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Stocks B / Berkshire Hathaway
|Subject: Re: WEB value formula||Date: 3/28/2013 6:40 PM|
|Author: mungofitch||Number: 200549 of 213054|
I suppose any formula is "good" as long as it's mathematically sound.
What other investing formulas do you feel are worth considering
Whether it makes economic or mathematical sense is debatable, but I can certainly
recommend the following formula because it makes money year after year:
- start with a good broad selection of stocks, e.g. Russell 1000 or 3000
- sort them by product of dividend yield and earnings yield.
This implicitly skips all stocks not paying dividends.
- keep the best 20-50 stocks on that sort. Best 35 is traditional but it doesn't matter much.
- of those, buy the few stocks that have risen most in price in the last year or so (12-16 months)
It's best to ignore any price change in the last 2-6 weeks or so, but not critical.
Anywhere 3-10 stocks is good, but 4-5 is the usual choice.
Hold those stocks for 3-13 weeks and repeat. A monthly check is traditional but again not critical.
I've been using every 2 months lately. The picks don't actually change that often.
This would have returned around 20%/year since 1986, including the
last decade which is entirely after the method was popularized.
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