Here's my results from the first full year of using the "Trending Value Strategy":
· June 19, 2012: I placed $100,000 in an account with my broker (Schwab - trades cost $8.95 then - later $4.95 - now 0 zero zilch).
· June 20, 2012: invested in common stocks of 25 companies listed on major exchanges.
· April 5, 2013: Withdrew $5,000 cash (from accumulated dividends) for personal use.
· Various dates: Sold shares that declined more than 15% from their highs since purchase (15% trailing stop) and reinvested the proceeds in shares that met the system criteria on that date.
· June 4, 2013: Rebalanced the portfolio – total value $127,428.58.
· Total Return: $127,428.58 + $5,000.00 I spent = $132,428.58 or 32.4% profit.
While it’s true that the stock market was strong during this time period – the S&P 500 index was up 17.2% (1362.16 to 1597.57) - my reference portfolio was up almost double the average, beating the index by 15.2%
Until recently (November 2020), I have never matched that return, but I have lived well and still have more money than I started with.
Here's the list of books I read (or re-read) before investing my business sale proceeds back in 2011.
- Re-read "The Intelligent Investor" by Graham
- "Quantitative Value" by Gray & Carlisle. Pretty heavy stuff, but well worth reading.
- "Market Wizards"by Jack Schwanger - not my cup of tea, but might be yours - with some good advice
- "What Works On Wall Street" by James P. O'Shaughnessy
- "Freakonomics" by Levitt and Dubner - not exactly an investment book, but worth a look.
- "Poor Charlie's Almanac" by Charlie Munger - a coffee table book by Buffet's partner. Entertaining and Educational
What did I learn?
- 70% of mutual funds perform worse than the S&P 500 over any five year period.
- The markets always revert to the mean.
- You will probably lose if you don’t follow a consistent plan.
- If you want to be a billionaire investor, you better figure on working very hard and very smart (smarter than me).
- You can win and keep your day job if you follow a strategy that puts the odds in your favor – maybe not a billionaire but a winner
- Keep it simple but disciplined
One more fact I know from experience:
· It is impossible to predict an investment manager's results based on their past performance, and if they have been highly successful in the past, The odds are that their future results will decline.
So - Here's what I recommend
Stay away from the subscription newsletters and instead become a Stock Gumshoe iregular and get your tips from Travis Johnson.
1. Buy the Book “What Works On Wall Street”, pick the strategy you like and do what it says.
2. If you want to use an investment manager, use O’Shaughnessy Asset Management I like their style and I don't get paid to recommend them. Or use Schwab or Fidelity's low cost "value" ETFs
3. IF you want to do it yourself, use this web site and StockGumshoe for ideas. You may want to get on my mail list so you can argue with me or correct mistakes you see. For now I will continue to freely publish weekly lists of the stocks ranked in order of momentum that meet the criteria of the "Trending Value Portfolio".