Miss
The property and casualty insurer posted a bottom-line miss as catastrophe losses spiked.
By Karee Venema Published