I enjoy hiking, one step at a time to get to the end of the trail. Business success proceeds in the same way, one step at time. This is how I approach value investing. There is no simple and easy way to achieve legitimate success without going through all the steps. It is hard work; the result is worthwhile. This site’s value investing membership is a two-prong program.
The primary purpose is educational. It is divided into three phases. The goal here is for the member to learn about the core principles and their proper application. In addition, Phases II and III are more intensive and focus on how to read financial statements and annual reports so the member can develop their own pool of potential investments. It is written as if the member were a sophomore student in college, neither too advanced nor amateurish in approach. These two phases have over 100 lessons. The end results are for the member to break away someday and focus on their portfolio without relying on this site’s Club pools.
The secondary goal is similar to a Club. The Facilitator has created eight pools of industries. Each pool has its own set of financial models, matrixes and of course ‘Buy’ and ‘Sell’ points for the member to utilize. Alerts, transaction history and other pertinent notifications are provided to all members so that they may take advantage of the information available. This aspect of membership is more of a running portfolio of activity that demonstrates how successful value investing really is. Each month, a report is generated that details all the respective transactions and how the Fund is performing. Here, the member doesn’t own any of the Fund nor are they allowed to invest in this site’s Fund. It is strictly informative with a goal that each member can take act on the information provide.
Many of you are only interested in the ‘Buy’ and ‘Sell’ points for the respective opportunities within each industry pool. That is OK too. This is exactly what the secondary goal is about. You still have to join the club to receive those notices of when the Fund ‘Buys’ and ‘Sells’ along with alerts, notifications and end of month reports.
Most readers find it difficult to believe that value investing can outperform other methods of securities investing. You want proof.
How about this? The only tool available to validate this method of investing is actual results over an extended period of time. Here’s the proof:
Take a close look. Click on the chart to expand it to full screen. The Fund’s results are compared against TEN major indices. I could add more; but, the depiction would just further reinforce what this chart already illustrates. These ten are the best in the world, I couldn’t find a single one that is better than the NASDAQ 100.
The annual average return over the last three years is starkly different. Value investing is oriented around purchasing high quality stocks when they fall below intrinsic value and waiting patiently for the market price to recover to a reasonable amount and then selling the investment and reaping the rewards of your patience.
Value investing focuses on one single tenet, buy low, sell high. It is a systematic process utilizing four core principles:
- Risk reduction via well researched top 2,000 companies that have at least $5 Billion of market capitalization; these companies must have long a long history of stable performance and they must continue to grow. RISK REDUCTION
- Determine the intrinsic value of the respective securities involved and only purchase the securities with a good discount against the intrinsic value; BUY LOW.
- Calculate a reasonable market recovery price that will occur within a couple of years, then SELL HIGH.
There are drawbacks to value investing. Let’s be clear here:
- THERE ARE NO INSTANTENOUS RETURNS ON YOUR INVESTMENT; these are high quality companies with strong, stable, historical results. That is, they are reliable and as such, they tend to behave in a predictable manner.
- RARELY WILL ANNUAL RETURNS EXCEED 40%; because these are highly stable operations and somewhat predictable, volatile changes in their market prices simply do not ocurr. Thus, there is never going to be one of those ‘VIRAL’ outcomes that an investor can scream and shout out about.
- IT IS BORING AND REQUIRES PATIENCE. Our society’s youth believe for some reason that wealth accumulation is instantaneous and as such, investing venues such as value investing can’t possibly deliver results like investing in Crypto or even what ‘Day Trading’ can do. How naive can you get? “A fool and his money are soon parted” – P.T. Barnum.
If you want to ask questions, send me an email and ask. I’m actually a responsive guy. I love to teach others about business principles and of course I take pride in this value investing program.