Using the Value Stock Buy List Program Productively - If All Else Fails... AND Expectations

If you didn't have questions, the "Selection Universe" itself, and the refined and filtered "Value Stock Watchlist" would be just another stock picking gadget, easy to slip into like a well worn pair of loafers. This is not your ordinary list of hyped up "story" stocks. It is the result of applying a time tested set of selection rules, concepts, and experiences, to a pre-selected group of securities that are of a known level of quality i. e., Investment Grade only. Here's a fairly comprehensive Question and Answer [more accurately, a Question & Discussion] list that should help you to use the Value Stock Buy List Program productively. Remember, the program is designed to follow the investment process defined and explained in "The Brainwashing of the American Investor". The more times you read it, the better your performance will be. Steve Selengut has been kind enough to answer some questions about his methodology. Here are my questions (and some that he has fielded directly). with his responses. (If you have additional questions, please send them to: brainwashed@optonline.net.)

If All Else Fails, Please Read the Instructions...again:

Do you have a one page summary of the rules for operating within your methodology?

• Having the rules on one page, as you put it, would be a big (but convenient) mistake. There are some rules and many guidelines, I've found that many people take an "engineering" approach to the methods I describe. That's not necessary or recommended. These are decision making thoughts and approaches to be implemented as things happen during the trading day and for the overall long term goals of the portfolio.
• It's more important to understand the concepts and the rationale for the guidelines than to commit the guidelines to memory.

I’m really interested in starting a portfolio based on the ideas outlined in "The Brainwashing of the American Investor" and I’d like to know the risk-side of the equation. What’s the average % draw down for a typical portfolio?

• I don't pay much attention to Market Value "draw down", I expect it. The larger it gets, the more opportunities either for "buy more" or for new portfolio additions there will be. This is a basic principle: you must learn to love corrections almost as much as you love rallies... they're just not as much fun.

Expectations:

Historically speaking, how often would you expect to be right?

• Just like any other decision-making methodology (and that's really what we are talking about here), there are going to be some mistakes. The better the decision-making, the more successful the enterprise. I've been managing other people's money this way since 1979, and the vast majority of clients have 60% or more of their assets in Equities. I think that speaks to the effectiveness of the methodology.
• My expectation is that I will make money on more than 90% of the stocks I choose, that I will be able to take a profit in an average time frame of well under six months, and that the average net/net gain will be within a % or two of my 10 % target. This is on an un-annualized basis and without considering dividends.
• I would guess that, for what ever reason, most individual investors make money (meaning realized capital gains) on less than 50% of their selections.
• This is the value of the Value Stock Buy List Program. It provides a realistic and easy to use decision-making framework that provides profit making opportunities in a relatively safe environment... most of the time. Very valuable indeed.