Retirement Ready Income Programs

...and Just What is an Investment Grade Value Stock?

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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.]


 
Retirement Ready Income Programs
2971 Maritime Forest Drive
Johns Island, SC 29455
Phone (800) 245-0494 • Fax (843) 243-8509
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Please read this disclaimer:
Steve Selengut is registered as an investment adviser representative. His assessments and opinions are purely his own. None of the information presented here should be construed as an endorsement of any business entity; the information is only intended to be educational and thought provoking.

Please join the private article mailing list or Call 800-245-0494 for additional information

Risk Management: Income, 401k, and IRA Programs

Take a free tour of a professional investment managers' private SEP IRA program during ten years surrounding the financial crisis:

CLICK HERE

In developing the investment plan, personal financial goals, objectives, time frames, and future income requirements should all be considered. A first step would be to assure that small portfolios (under $50,000) are at least 50% income focused.

At the $100,000 level, between 30% and 40% income focused is fine, but above age 50, the income focus allocation needs to be no less than 40%... and it could increase in 10% increments every five years.

The "Income Bucket" of the Asset Allocation is itself a portfolio risk minimization tool, and when combined with an "Equity Bucket" that includes only Investment Grade Value Stocks, it becomes a very powerful risk regulator over the life of the portfolio.

Other Risk Minimizers include: "Working Capital Model" based Asset Allocation, fundamental quality based selection criteria, diversification and income production rules, and profit taking guidelines for all securities,

Dealing with changes in the Investment Environment productively involves a market/interest rate/economic cycle appreciation, as has evolved in the Market Cycle Investment Management (MCIM) methodology. Investors must formulate realistic expectations about investment securities--- by class and by type. This will help them deal more effectively with short term events, disruptions and dislocations.

Over the past twenty years, the market has transitioned into a "passive", more products than ever before, environment on the equity side...  while income purpose investing has actually become much easier in the right vehicles. MCIM relies on income closed end funds to power our programs.

To illustrate just how powerful the combination of highest quality equities plus long term closed end funds has been during this time... we have provided an audio PowerPoint that illustrates the development of a Self Directed IRA portfolio from 2004 through 2014.

Throughout the years surrounding the "Financial Crisis", Annual income nearly tripled from $8,400 to $23,400 and Working Capital grew 80% $198,000 to $356,000.

Total income is 6.5% of capital and more than covers the RMD.

https://www.dropbox.com/s/b4i8b5nnq3hafaq/2015-02-24%2011.30%20Income%20Investing_%20The%206_%20Solution.wmv?dl=0

Managing income purpose securities requires price volatility understanding and disciplined income reinvestment protocals. "Total realized return" (emphasis on the realized) and compound earnings growth are the key elements. All forms of income secuities are liquid when dealt with in Closed End Funds. 



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Please read this disclaimer:
Steve Selengut is registered as an investment advisor representative. His assessments and opinions are purely his own and do not represent the views of any other entity. None of his commentary is or should be considered either investment advice or a solicitation of business. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be or should be construed as an endorsement of any entity or organization. The reader should not assume that any strategies, or investments mentioned are any more than illustrations --- they are never recommendations, and others will most certainly disagree with the thoughts presented in the article.