What are your goals?College funds? New or second home? Maintaining or increasing your standard of living in the future? How much do you want to travel each year? Do you want a new boat? How often can you afford a new car? Do you have enough life insurance? Will the surviving spouse have enough income?
The Retirement Lifestyle Book and online Goal Wizard helps you identify and manage your goals.
"Models
beat human forecasters because they
reliably and consistently apply the same criteria time after time.
In almost every instance, it
is the total reliability of application of the model that accounts
for its superior performance."
~James P. O'Shaughnessy
For the stock component of your portfolio, time-tested equity models (see samples below) are utilized. In some cases, exchange-traded index funds which are packaged models are also used. Using models removes your emotions from the process.
As with all investment strategies, past returns do not predict future returns.
Small cap and mid cap models have relatively high standard deviations and therefore can be relatively more volatile than larger company models in volatile market environments. These models are designed to be used 365 days per year throughout all market environments.
If appropriate for your portfolio, we take advantage of company automatic dividend reinvestment programs. Depending upon an individual's situation, a beautifully designed portfolio might be allocated like the pie chart below.
Small Cap Growth Model
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Market capitalization > $200 million.
The limit on market cap is to exclude micro cap companies from our universe, which can be difficult to trade without affecting the micro cap's price.
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Price to sales ratio < 1.5
Price to sales ratio is a value factor which helps find relative bargains. Since earnings are easier for companies to manipulate, sales is used because sales figures are more difficult for companies to manipulate.
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Earnings higher this year than last year
A company's earnings and financial strength often go hand in hand. Companies with growing earnings can get stronger as earnings grow.
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Positive 3- and 6-month relative strength
Historically, relative strength has done a good job picking companies with above-average growth potential.
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Buy the 30 to 50 stocks with the highest 12-month price appreciation. The portfolio is usually rebalanced between every 12 - 24 months.
Mid Cap Growth Model
The mid cap growth model focuses on long-term growth of capital from 30 domestic companies. The Formula prefers domestic, mid cap companies with low prices to sales and other value and/or growth criteria.
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Market capitalization between $1 billion and $10 billion
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Price to sales ratio < 1.50
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Earnings higher this year than last year
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Positive 3- and 6-month relative strength
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Buy the 30 to 50 stocks with the highest 12-month price appreciation. The portfolio is usually rebalanced between every 12 - 18 months.
Dogs of the Dow Strategy Model
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Universe: The 30 companies that make up the Dow Jones Industrials Index.
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Select the top 10 companies with the highest dividend yield.
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Buy equal dollar amounts.
S&P 500 20 Highest Yielding
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Universe: The 500 companies in the S&P 500 Index
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Select the top 20 companies with the highest dividend yield.
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Buy equal dollar amounts.
S&P 500 Ten Value and Growth Model
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Universe: The 500 companies in the S&P 500 Index
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Select the top 250 companies with the largest market cap.
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Select the 125 companies with the lowest price to sales ratio.
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Sort by 1-year price momentum, high to low within the market.
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Buy equal dollar amounts of the top 10 companies.