INVESTING FOR EVERYONE
(even if you are not a professional money manager)
You have to do it!!
Beating a "Benchmark" may only be good for a bonus among professional money managers.
For those non-pro investors with a limited amount of money to invest and real life issues (college tuition, actual living expenses like food and clothing, gas and utility bills, finding a little left over to save for retirement) just beating a benchmark is too often just not good enough. Is it?
The pro money managers get their bonus even if their benchmark is down and their portfolios are down a little less - they "beat" their benchmark and get rewarded!! We get to see our precious savings reduced in value by the full amount!! No rewards for us.
Inflation - the inevitable rise in the price of everything we need to consume - versus the much slower rise in our income makes it really hard to "make ends meet".
Before we even try to tie the ends together Government at all levels must be paid in the form of taxes, fines, license fees and social security deductions!
What is a person to do?
You must invest or get progressively poorer .
Invest like the best!sm
Here is a solution:
Click on the MRRR andInfltaion Tab above.
There you will find an updated inflation rate and a table in which you will find Minimum Required Investment Rates of Return (MRRR). Select your tax bracket and look up your personal MRRR in the table.
Use this MRRR to sort candidate investments for purchase.
Look for investments that have consistently produced this rate of growth or better.
Build a portfolio of these investments and manage it regularly.
Be warned: "past performance is no guarantee that this performance will continue in the future." .....but how else are you going to start?
Where will you find these investments? ...and how will you use them to build a portfolio successfully?
For some suggestions on what a model portfolio could look like, click on the portfolio tabs above. There you will see what a model portfolio looks like and you can get a feel for the past performance .
Selecting the portfolios
At Coreportfolio.com we use this method ( we do not advocate this to be suitable for everyone - only a professional financial advisor who knows your personal situation can tell you that).
We divide available cash into roughly 11 equal portions and buy 10 stocks , keeping the 11th portion of cash in reserve.
Coreportfolio.com uses a unique method of culling out the best candidates for investment: We want to Invest Like the Best, so we look at the portfolios of the consistently best performing Mutual Fund managers in the USA fund universe. We compile a list of common stock investments that they have committed their money to most frequently. This is the CORELISTsm
This method taps into the largest pool ( perhaps as many as several thousand of the best of them) of "buy side" analyst recommendations. They have the Fund's money at risk along with their fees and performance bonuses... it matters a lot to them to make more money than their competitors for your investment dollars.
Then we rank these candidates on both a fundamental, technical and momentum basis and make our selections based on combined rankings called a Core Score sm (we obviously prefer to include the highest ranked stocks first).
Yes we do pay attention to "diversification".
However diversification for its own sake will only lead to mediocre performance.
For that reason portfolio selections are limited to around 10 items . Beyond these items, additions add very little extra risk reduction to the overall portfolio and the performance penalty for doing so is often big.
Managing the portfolio
There is a very simple method of portfolio management recommended by William O'Neill, founder of Investors Business Daily (www.ibd.com), and I recommend it to everyone who asks me.
Follow the market price of your stock purchases and hold them as long as the fundamental reasons for buying are largely intact (the Core Score sm will guide you here) AND generally the price has not declined by more than 8% from the purchase price.
At Coreportfolio.com we use a slightly different method: in addition to monitoring fundamentals - a slightly bigger (10%) price decline from purchase may be considered.
Since our Watch Lists usually contain around 200 potential candidates, barring a short period in 2008, there were always a few selections with a BUY recommendation to use as replacements for stock positions we sold.
Rinse and repeat.
The contained information is based on historical data. The analysis assumes the stock/fund will perform in the future as it has in the past. This is generally never true.
Before buying or selling a security, you should do your own research and reach your own conclusions. Reliance on this information is at the sole risk of the reader.
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