Monthly Archives: June 2015

Fair Value Stocks

The 6 Keys to Building a Winning Portfolio of Stocks – Part 2 of 6

“Fair Value”

By Dr. Thomas K Carr

The following article is adapted from Dr. Carr’s forthcoming new book, “Stop Trading, Start Investing: the 6 Keys to Building a Winning Long-Term Portfolio”

In my previous article in this series that can be read HERE, we looked at how “organic growth” that can be sustained over time is essential to finding great long-term investments in the stock market.  In this article we are moving on to key number two.

fair valueThe second key to finding the best stocks for investment is to make sure that the stocks that show sustainable organic growth are also fair value; i.e., stocks that are trading at a fair price.  When you buy a stock, what you are buying is the right to share financially in the company’s current generation of net income (if the company pays a dividend) and in the company’s future growth prospects as appreciated by the market through rising share prices.  Since that right can be extremely valuable, you will always be paying a premium for it.  This is to say that, in most cases you are going to be paying more money per share than the company is actually worth now.  This premium is, in effect, your deposit on the right to participate in the future growth of the company the value of which, if you implemented the first key (“organic growth”) correctly, should be much greater than the premium paid.  Here in implementing the second key, what you want to avoid is paying a premium that overvalues that future growth and pay a fair value.

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How can you use Gold and Silver to help protect your wealth?

Building your own stash of gold doesn’t have to be this risky…!

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Perhaps, at some point in your life you have imagined what it would be like to own a safe full of bars of gold or even a big treasure chest full of silver..  Far from the sometimes risky image portrayed in crime films, Gold and Silver is the most traditional safe haven known to the financially prudent.

Wealth held by banks, other financial institutions and governments is not considered as safe as it once was.  Consequently, we at Bleyer have seen an increasing demand in the precious metals market over the past couple of years.  We continue to meet the changing and varied needs of clients wanting to flexibly hold a percentage of their wealth in this trusted and ancient form.  A generation is beginning to return to the wisdom of their grandparents, when owning Gold and Silver (British coins particularity) was a perfectly normal thing to do.  In 1970 you could buy an ounce of gold for £14.60, an ounce of gold in 2015 is currently looking incredibly appealing again at the low price of £780.  This may seem comparatively high but gold actually almost reached £1,200 an ounce in 2011.  Precious metals have long been seen as a strong asset in a diverse portfolio, the ultimate hedge against financial unrest because metal performs when other stocks don’t, the tax advantages can also be fantastic.

​Today we will be looking into the fundamentals of precious metal investments, we will show you why you should start to think about buying now to avoid missing the horse!

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Organic Growth

The 6 Keys to Building a Winning Stocks Portfolio – Part 1 of 6 “Organic Growth”

By Dr. Thomas K Carr

The following article is adapted from Dr. Carr’s forthcoming new book, “Stop Trading, Start Investing: the 6 Keys to Building a Winning Long-Term Portfolio”

The first key to finding investment-worthy stocks is to find companies that display organic growth.  I’ll explain what that phrase means in a moment.  First let me prove to you just how powerful a predictive indicator this first key is.  Typically, financial analysts measure growth by noting increases in both bottom-line (earnings per share) and top-line (sales revenue) numbers.  So what would happen if we took the companies in the S&P 500 that ranked among the top 20 for their 5-year earnings per share growth rates. And of those we took the top 5 ranked companies for their 5-year sales revenue growth rates.  If we bought only those companies at the beginning of each year, held them for one year.  Then ran the screen again at the end of each year and changed positions accordingly. What would our returns look like over time?  Take a look below in Fig. 5.  Here are the results over the past 15 years of buying only the best top-line and bottom-line growth companies among the S&P 500: (Click on the image to enlarge, then press the back button on your browser to return to the article)

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Fig. 5: 15 Year Test of S&P 500 Growth Companies

You can see that while the S&P managed a total gain of around 70% (3.6% annualized with compounding), our top 5 growth companies gained more than 20 times that!  Had you invested only $2,000 in each of those 5 companies back on January 2nd, 2000, by December 31, 2014, you’d be sitting on a stocks portfolio account worth over $157,000!

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