In recent five years, the S&P 500 gained 24.71% in 2009,
11.65% in 2010, 0% in 2011, 12.1% in 2012, and 25.71% until now.
The market performance looks good. Could investors make more money
by investing in GuruFocus Model Portfolios? It is time to check the
performances. The following are the details of the performances of
the four value strategies:
Value Strategies (Long):
* All numbers do not include dividends.
In the first 10 months of 2013, we can see that except for the
model portfolio of Top 25 Undervalued Predictable Companies, the
other three model portfolios all outperformed the S&P500. We
remember up to Oct. 8, 2013, the portfolio of Top 25 Historical Low
P/S Ratio Companies underperformed the S&P 500 by 2.38%. Just
in one month, it outperformed the market by nearly 1%. Since
inception of each model portfolio, they all outperformed the
Both of the portfolios of Buffett-Munger Screener Top 25 and Top 25
Undervalued Predictable Companies
were started in January 2009. In 2009 and 2010, Buffett-Munger
Screener outperformed the market by around 4% and 8%. In 2011, the
market was even, yet the Buffett-Munger Screener outperformed the
market by 6.01%. In 2012, Buffett-Munger Screener was about even
with the S&P 500. In 2013, it outperformed the market by 0.30%.
From the above performance figure, GuruFocus can be proud to say
that Buffett-Munger Screener Top 25 outperformed the market almost
every year except 2012. Even the only underperformance was small
compared to the stock market's performance. Regarding the Top 25
Undervalued Predictable Companies, the portfolio gained 55.72% and
20.17%, respectively, in 2009 and 2010, almost double the return of
the S&P 500 in that period. However, from 2011 up till now, the
portfolio of Top 25 Undervalued Predictable Companies
underperformed the market. In all, since inception, Buffett-Munger
Screener Top 25 outperformed the S&P 500 by 31.83%. The
portfolio of Top 25 Undervalued Predictable Companies outperformed
the market by 32.97%, even higher than the Buffett-Munger Screener.
Without any doubt, Warren Buffett's investment strategy is the most
successful ever. He believes that to buy companies with
"predictable and proven" earnings can be very profitable in stock
market investing. Based on his strategy, GuruFocus develops
, which helps to find companies with high-quality business at
undervalued or fair-valued prices:
- Companies that have high Predictability Rank, that is,
companies that can consistently grow their revenue and earnings.
- Companies that have competitive advantages. It can maintain
or even expand its profit margin while growing its business
- Companies that incur little debt while growing business
- Companies that are fair valued or under-valued. We use PEPG
as indicator. PEPG is the P/E ratio divided by the average growth
rate of EBITDA over the past 5 years.
Both Buffett-Munger Screener and Top 25 Undervalued Predictable
Companies select stocks from the companies that have the highest
predictability rank. Top 25 Undervalued Predictable Companies
Portfolio selects the stocks that are undervalued from DCF
calculations. For the current list of undervalued predictable
companies, go to the screener. For the current list of good
companies at fair or undervalued price for Buffett-Munger screener,
The other two model portfolios are for predictable companies that
are traded at historical low P/S and historical low P/B ratios,
respectively. Both of these two portfolios outperformed the market
average in 2010, 2012 and 2013, but about even with the market in
2011. In all, since inception, historical low P/S outperformed the
S&P 500 by 14.58%. The portfolio of historical low P/B ratios
outperformed the S&P 500 by 12.97%. Please go to historical low
P/S ratios and historical low P/B ratios for the complete stock
All the portfolios are rebalanced once a year; therefore, no
portfolio changes will be made at this time.
From the above analysis, we can see for a single year, the
performance of our portfolios may not beat the market, yet in the
long run, it is profitable to invest using our model portfolios.
These are the summaries of the four value strategies mentioned
1. Buffett-Munger screener: Invests in predictable companies that
have low debt, consistent profit margin and are traded at low P/E
to growth ratios.
2. Undervalued Predictable Companies: Invests in predictable
companies that are undervalued based on DCF model.
3. Historical low P/S: Companies that have high predictability
rank, but traded at historical low P/S ratios.
4. Historical low P/B: Companies that have high predictability
rank, but traded at historical low P/B ratios.
GuruFocus premium membership is needed to access the details of the
portfolios and screeners. We also publish a monthly Buffett-Munger
newsletter which features the picks from Buffett-Munger Screener.
If you are a premium member, you can download this for free. If you
are not a Premium Member, we invite you for a 7-day Free
Trial.About GuruFocus: GuruFocus.com tracks the stocks picks and
portfolio holdings of the world's best investors. This value
investing site offers stock screeners and valuation tools. And
publishes daily articles tracking the latest moves of the world's
best investors. GuruFocus also provides promising stock ideas in 3
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