Ten Years … Gone “Hog Wild”

This started with the top trailing 10-year performers from the S&P 500, which is cool — and at least they got that going for them. But we know the virtues of All-of-the-Above investing, which means the Value Line 1700 list is even cooler. Look what Groundhog Nation did with them.

Carl Quintanilla (CNBC) provided this list of the best performing stocks in the S&P 500 since the market low ten years ago.

It’s been fun and rewarding for many. Take note how many of these have been covered and/or resident in our model portfolios, etc. since then.

Who did we miss? Why?

Spy top 50 performers since 2009 20190308

So what were you doing when the “Great” Recession bottomed on March 9, 2009? CNBC got this whole this started with the S&P 500 but we know that even better opportunity manifests in the Value Line 1700 — and we weren’t disappointed.

There are 1200 stocks with stock price data for 3/9/2009 and 3/8/2019, ten years later. Investing $100 into each of these 1200 ($120,000) would worth $1,012,892 this past weekend — an annualized total return of 23.8%. Sorry, Carl Quintanilla, but the S&P 500 checks in at 17.3%.

  • The annualized total return (10 years) on the Wilshire 5000 (VTSMX) is 17.5%. 655 of the 1200 stocks (54.6%) beat the market. This collective of gainers have an average quality ranking of 69.
  • 1138-of-1200 (94.8%) gained and a have a current value greater than $100. The stocks that lost ground have an average quality ranking of 27.
  • The top performing decile has a sales growth forecast of 9.2%. The bottom decile stands with a 5.3% growth forecast.
  • If the Value Line Arithmetic Average were “investable,” the annualized total return was 19.7% as 999.30 advanced to 6046.07 during the time period. All-of-the-Above Investing works.

Gone Hog Wild (March 2009)

Every year we run a stock picking contest that starts on Groundhog Day and continues until the next Groundhog Day. Back in March 2009, we featured the most-frequently selected stocks as something of a screening exercise. As the accompanying image shows, yes, Virginia, the average return forecast was “north” of 20% at the time.

The Sweet 16 stocks featured back in March 2009 generated a return of 21.2%.

The top performer was the swing-for-the-fences selection of Sigma Designs (SIGM) and every once in a while, Casey does not always strike out. 36.6% can be a wonderful thing. But the rest of the field was also formidable and include a number of community favorites (Manifest Investing 40 residents).

Sweet 16 (3/1/2009) Results — Ten Years Later. As shown the collective performance of the (16) selections known as “Heavy Hogs” delivered a 21.2% annualized total return. Dividends are included. We can’t help but note the strong performance from the companies at the top of the 10-year-old screening results vs. the achievements of some nearer the bottom. Quality Systems (QSII) morphed into NextGen Healthcare (NXGN). [Editor’s Note: If we’d only listened to Cy Lynch and WellCare Health Plans (WCG) at the time, +44.1%.] Buffalo Wild Wings (BWLD) was acquired by Arby’s after a considerable gain. Navellier Fundamental (NFMAX) evolved into a private wrap offering, results shown are from Navellier fact sheet (https://navellier.com/files/3815/4964/8534/fundamental-a-factsheet.pdf).

 

Invest With Your Friends.  The journey can be a most informative, rewarding and entertaining adventure.

 

Start a test drive (trial subscription) at http://www.manifestinvesting.com ($79/year, group discounts for club partners and educators) and participate in the next ten years of going “Hog Wild.”

Questions?

Contact Mark Robertson via markr@manifestinvesting.com or via Twitter by reaching out to @manifestinvest.  Manifest Investing also maintains a “slipstream blog” at Facebook: https://www.facebook.com/manifestinvesting/  Comments and inquiries welcome.

 

A Harangue of Hoopla

This column appeared in Better Investing magazine nearly 20 years ago. The only time I now trim my eyebrows is when my wife threatens me.

1998. Paraphrasing a great statesman, “It was a year like all years, filled with events that shape and illuminate our times.” It’s so true. In some ways this one was different, but in many others, the same.

One difference was thanks to the recent space mission, our 12-year-old daughter has now seen Mr. Cronkite, and she now knows who he is. Our 8-year-old observed that he seems to be a “nice, smart man, but he needs to trim his eyebrows.” We gently reminded him to be polite and offered some photos of Albert Einstein. During an afternoon at the Ford Automotive Museum, we discovered that the more “famous” of the Fords was Henry, not the Harrison variety that the kids seem to know better. The kids (and adults) were treated to stories of innovation about the real Mr. Ford and his relationship with Thomas Edison. Alex, in noticing Mr. Edison’s “bad hair day” in a photo, combined with the Einstein photo, and Walter’s eyebrows, decided to muss his hair to see if it stirred his imagination. I’d submit that it already had.

As this issue went to press, we appeared to be headed for another strong annual performance result. 1998 had its moments, including the July-August sell-off which quickly reminded many that these things do happen. Interestingly enough, the September-to-November rebound may have inhibited the message a little. Although far from a market call, we might observe that third and fourth quarter earnings results continue to weaken. If this trend continues, it would be easy to build a case for some tough days ahead.

There are risks associated with investing in stocks. Recent exuberance sometimes makes this message a little hard to deliver. But in 1998, as in every year, one of our core messages is to encourage investors to stay the course, no matter what tomorrow brings. The greater risk, to us, is that of NOT being involved.

The Wall Street Journal caused a bad hair day for the NAIC last week, followed by legions of syndicated translations nationwide in the days that followed. The Chicago Tribune decided that their own interpretation was “Join an Investment Club? No Thanks!”

We might suggest two themes for your consideration. The first is that it’s possible that, once again, the message delivered misses the point. See “Our Editor’s Reaction” below.

The second is that it’s time to extinguish some of the mystery. NAIC investors are extremely successful, so much so that we’ll continually be challenged by those untouched by our community and experience. It’s time for a factual debate and apples vs. apples comparisons. In the months ahead, we’ll look to explore the facts and share them with you.

The annual performance of growth mutual fund managers is commonly cited. We read that 5, 10, 20 and in rare cases, 30 or 40 percent of funds exceed the S&P 500 in a given year. The NAIC has conducted surveys, going back decades, that measure performance, using lifetime statistics and a more stringent comparison, as we assess performance. Placing mutual funds under a multiyear microscope, here’s a chilling statistic. From a sample of 3,637 funds, regardless of type, 18 or 0.5 percent (that’s 1-in-200, folks) outperformed the S&RP 500 over the last five years.

It’s time to explore our fascinating track record and Great Expectations going forward. As for our eight year old, Alex, I doubt that he’ll ever trim his eyebrows.

The NAIC wishes a most jubilant and safe holiday season, to you and your family.

On Recessions (State of Investing)

The thing very few people tell you about “overvalued” markets is that, occasionally, the fundamentals arrive to justify them. — Joshua Brown

If there’s one image that captures the State of the Investing “Union”, this is one of the more important flavors. Recessions massacre profitability and explode Stock Selection Guides (2008-2009). Companies with weak profitability dip below zero and EPS “disappear.”

Value Line Arithmetic Average Companies ($VLE) ex-Financials. This statistic covers the industrials and excludes the asset-based companies where we focus on ROE.

One of the biggest reasons that the 2016-2017 period for the bull market was so “empty” for most investors is because of the recessionary conditions that materialized in some segments, rolling corrections. With the tax law revisions for 2018 and beyond, we’ll be carefully monitoring the additions of 2020 and 2024 estimates to our studies as Value Line ratchets their data arrays one year during upcoming Issue updates.

Crowning Groundhogs (2018)

This Week at MANIFEST (2/8/2019)

“A group of investors heeding the lessons of Graham, Babson and Nicholson has at least one leg up on the crowd and a better than average opportunity to generate exceptional returns.” — Our Groundhog Creed.

Super Performances

The Super Bowl is on Sunday.

Sorry Patriots fans, but if you care about the 2019 stock market, the only thing standing between you and the oblivion of an “old AFL team” winning the Super Bowl and poking the restless bear, the accompanying image of a focused Ram is it. Go Rams!

And that’s the second most important thing going down this weekend.

Our courageous band of Groundhogs have finished another revolution around the sun, the twelfth such rendition — and we’ll be crowning another repeat champion, Anna Gombar of Holly, Michigan.

Inviting Anna Gombar (and her husband Rod) to a stock selection contest is like inviting Tom Brady to a football tournament.

The results are in and the accounting team is crunching numbers, munching pizza and chugging adult beverages in the conference to compile the final results. Spoiler alert: They’re outstanding. Again. (I hope) No, we expect.

Back To The Super Bowl And All Things Commercial

What have been your favorites over the years? The Coca-Cola ad ranks as one of the best of all time. The Apple commercial is epic. And Budweiser consistently hits it out of the park with the gorgeous Clydesdales. But the E*Trade babies and the CareerBuilder Monkeys are legendary.

But — to us (particularly in Michigan) — the Eminem commercial by Chrysler stands out among the best. Ever.

The S&P’s 7.9% Advance Marked Its Best Start To The Year Since 1987

Sharp Rebound. The S&P 500 had it’s best month in three years following December’s slump. Hard to think of the market gyrations over the last four months as anything but a YoYo “Walk-The-Dog” market.

MANIFEST 40 Updates

  • 2. Cognizant Technology (CTSH)
  • 4. Microsoft (MSFT)
  • 12. Alphabet/Google (GOOG)
  • 19. Visa (V)
  • 27. Oracle (ORCL)
  • 28. Wells Fargo (WFC)
  • 36. T. Rowe Price (TROW)

Round Table Stocks

  • Amazon (AMZN)
  • Baidu (BIDU)
  • Booking.com (BKNG)
  • Cognizant Technology (CTSH)
  • eBay (EBAY)
  • EPAM Systems (EPAM)
  • FleetCor (FLT)
  • Global Payments (GPN)
  • Infosys Tech (INFY)
  • Microsoft (MSFT)
  • PayPal (PYPL)
  • SEI Investments (SEIC)
  • T. Rowe Price (TROW)
  • Western Union (WU)

Best Small Companies (2019 Dashboard)

The status of the 2019 Best Small Companies can be tracked at: https://www.manifestinvesting.com/dashboards/public/best-small-2019

Investing Round Table Sessions (Video Archives)

Turnout Tuesday Educational Sessions

Results, Remarks & References

Companies of Interest: Value Line (2/8/2019)

The median Value Line low total return forecast for the companies in this week’s update batch is 5.7% vs. 7.7% for the Value Line 1700 ($VLE).

Materially Stronger: Fiserv (FISV)

Materially Weaker: Sohu.com (SOHU), Ameriprise (AMP), SEI Investments (SEIC), BlackRock (BLK), Ctrip.com (CTRP), GroupOn (GRPN), Capital One (COF), Ansys (ANSS)

Discontinued:

Market Barometers

The thing very few people tell you about “overvalued” markets is that, occasionally, the fundamentals arrive to justify them. — Joshua Brown

Value Line Low Total Return (VLLTR) Forecast. The long-term low total return forecast for the 1700 companies featured in the Value Line Investment Survey is 7.7%, decreasing from 7.7% last week. For context, this indicator has ranged from low single digits (when stocks are generally overvalued) to approximately 20% when stocks are in the teeth of bear markets like 2008-2009.

Groundhog Challenge 2019

Gh invite 20190130

Timeless Perspective From Omaha

A number of Manifest Investing community participants have recently forwarded this message to investment club partners, friends and family.  It’s a timeless reminder from 2008-2009, Warren Buffett … and we doubled down on it recently.

The following was excerpted from Bloomberg (11/21/2008):

Billionaire Warren Buffett’s Berkshire Hathaway Inc. slumped 32 percent last year, the worst performance in more than three decades, as the U.S. recession forced down the value of the firm’s equity holdings and derivative bets.

Most of the stock decline happened in the last three months as Berkshire posted a fourth straight profit drop amid sagging insurance results. The company still beat the 38% tumble of the S500, the 14th year in 20 that Buffett outperformed the benchmark. Just six of 1,591 (0.37%) U.S. stock mutual funds with at least $250 million in assets made money for investors last year, according to data compiled by Bloomberg.

“In 2008, there was nowhere to hide,” said Guy Spier, chief investment officer at Aquamarine Capital Management, which holds shares in the Omaha, Nebraska-based company. “Berkshire can’t escape the general fate of American businesses. What Buffett tries to do is ensure that Berkshire Hathaway does less badly than other companies.”

Buffett built Berkshire over four decades from a failing textile maker into a $150 billion company by buying out-of-favor stocks and businesses whose management he deemed superior.

Buffett Not Concerned

The stock plunge “doesn’t make any difference,” Buffett told Fox Business Network Nov. 21.

“It’s happened to me three other times,” Buffett said. “It happened when it went from 90 to 40 back in 1974, and it happened in 1987. It went down 50 percent in 1998-to-2000. I mean, I hope I live long enough so it happens a couple more times.”

=End of Excerpt=

It’s a perspective that has led to 20% annualized returns over multiple decades. Ignore it only if you’re willing to settle for a dimmer future.

Mark Robertson

Brkvsp5002008

I recently watched a 10-year retrospective on the financial crisis of 2007-2009.

Do you remember Buffett’s reaction to one of the most challenging market moments of his lifetime?

Answer: I hope I live long enough to experience a couple more of these.

Perspective matters.

Here’s what Warren Buffett says to do when the market tanks (CNBC, 10/10/2018)

“Don’t watch the market closely,” he advised those worried about their retirement savings at the time. “If they’re trying to buy and sell stocks, and worry when they go down a little bit … and think they should maybe sell them when they go up, they’re not going to have very good results.”

… he recommends investors “get ice cream with their kids and say hi to a friend they haven’t spoken with in a while.”

 

And he’d appreciate it if you’d find the nearest Dairy Queen for the occasion.

All Of The Above Investing

This Morning’s Powerful Reminder About All-Of-The-Above Investing. We build and maintain portfolios with a sufficient number of small and medium-sized companies such that the overall growth forecast (weighted average) is approximately 11%. This assures that we’ll have a suitable balance of promising faster-growing smaller companies and large core/blue chip stalwarts.

$100 invested in the S&P 500 on 6/13/1997 would now be worth $314.85. (5.9%)

$100 invested in the Value Line 1700 Arithmetic Average ($VLE) would now be worth $820.50. (11.1%)

The Rest of the Story: Wasted Wish?

Perspectives, by Mark Robertson, Managing Partner


Originally Posted on January 1st, 2010 — we felt it was worth another look back at a visit from Santa … from a few years ago on the heels of a vicious bear market.

With certain apologies to Paul Harvey, we need to continue a look at our “Best Season To Invest?” theme from last month. Our December cover story included an exchange with Santa Claus where we playfully negotiated three wishes. The 3rd wish was for Santa to let us know the best day to invest during any given year.

Santa reluctantly agreed to see what he could do … after exploring our comments about lottery-related spam email. But his message was pretty clear, the perceived advantage isn’t nearly what most people think it would be.

We resumed the discussion where we left off during his visit to Rochester Hills, Michigan on a snowy December 25.

 

A Wish Already Granted? $100 invested into Tin Cup (our model portfolio) would have led to total assets of $1565 over the last ten years. The same $1000 invested on the best day for investing in each of those ten years stands at $1317. Investing regularly in quality companies with leadership projected returns turns out to be pretty compelling.

 

MI: So how’d it go in Omaha?

Santa: I’m still undecided. Buffett is on probation until I figure out why he said “Buy American!” and then bought a Chinese stock? But he gets good list points for pointing out long-term investing in general.

MI: Indeed. We think Buffett, and for that matter, all of us, should be willing to invest wherever your sled flies on Christmas Eve.

Santa: I might be mixed up on the years … but in any event, he’s on probation until I finish reading Snowball. If he’s gonna use one of my favorites for the title of the book, he’d better behave. I’m not convinced. For now, it’s a fly-by.

MI: Charlie Munger, too?

Santa: Not a chance. Charlie’s a hoot, one of my favorites. I may leave him a clump of coal just to play mind games with him. He’ll probably wonder if Buffett is out to buy an entire coal company next.

MI: Now who’s misbehaving?

Santa: Watch it. That 2010 list is already a work-in-progress. You’re already hanging in the balance.

MI: OK, I’ll add “being nice” to my list of resolutions for 2010.

Santa: It’s early. You have a shot.

MI: We’ve been doing some more thinking about that wasted third wish from last month. Is it possible that I wished for something less than we already have?

Santa: Ding. Ding. And two more angels get their wings. Your subscribers have already checked in with their own observations that Tin Cup gained 48% during 2009?

MI: Right. We’re thrilled!

Santa: Well … investing $100/year in Tin Cup and not worrying about “best day of the year” achieved $1565 over the last ten years vs. $1317 using the “best day” approach. Celebrate that. Hey! Nice touch on the beverage, chips and salsa … milk and cookies are great, but they get old after a few million stops.

MI: Thanks, Santa. Have a great year!