On 10/28/2020 the value investment fund purchased 98.2849 shares of Norfolk Southern Corporation in its Railways Pool. The total amount invested was $20,000 at a price of $202.49 per share plus a $1/share transaction fee. Thus, each share costs $203.49.
Under the value investing approach, today, 13 days later, the stock recovered well past its prior peak of $224.99 and the preset sell trigger of 103% of prior peak ($231.74) at 9:35 AM. This was set in motion by the announcement from Pfizer’s that the vaccine for COVID performed well during Phase 3 trials. The market rebounded as a whole.
Since the fund utilizes buy/sell orders via computer directives, the shares were automatically sold at $231.74 netting $230.74 per share after $1/share transaction costs. Total gain from today (11/09/2020) is $2,678.26 on a $20,000 investment. There is still more good news. On Thursday the 5th of November, those owning shares of Norfolk Southern were recorded for the dividend payment in early December at 94 cents per share. Thus, there is a receivable for $92.39 from Norfolk Southern. Total earnings during the 13 days equals $2,770.65 which equates to a 13.85% return.
If you were to annualized this return, it would equal 388% uncompounded. Of course, a 388% return is unrealistic, but the point is that value investing is a very effective systematic approach towards accumulating wealth.
The fund’s initial balance for this cycle was $100,000; this is the first full trade and it locks in $2,770 of the $30,000 goal and the fund just started three weeks ago. Act on Knowledge.
Value Investing
Do you want to learn how to get returns like this?
Then learn about Value Investing. Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.
There are four key principles used with value investing. Each is required. They are:
- Risk Reduction – Buy only high quality stocks;
- Intrinsic Value – The underlying assets and operations are of good quality and performance;
- Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
- Patience – Allow time to work for the investor.
If you are interested in learning more, go to the Membership Program page under Value Investing section in the header above.
Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each member goes through three distinct phases:
- Education – Introduction to value investing along with terminology used are explained. Key principles of value investing are covered via a series of lessons and tutorials.
- Development – Members are taught how pools of investments are developed by first learning about financial metrics and how to read financial statements. The member then uses existing models to grasp the core understanding of developing buy/sell triggers for high quality stocks.
- Sophistication – Most members reach this phase of understanding after about six months. Many members create their own pools of investments and share with others their knowledge. Members are introduced to more sophisticated types of investments and how to use them to reduce risk and improve, via leverage, overall returns for their value investment pools.
Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:
- Lessons about value investing and the principles involved;
- Free webinars from the author following up the lessons;
- Charts, graphs, tutorials, templates and resources to use when you create your own pool;
- Access to existing pools and their respective data models along with buy/sell triggers;
- Follow along with the investment fund and its weekly updates;
- White papers addressing financial principles and proper interpretation methods; AND
- Some simple good advice.
© 2020 – 2023, David J Hoare MSA. All rights reserved.
