Message Font: Serif | Sans-Serif
No. of Recommendations: 13
I wanted to get this to the board before my vaction. This is a beta version of our new FAQ. Read it over; pick it apart; check my spelling/language (heaven knows I did'nt); add new ideas...whatever.

We still need to add something to the definition regarding a Boring company's balance sheet (I'm not sure I care for the last idea I posted)

If I don't reply in the next few days it's because I'm on vacation with my family.


Boring Stocks 3.0

Welcome to the Boring Stocks Board, version 3.0. In January of 2002, we began an effort to revive this dead (or extremely sleepy) board. Prior to this effort there have been two Fools that have been widely considered to be the portfolio managers. Their names and beginning philosophies are linked below:

By Greg Markus (MF Boring)

By Dale Wettlaufer (TMF Ralegh) – currently posting as 'FDWBaltimore'

A Guide For Boredom Seekers

We believe that Tech Stock investors are usually thrill seeks. By contrast, participants on our board are Boredom Seekers.

Most investing boards here at TMF have a subject, or topic that is easily understood simply in reading their names. When most Fools choose to enter boards like; “Shorting Stocks”, or the “Communion of Bears”, they would likely have an understanding of the general subject matter to be discussed on that board. However, “Boring Stocks” is open to interpretation.

In this latest version of Boring Stocks, we have created a definition of the type of stocks we are interested in. This definition is intended to help all interested Fools in learning the characteristics of companies that we consider Boring:

1 - A Boring Company Has Minimal Analyst Coverage.
2 - A Boring Company Earns a Majority Of Its Revenues In A Middle Growth Industry.
3 - A Boring Company Earns Revenues In A Small Number Of Industries.
4 - A Boring Company Has A History Of Positive Earnings.

The Z Factor

“Z”; the universal symbol used to depict a sleeping cartoon character. This letter is the symbol for our initial scoring system.

Along with our definition, we have created a scoring system. Each portion of our definition has a range. Each range has a score. If you consider a particular company Boring, you can apply our scoring system to that company. The score the company receives is called its “Z Factor”. The higher the Z Factor, the more Bored you should be by the company.

Pick a company and give it a try!

Minimal Analyst Coverage – Number of Analysis
(A) 1-3 (3 points)
(B) 3-5 (2 points)
(C) 6-8 (1 point)
(D) More than 8 (0 points)

Revenues In A Middle Growth Industry – Industry Growth Percentage

(A) 7-8 (3 points)
(B) 9-10 (2 points)
(C) 11-12 (1 point)
(D) More than 12 (0 points)

Revenues In A Small Number Of Industries

(A) 1-2 (2 points)
(B) 3-4 (1 points)
(C) More than 4 (0 points)

History Of Positive Earnings – Number of Years

(A) 6 or more (3 points)
(B) 4-5 (2 points)
(C) 2-3 (1 points)
(D) Less than 2 (0 points)

The Z Factor assigned to a company is not intended as a “buy”, “sell”, or “don't buy” signal. We believe buying stocks is much more complicated than a scoring gimmick (no offense Tom & Dave). The scoring method is intended to provide framework for future discussion on a company.

Following extensive research, we are just as likely to purchase a company with a Z Factor of 1, as we are a company with a Z Factor of 10. Indeed, a company with a Z Factor of 10 may receive more interest at first, but that does not mean companies with lower scores are eliminated from consideration.

How it Works

Our board has a mythical IRA account, online, with American Express. Our opening balance is $100,000. As a result, no tax considerations, or transaction charges are considered in our portfolio's performance. (If you have a problem with this, then you may volunteer to be the bookkeeper for the portfolio, and you can track all that stuff!).

Our funds come from the death of our rich uncle, Dean. He was an accountant for a funeral home his entire life. However, his estate turned a fortune on selling his secret stamp collection. A part of that estate was gifted to us. We have vowed to only purchase Boring Stocks as a tribute to him and his rather dull existence!

A reasoned, business-like approach is required in the analysis of our stocks. There are an endless amount of things to consider when purchasing a stock. However, our board has provided a list of measures that we intend to consider in evaluating a stock after its Z Factor has been determined:

Low Valuation
Positive Cash Flow
Returns on Capital / Better than Cost of Capital
Increasing Earning Growth
Dividend Rates
Low Market Cap

There may be other things to consider as well. This list is intended to inform posters of the things that our members feel are important considerations when deciding to buy a stock.

We are not professionals (except for Dale). We very much consider our board to be a work in progress. We are learning just like you. As our Board's community evolves, we anticipate that we will need to make changes to our philosophies and definitions. Respectful, well reasoned debate is oil on the gears of change. If you don't like, or agree with something, let us know. But remember, this is an investment group. We are always interested in 'what works for you'. However, certain practices or methods may work well for an individual, but may be difficult for the group to adapt. In the end we hope we are sharing ideas; laughing; and learning with each of the boards successes and failures.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.