Submitted by Steve Selengut
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...and Just What is an Investment Grade Value Stock?
Sometimes, a simple definition just isn't quite good enough! For example, a quick Google search produces this:
- "A stock that is considered to be a good stock at a great price, based on its fundamentals, as opposed to a great stock at a good price. Generally, these stocks are contrasted with growth stocks that trade at high multiples to earnings and cash."
The Value Stock Buy List Program is much more particular, looking only at stocks that meet all of the following specific selection criteria, with no exceptions:
- A Standard & Poor's Quality Rating of B+ or better, based on the current issue of the monthly S & P Stock Guide.
- A common stock, not including CEFs, traded on the New York Stock Exchange.
- A history of profitability.
- A history of regular dividend payments, regardless of their size.
- A price above $10.00 per share and below $80.00 per share.
Stocks that meet all of these requirements are considered part of the Equity "Selection Universe". Each day, the Investment Grade Value Stock Buy List program identifies all of the stocks that meet the additional price movement and relationship to 52 week high parameters [as defined in Chapter Four: "Buy Low" of the 2007 Revised Edition of "The Brainwashing of the American Investor"] and develops an up to date "Watchlist" of potential stock purchase candidates. At this point, the investor:
- Can select stocks (round lots only please, because...) that fit appropriate diversification rules for their portfolio(s), and
- Update their account worksheets for orders they plan to place if the stock price moves lower by the recommended amount.
...and Why JUST Investment Grade Value Stocks?
Because this particular selection process, and the management criteria applied to it, has produced historical results that we understand are superior to the performance of Mutual Funds and other more speculative, more technical, or more "gimmicky" approaches to equity investing.
It is an approach which works best (perhaps only) with the targeted profit taking discipline and "ATH" portfolio cleansing mechanisms that are detailed in Chapter Six "Sell High(er)" of "The Brainwashing of the American Investor". (And because they are generally...this should be obvious...less risky.)
Read the book first, read it again, then start your new investment program.
Articles on Value Stock Investing
The Case for Value Stock Investing... What If?
"Wall Street Institutions pay billions of dollars annually to convince the investing public that their Economists, Investment Managers, and Analysts can predict future price movements in specific company shares and trends in the overall Stock Market. Such predictions (often presented as "Wethinkisms" or Model Asset Allocation adjustments) make self-deprecating investors everywhere scurry about transacting with each new revelation. "Thou must heed the oracle of Wall Street"… not to be confused with the one from Omaha, who really does know something about investing. "These guys know this stuff so much better than we do" is the rationale of the fools in the street, and on the hill (sic). " [Click here for the full article.]
In Value Stock Investing, Quality is Job One
"How much financial bloodshed is necessary before we realize that there is no safe and easy shortcut to investment success? When do we learn that most of our mistakes involve greed, fear, or unrealistic expectations about what we own? Eventually, successful investors begin to allocate assets in a goal directed manner by adopting a realistic Investment Strategy... an ongoing security selection and monitoring process that is guided by realistic expectations, selection rules, and management guidelines. If you are thinking of trying a strategy for a year to see if it works, you're due for another smack up alongside the head!" [Click here for the full article.]