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!

Cyber Monday Sale @ Manifest

Cyber Monday Sale!

Black Friday is more than just another day … our special extends through Cyber Monday.

Discover the successful investing approach used by hundreds of thousands of investors over the last several decades. By focusing on company quality, return forecast and growth forecasts — we design and manage portfolios that are built to beat the market.

Create an account at for ONLY $49/year — and save $30 off the regular subscription until December 1.

Manifest Investing is one of the few places where you can screen for stocks while remaining focused on what really matters: (1) the long-term return forecast and (2) quality. Our powerful screening tools continuously deliver actionable ideas.

Discover how dashboards can enhance your portfolio design and management experience.

We’re thankful for the gains from companies like Apple (AAPL), up +349% (28.4% annualized) since it was added to our 40 most widely-followed stocks back in September 2009. Other companies, like Cognizant Technology (CTSH), FactSet Reseach (FDS) and Walgreen (WBA) have combined to deliver exceptional market-beating performance. We are grateful for contributions from other companies like Bio-Reference Labs (BRLI) and IPC Hospitalist (IPCM) — two companies that were acquired during 2015 rewarding our long-term investors.

The discovery of promising, smaller, faster-growing companies is a core guiding principle. You can experience a recent demonstration of highlighting study candidates at Best Small Companies . This feature includes a public dashboard that can be sorted to identify (from highest to lowest projected annual return) purchase candidates.

When we think of Black Friday, we think of positive relative returns … the black ink statistics that underscore market-beating performance by so many of our portfolios, demonstrations and club/individual portfolios. The Round Table tracking portfolio has topped the market by 3.5 percentage points over the last five years. Our monthly Solomon Select stock features have collectively beaten the market and the Tin Cup demonstration portfolio got “back to even” with this perpetually fully-invested collection of stocks and continues to soar. Tin Cup makes the maximum allowable deposit into a demonstration 401(k) … passed $1,000,000 in 17 years and already has $2,000,000 in the cross hairs.

Create An Account. Explore.

1. Start your account and launch a FREE, fully functional 30-day test drive. Explore features like the Stock Search, Dashboards and Sandboxes … and our weekly features that highlight threats and opportunities for stock watchers and shareholders. The weekly features present a number of actionable stock study ideas.

2. If you’re in a club or have friends and family that you’d like to share Manifest Investing with, share the message and we’d be happy to give them a FREE test drive also. Let us know via we need is name, email address and zip code to establish an account.)

3. Place your renewal order before December 1 and the price will be $49/year. The price after the Black Friday and Cyber Monday shopping frenzy will return to $79/year.

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For clubs or groups with more than eight partners, contact us ( for a great personalized Black Friday offer.

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Best wishes and Better Investing!


Introductory pricing is only available to households or customers at a business address who have not been subscribers to Manifest Investing within the last 180 days. If you respond to this offer but do not qualify for introductory pricing, we reserve the right to reject your order or prorate your subscription term to reflect current subscriber pricing. This offer may be withdrawn at any time.

Tin Cup Update

“I would be a bum on the street corner with a tin cup if markets were efficient.” — Warren Buffett

This demonstration portfolio invests the maximum allowable 401(k) in stocks. Total assets reached $1,000,000 in 17 years. Tin Cup has outperformed the S&P 500 since inception (1995) and the annualized total return is now 18.6% vs. 9.9% for the S&P 500.

The total return for the trailing year for Tin Cup is 20.1% versus 13.9% for the Wilshire 5000 (VTSMX).

Tin cup vs vtsmx 20150301

And not to “jinx” the free throw shooter during March Madness … but we can probably start thinking $2,000,000 count down fairly soon.  The second million won’t take nearly as long as the first.

Tracking portfolio for Tin Cup:

Honoring Walter Schloss

This tribute was originally shared in October 2012 edition of Expected Returns … but since we’ll be talking about Walter Schloss and some of his screening preferences — we wanted to remind subscribers and future subscribers about Schloss and his fabulous track record.

This month, we celebrate his approach to investing — including a nod to Warren Buffett (Ben Graham) and Value Line.

Long-time readers are somewhat familiar with the exploits and achievements of the late Walter Schloss (August 28, 1916 – February 19, 2012). This month, we celebrate his approach to investing — including a nod to Warren Buffett (Ben Graham) and Value Line. We’ll briefly explore the drivers behind our focus on the Value Line low total return forecast. Value Line is good enough for Buffett who wrote about the achievements of Walter in his work, The SuperInvestors of Graham-and-Doddsville. In addition to the investing guidelines detailed here, Schloss relied extensively on Value Line. In Buffett’s words, “Schloss practiced investing in a way that any ordinary investor can.”

“Over 39 years of investing had delivered annualized returns of slightly over 20% to the clients of Walter Schloss. He worked entirely from a few publications like Value Line …” — Warren Buffett, “The SuperInvestors of Graham-and-Doddsville”

Value Line Investment Survey Low Total Return Forecast (1999-Present). Was the faith in Value Line held by Walter Schloss misplaced? Why does Manifest Investing focus on the low total return (VL LTR) forecasts at Value Line? We think Walter’s faith was well-founded and that Value Line has the potential to deliver outstanding opportunities as a trusted resource. Since 1999, the average quarterly low total return forecast for the Standard Edition has been 8.5%. The actual quarterly returns have been 8.6%. We think it’s a really good idea that MANIFEST PAR tracks LTR, in general.

Schloss shared the following investing guidelines in a presentation dated March 10, 1994. As we’ve said before, and we’ll be happy to repeat — when an extremely successful investor with a track record that spans more than five decades says, “Listen up. This is what is important.” We listen.

1. “Price is the most important factor to use in relation to value.”

Price is an important component of the return forecast equation. The expectations we build for the companies we study necessarily seeks superior returns. We’re here for the returns. Superior long-term performance depends on the discovery of better returns — based on attractive prices.

2. “Try to establish the value of the company. Remember that a share of stock represents a part of a business and is not just a piece of paper.”

“When you buy a stock, you become an owner of the company. There is just as much reason to exercise care and judgment in being an owner as in becoming a shareholder.” — Benjamin Graham

3. “Use book value as a starting point to try and establish the value of the enterprise. Be sure that debt does not equal 100% of the equity. (Capital and surplus for the common stock).”

The value of any enterprise is a combination of book value and the discounted value of a future stream of cash flows. Remember that capital structure is a management decision — and that we expect our leaders to prudently pursue the optimum blend. That said, a company steeped in debt makes interest payments and in the case of failure, common stock holders are often deserted. It’s quite a challenge for a company to go bankrupt with no debt — prudent advice for beginning investors.

4. “Have patience. Stocks don’t go up immediately.”

Patience. Discipline. Good advice.

5. “Don’t buy on tips or for a quick move. Let the professionals do that, if they can. Don’t sell on bad news.”

Do diligence. Pun intended.

Value Line Forecast Efficacy (1999-Present). This graphic profiles the collective low total return forecasts for the Value Line Investment Survey. The green bars represent quarterly four year forecasts based on the 3-5 year median projected low total return. The blue graph provides the actual results four years later. As shown, the second bar from the left represents the 6.1% low total return forecast on 3/31/2000. The second blue dot from the left on the line graph is the actual returns realized for the trailing four years ending 3/31/2004 — the forecast period. The average forecast and average actual result is 8.5% with periods of optimism and pessimism from 1999-present.

6. “Don’t be afraid to be a loner but be sure that you are correct in your judgment. You can’t be 100% certain but try to look for weaknesses in your thinking.”

What are the threats to your assumptions for growth, profitability and valuation? Have you digested the bulls case vs. the bears case from sources like Morningstar? How about the 5-and-3 influences discussion from sources like the Motley Fool Stock Advisor.

7. “Have the courage of your convictions once you have made a decision.”

Do you believe that our approach to understanding the trends associated with growth, profitability and valuation work? If so, let them work.

8. “Have a philosophy of investment and try to follow it. The above is a way that I’ve found successful.”

We know that our mettle will always be tested. The discipline of building expectations and vigilantly monitoring for threats and opportunities with respect to a few key factors makes it easier to adhere to our convictions and philosophy. It doesn’t hurt to have the peer pressure and source of ideas from a community of like-minded investors, either.

9. “Don’t be in too much of a hurry to sell. If the stock reaches a price that you think is a fair one, then you can sell but often because a stock goes up say 50%, people say sell it and button up your profit. Before selling try to reevaluate the company again. Be aware of the level of the stock market. Are yields low and P-E ratios high? If the stock market historically high. Are people very optimistic etc?”

Buy. Hold. For as long as it makes sense to do so?

We think the analysis should be a CONTINUOUS process. Is your return forecast for any stock below money market rates. Market levels? With respect to market barometers, what is the median return (MIPAR) for all stocks? Does your overall portfolio PAR need bolstering? If not, don’t hurry.

But if it is, don’t wait.

10. “When buying a stock, I find it helpful to buy near the low of the past few years. A stock may go as high as 125 and then decline to 60 and you think it attractive. 3 years before the stock sold at 20 which shows that there is some vulnerability in it.”

NAIC co-founder George Nicholson also liked to monitor trailing period low prices, usually 3-5 years.

Stock prices fluctuate.

The key takeaway is to de-emphasize stock price. Heed the chronicle of return forecasts. Keep your eye on the projected returns.

11. “Try to buy assets at a discount than to buy earnings. Earnings can change dramatically in a short time. Usually assets change slowly. One has to know how much more about a company if one buys earnings.”

Earnings and P/E ratios are the staples of the underperforming rhino playground. Earnings fluctuate. Stock price follows earnings — but the focus should be on long-term trends.

Build an understanding of (1) the top line and growth, (2) the profitability trend and (3) the valuation characteristics — particularly as a function of life cycle and industry-specific tendencies.

We don’t buy earnings streams. We invest and own successful enterprises.

MANIFEST 40: September 2012. Our quarterly summary of the (40) most widely followed stocks by Manifest Investing subscribers. Apple (AAPL) finished its ascent up the list, dislodging Stryker (SYK) from the pole position. The outperformance accuracy of the MANIFEST 40 is 69% with an overall relative return (alpha) of +4.9%.

12. “Listens to suggestions from people you respect. This doesn’t mean you have to accept them. Remember it’s your money and generally it is harder to keep money than to make it. Once you lose a lot of money it is hard to make it back.”

We agree. We respect the achievers all around us. As a case in point, the relative return (alpha) of our quarterly summary of the (40) most widely-followed companies by MANIFEST subscribers (shown here) is +4.9%.

We believe in the wisdom of communities and our experience has been that this is a place where ideas are born.

13. “Try not to let your emotions affect your judgment. Fear and greed are probably the worst emotions to have in connection with the purchase and sale of stocks.”

Incomparable advice. We believe that the comprehension of return forecasts (PAR) based on the major milestone judgments (growth, profitability and valuation) and quality enable patience and discipline.

14. “Remember the word compounding. For example, if you can make 12% a year and reinvest the money back, you will double your money in 6 yrs, taxes excluded. Remember the rule of 72. Your rate of return into 72 will tell you the number of years to double your money.”

Stay invested. That doesn’t mean stay 100% in stocks at all times. It is OK, highly desirable, to hold cash equivalents for as long as it takes to shop. Near market tops, we think selectivity is important and opportunities should become more scarce.

Incremental impact matters. Using the +4.9% relative return of the MANIFEST 40 as an example. $100 invested for 40 years at 8.0% attains a value of $2172. Achieving 12.9% over that same 40 years turns $100 into $12,816. Every percentage point increment matters. Big.

15. “Prefer stocks over bonds. Bonds will limit your gains and inflation will reduce your purchasing power.”

True. But carefully consider balanced investing and asset allocation when you’re ready.

16. “Be careful of leverage. It can go against you.”

Two words. Great Recession. What was so great about it? Speaking of great … Thanks, Walter Schloss, for these 16 nuggets. He showed us that superior performance is possible and told us how to do it.

Tin Cup (May 2013)

Tin Cup Model Portfolio: May 2013

Sell STRA, Buy CHRW. Accumulate QCOM

This demonstration portfolio invests the maximum allowable 401(k) in stocks. In the absence of choices within the portfolio, we shop outside the portfolio using the combination of return forecast and quality rating to identify candidates to be added to the portfolio. Total assets reached $1,000,000 in 17 years.

Tin cup vs vtsmx 20130430

Total assets are $1,092,174 (4/30/13) and the net asset value is $244.09. The model portfolio gained +3.01% during April 2013. The S&P 500 checked in at +1.70% for the month. Tin Cup has generated a 6.1% annualized total return over the trailing five years vs. 5.8% for the S&P 500 for a trailing 5-year relative return of +0.3%.

Tin Cup has outperformed the S&P 500 over the trailing ten years by +0.7% and the annualized total return since 1995 is now 19.0%.

Portfolio Characteristics

With MIPAR at 6.6%, our target for the minimum overall portfolio PAR is at least 11.6%. The overall portfolio PAR is 11.3% on 4/30/2013. Quality and financial strength are sufficient at the current levels of 92.4 (Excellent) and 92%. EPS Stability is 85 for the portfolio. Sales growth is a little “light” at 9.1%.


We challenge the lowest MANIFEST rank (return forecast + quality) holding, Strayer (STRA) and replace it with C.H. Robinson, the Solomon Select featured stock for May — taking advantage of the higher quality and return forecast. Our $1917 and dividends for May are destined for Qualcomm (QCOM) based on the higher MANIFEST rank for the company. Looking at the companies at the top of the sweet spot, there’s a group concentrated at a return forecast of approximately 15%. The nod goes to QCOM on the strength of its quality ranking.

Tin cup digest 201304030