Stock Wealth Safely has devoted more than 25 years of scientific research to develop a unique approach to stock investing. After providing private investment advice for years, we are now offering this service to the public.
PROBLEMS WITH EXISTING INVESTMENT STRATEGIES
If there was a strategy that was consistently successful, there would not be so many different ones promoted: value, growth, momentum, technical analysis, macroeconomic and behavioral finance to name a few.
All of these strategies work some of the time, but none work all of the time.
For example, there are years when a value approach does well until mean reversion occurs and the value strategy underperforms a different approach such as growth stocks the next year. The same can be said for any of the above investment styles. Yet most investment funds proudly announce that they follow a single style and try to convince you that it is always going to be successful.
Using a scientific analogy, stock market strategies are at a pre-paradigm stage, with many competing approaches and none shown by the evidence to be clearly superior over time. A new method is needed to move the field forward.
THE STOCK WEALTH SAFELY APPROACH
Our research has shown that it is necessary to assess the usefulness of each of the above styles to each stock being considered. The key to our success is to be able to give a different value to each approach when evaluating a specific stock, depending on its particular environment.
Our competitive advantage is our ability to determine the optimal weighting of the coefficients for each variable, as these are constantly changing depending on the circumstances existing at the time for each stock. Stocks that meet the criteria established by this analysis are posted on our website. We can identify an average of two new stocks each week that meet our criteria for selection. Quality is more important that quantity.
Our approach will not be the best performing every year as single strategies (eg value, growth etc) will always have some years in which they shine. However, our research has shown that over time, our strategy will give consistently better results than the others.
We focus on an intermediate investment time horizon of 6 months to provide safe, consistent returns. We define success as a 5% gain in the stock price during this interval. Although some stocks will gain more, accepting this moderate capital gain locks in the profit and repeating this 2-4 times per year gives about a15% annual profit.
Check out our long term results page to see how we have done since going public December 31, 2018.
POSSIBLE TRADING TECHNIQUES
A. Conservative: Sell as soon as stock gains 5%
The calculations below show how the Stock Wealth Safely approach can yield an annual return of
around 15%. The example below is how this strategy produces this return over a 12 month period,
based on the success rate we have demonstrated. The calculation is presented in some detail so you see
for yourself that the results are achievable using the stock selections identified by our proprietary
The model demonstrates what should happen if 100 shares are purchased at $100 per share for an
investment of $10,000.
1. Our data on the long term results page shows that 75% of selected stocks have gained 5% by 2
months, 85% by 6 months, 90% by 10 months
2. All transactions done when stocks have been held for 2, 6 or 10 months
3. Stocks are sold when they have gained $5 (5%) and are immediately replaced so total holding is
always 100 shares
The capital gain in 12 months should be $1620 on a $10000 investment = 16.2%. Since the average dividend yield for our selected stocks in 1.8%, the total return would be 18.0%.
B. Conservative strategy using Stop-Loss
A similar approach to the conservative strategy shown above except that a trailing stop-loss is placed as soon as the stock has gained 5%: this potentially allows further gains while protecting against losses.
C. Aggressive strategy
Our stock selections on average gain much more than 5% as detailed in our Recent Winners and Long Term Results pages. Continuing to hold a stock selection after its gained 5%, with the expectation that it could gain considerably more is another strategy. It is more aggressive in that it can lead to larger gains but there is also the possibility that the stock could drop in price after its initial gain.
Stock Wealth Safely selections may add value to your investment returns.