It serves as a GREAT short list when the market turns ugly. Stocks like MA and ICE were on their list. Both were great shorts a few week ago. Use it as a herd contrarian indicator, at best.
A lot of people make a lot of money with the IBD 100.... To try and use it as a contrarian indicator is simply foolish at best... These stocks show strength because of increasing earnings, increasing revenue and increasing buying by institutional investors They will reach a "buying top" at some point, but when ???? If they miss earnings, yes, they will drop in a hurry.....but that is predicting.... But, hey, go ahead, it's your money.... Short two stocks over $100/share with relative small floats and small short per centage???? SteveD
Sometimes the best part of the run is over before it makes the list or to put it another way, by the time the planets (ratings/rankings) line up it is obvious to everyone.
It still delivers. But, keep in mind that their performance depends on market direction. Even for the best stocks, its more probable to decline during a market downturn, even if they were recommended by Jesus.
IBD 100 is a fools game. My experience is that the toughest way to make money in the market is to figure out when a hot stock might become even hotter or finally run out of steam. Sure the rewards are big if you get it right. But there are easier ways to make money in market with higher certainty and less risk.
User Zeelotes at the Motley Fool boards did some backtesting on the IBD 100 and published the findings: http://boards.fool.com/Message.asp?mid=23640709&sort=postdate May have to register to see it (free). smitty
If you play the momo high growth game buy the dips and dont buy all at once. For example I bought more Goog at 450, MA at 90, and some GS at 200 following the selloff a few weeks ago. Now I'm ahead on all those and made more money than my 1/20 tick daytrader friends.