Month: October 2020

Purchased 114.9557 Shares of Union Pacific

Union Pacific

From the Lessons Learned article posted a few days ago, in order to gain higher returns, the investment model needs to have greater dispersion with my buy/sell trigger points in its model. Last year, the buy/sell triggers for Union Pacific were a 17% market price decrease from the prior peak and to sell at 100% of prior peak.

This purchase point is driven by the model update whereby market price decreases must hit 18% decrease and the sell point increases to 102% of the prior peak price. This post covers the model update and the associated dollar amounts tied to Union Pacific.

Purchased 98.2849 Shares of Norfolk Southern

This morning at the market opening, the railways pool of the Value Investment Fund purchased 98.2849 shares of Norfolk Southern at $202.49. Altogether, including transaction fees of $1 per share, the fund invested $20,000. This post also explains that the dispersion values increased from 8% decrease in price from prior peak to 10% decrease. This is a result of the Lessons Learned article posted earlier this week. Value investors use financial analysis to substantiate their respective decision models for investments and pools of investments.

Purchased 606.9803 Shares of UDR, Inc.

At close of business today, 10/26/2020, the REIT pool of the value investment fund purchased 606.9803 shares of UDR, Inc., United Dominion Realty Trust, at $32.95/Each including transaction fees of $1 per share. This post explains the buy/sell trigger points for UDR, Inc. There is also a link explaining the concept of PUTs.

Lessons Learned – Value Investing Fund Year One

A primary tenet of good business management is to constantly and consistently evaluate outcomes of decisions made; make adjustments and reevaluate the new results. This pattern continues indefinitely as conditions and criteria are constantly changing in our business environment. 

During the first year of the value investment fund, the fund didn’t achieve the financial return desired. Several mistakes were made. First off, the fund held too much cash. This means that this cash did not earn money for the fund. Reducing the cash position as a percentage of the fund’s value is necessary to increase the effectiveness of the overall fund’s investment.

Secondly, the fund adhered to the buy/sell points that were relatively conservative buy/sell trigger points. Increasing the dispersion of the buy/sell points will earn more return for the fund. However, this comes with some risk that there will be missed opportunies at the more conservative buy/sell points. To mitigate this risk, additional pools of companies are now available (the fund has added REITs to its portfolio) which provides additional opportunities thus offsetting the risk of the more aggressive buy/sell points.

Finally, the investment fund is now going to sell PUTs to own the respective investments at the desired buy points. This achieves two important goals; first, its earns money selling PUTs and secondly it provides greater assurance of owning the stock at the respective strike price.

During the past year, the Value Investment Fund earned a 23.52% return on its original investment. To achieve higher returns during down markets, the fund must make some quality changes including increasing the dispersion amounts between buy and sell points for stock, leveraging the fund by utilizing inputs (insurance tool) and increasing the return on any excess cash available.

Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.

There are four key principles used with value investing. Each is required. They are:

– Risk Reduction – Buy only high quality stocks;
– Intrinsic Value – The underlying assets and operations are of good quality and performance;
– Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
– Patience – Allow time to work for the investor.

If you are interested in learning more and receiving good information, reports, charts and recommendations; join as a club member by clicking on Value Investing tab in the header above. Start your investment portfolio today.

Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:

1) Lessons about value investing and the principles involved;
2) Free webinars from the author following up the lessons;
3) Charts, graphs, tutorials, templates and resources to use when you create your own pool;
4) Access to existing pools and their respective data models along with buy/sell triggers;
5) Follow along with the investment fund and its weekly updates;
6) White papers addressing financial principles and proper interpretation methods; AND
7) Some simple good advice.

Purchased 382.336 Shares of Equity Residential

When selling PUTs in the market, value investors cover their position by purchasing a similar position in an existing low price to book stock. In effect, the position acts as a bank account in case the PUTs are activated, thus the existing stock is sold and the proceeds are used to cover the PUTs financial obligation. This also helps to diversify a value investor’s portfolio.

There is some minor risk involved, i.e. the stock purchase acting as the bank for the PUTs could go lower. However, value investors do their homework and limit downward pressure by purchasing extremely high quality stock backed by intrinsic value. This is covered in another article in the Value Investing Lessons series available to members of the Value Investment Club.

Value Investing

Do you want to learn how to get returns like this?

Then learn about Value Investing, a systematic conservative approach to earning excellent returns over time. Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.

There are four key principles used with value investing. Each is required. They are:

– Risk Reduction – Buy only high quality stocks;
– Intrinsic Value – The underlying assets and operations are of good quality and performance;
– Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
– Patience – Allow time to work for the investor.

If you are interested in learning more and receiving good information, reports, charts and recommendations; join as a club member by clicking on Value Investing tab in the header above. Start your investment portfolio today.

Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:

1) Lessons about value investing and the principles involved;
2) Free webinars from the author following up the lessons;
3) Charts, graphs, tutorials, templates and resources to use when you create your own pool;
4) Access to existing pools and their respective data models along with buy/sell triggers;
5) Follow along with the investment fund and its weekly updates;
6)White papers addressing financial principles and proper interpretation methods; AND
7) Some simple good advice.

Purchased 48.9644 Shares of Essex Property Trust

Essex Property Trust, Inc.

Purchased 48.9644 Shares of Essex Property Trust A second purchased made at close of business yesterday is 48.9644 shares of Essex Property Trust, another REIT investment. The total cost per share including transaction fees is $204.23 per share (closing price is $203.23). Total investment in Essex is $10,000. Cumulative total investment in the Value Investment …

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Purchased 192.123 Shares of Equity Residential

Purchased 192.123 Shares of Equity Residential This post is to record the value investing fund’s purchase of 192.12296 shares of Equity Residential, a real estate investment trust (REIT) for the value investment portfolio.  As a result of my ‘Lessons Learned’ article that will be completed and posted this week, I had to broaden my portfolio …

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Value Investing CRUSHES the Dow Jones Industrial Average by 353%!

On October 22, 2019 the Dow Jones Industrial Average was 26,823 (market opening). Today, October 18, 2020 the Dow Jones Industrial Average is 28,607. The DOW improved 6.65% in the course of one year (technically 361 days).

On October 22, 2019, I started out with $10,000 in a value investing based railroad fund. Today, the fund has a cash balance of $12,351.96 with no receivables nor stock position. This means, the fund had a return of $2,351.96 or a 23.52% return on the original basis of $10,000. This means, the fund performed 353% (a factor of 3.53) greater than the Dow Jones Industrial Average in the same time period.

How did this fund outperform the market? Two words explain the result – Value Investing.

Value investing is a style of investing whereby the investor uses business ratios to evaluate and set buy sell points for each of the respective stocks within a pool of stocks. The pool consists of similar companies within an industry. Each company within this pool has a buy/sell point and with this knowledge, the value investor simply waits for a trigger, a buy/sell point to occur, and automatically acts on the preset action. The results are undeniable, value investing generates significantly greater returns over the long run than the market does as a whole. It is simply a model that reduces risk and maximizes return on that investment pool.

Sold 49.060606 Shares of Norfolk Southern Railroad for a 14.97% Annual Gain

Sold 49.060606 Shares of Norfolk Southern Railroad for a 14.97% Annual Gain On 09/14/2020, Norfolk Southern’s price hit $220.13 at opening. I set my sell point via an automatic sell at $219.88 and thus the shares automatically sold at $220.13. After paying a $1 per share fee, the railroad fund that I write about on …

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