Railroad Fund Balance 06/30/2020
It is now the end of the quarter and time to post the status of my railroad fund as of 06/30/2020. For those of you not aware, I am testing my value investing theory and chose railroads since their dynamics and reporting requirements are closely aligned. I started this back in the 3rd week of October 2019. This is a one year test to see how my fund does against the market as a whole. I firmly believe that value investing is the absolute best method to invest for the following reasons:
- Downside risks are low, upward potential is good; in effect value investing has low volatility.
- Simply do your research and set buy/sell triggers and then sit back and watch the fund grow over time.
- Returns on investment should average about 30 percent per year which is about two to three times the market return.
- Low stress investment technique.
The fund started out with $10,000 on October 21, 2019 and it is now 8.5 months later. I have had multiple trades to date, approximately 5 total. My current position for the fund is:
49.060606 Shares of Norfolk Southern Corporation – Closes at $175.82/Share FMV = $8,625.84 (Avg Buy Price/Share = $203.83 for Basis of $10,000.00)
Cash Position including recent dividend payment from NSC = $1,555.16
Total Fund Balance = $10,181.00
FMV Gain as a % Since Inception: = 1.81%
Gain on the initial fund basis of $10,000 is $181.00.
Dow Jones Industrial Average on Oct 22 at opening: 26,828
Dow Jones Industrial Average on June 30th 2020 at closing: 25,813
Market Change as a Percentage Decrease: -3.78%
Naturally, the above isn’t anything to get excited about. The market is a reflection of the current COVID Pandemic and the impact on the US economy. But it does validate the minimal downside risk element related to value investing. In effect, my fund has not decreased in value in comparison to the market. When the market recovers or begins to head in a positive direction over a long term period of time; my investment fund will also recover. Once I sell NSC shares, which I anticipate happening prior to Oct 21, I anticipate selling them at their previous high of $219.88 (01/29/2020 at 10:30 AM). Once sold, my fund balance will equal approximately $1,2293.55. Now we just wait. Based on my analysis, the share price will recover; it is just a matter of waiting. Act on Knowledge.
Do you want to learn how to get returns like this?
Then learn about Value Investing. 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, go to the Membership Program page under Value Investing section in the header above.
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 member goes through three distinct phases:
- Education – Introduction to value investing along with terminology used are explained. Key principles of value investing are covered via a series of lessons and tutorials.
- Development – Members are taught how pools of investments are developed by first learning about financial metrics and how to read financial statements. The member then uses existing models to grasp the core understanding of developing buy/sell triggers for high quality stocks.
- Sophistication – Most members reach this phase of understanding after about six months. Many members create their own pools of investments and share with others their knowledge. Members are introduced to more sophisticated types of investments and how to use them to reduce risk and improve, via leverage, overall returns for their value investment pools.
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:
- Lessons about value investing and the principles involved;
- Free webinars from the author following up the lessons;
- Charts, graphs, tutorials, templates and resources to use when you create your own pool;
- Access to existing pools and their respective data models along with buy/sell triggers;
- Follow along with the investment fund and its weekly updates;
- White papers addressing financial principles and proper interpretation methods; AND
- Some simple good advice.