September 24, 2017
 
 
 

How USIR Makes Money for Investors

USIR’s Investment Strategy:

Blending portfolio concentration with diversity to maximize gains and minimize risk

Just a dozen or so stocks of leadership companies spread selectively over the fastest-growing sectors have consistently out-gained the market since 1985 and preserved USIR subscribers’ capital in downturns.

Portfolio concentration lets stock picking shine, while the spreading of holdings across carefully selected growth cestors controls risk with no dilution from over-diversification.

Those are the essentials of US Investment Report Editor Stephen Quickel’s investment strategy.

Read on to see how Steve describes his approach in his own words. Like US Investment Report, it is not long-winded but to-the-point and easy to follow.

How US Investment Report Makes Money for Investors

"Since I started US Investment Report in 1985 our greatest strength has been our stock picking. We seek stocks that can appreciate at least 20%, and have found thousands of them--many that did doubled or tripled.

"Years as a financial journalist taught me how size up public companies and their managers, and gave me access to invaluable information sources. That's why we have consistently selected stocks that out-perform the market averages.

"Coming up with winning stocks is the starting point. Here is how we package them into three successful model portfolios tailored to varied investor objectives and risk levels."

Concentration to Maximize Gains

To maximize the rewards of strong stock picking, USIR’s strategy is to concentrate the model portfolios in a relatively small number of leading stocks and sectors.

Mutual funds that are invested in scores of stocks dilute their performance by owning too many. But I am confident enough of my stock picking ability to concentrate my portfolios in just 15 or so stocks from a limited number rapid-growth industry groups. When these stocks rise rapidly their gains are not watered down by scores of lesser stocks.

Stock Selection is the Key

Concentration puts a premium on maintaining superior stock selection. USIR’s ability to do so is evident from my long-term track record. Since the end of 1995, including the recent bear market, the USIR concentrated portfolios have achieved the following gains:

 

From October 2000 market bottom
to present

USIR Conservative Growth Portfolio

+647%

USIR Growth Leaders Portfolio

+1655%

USIR Emerging Growth Portfolio

+2286%

Dow Jones Industrial Average

+86%

Standard & Poor’s 500

+88%

Nasdaq Composite

+185%

See for yourself. Click here for a detailed report on the USIR track record.

Effective Diversity to Minimize Risk

Concentration increases risk, of course. To reduce that risk, I spread my portfolios into leading stocks in 8 to 12 of the very best growth sectors I can find. I call this “effective diversification” as opposed to the excessive diversity of mutual fund portfolios.

But the stocks and sectors must be reasonably priced. I avoid rapid growth sectors where stocks have become over-priced and the downside risk exceeds upside potential. But I also avoid sectors with lower price valuations where potential sales and earnings growth appears merely average. These stocks, sometimes mistakenly called value stocks, tend to under-perform the market and sap portfolio results.

Stop-Loss Limits to Preserve Capital

Preserving capital is just as important as ringing up large capital gains. USIR has successfully protected subscribers’ capital over the years by setting stop-loss limits on every portfolio stock, and raising them as prices rise.

Time after time, my stops have spared subscribers from serious losses when a stock or a sector or the whole market suddenly dips. Stops get us all out automatically, at a preset loss limit, before a 7% or 8% dip turns into a 20% or 30% disaster. If a stock recovers quickly, we can buy it back and ride it to the gain we had targeted. If it keeps going down, we have preserved the capital to buy other promising stocks.

The stops work. They’ve been a major tool in compiling USIR’s long-term track record. Investors who have ridden favorite stocks down 10%, 20% or more in market downturns, hoping they would somehow head up again, can appreciate the value of loss limits that might have gotten them out early with most of their capital intact.

USIR’s Strategy in a Nutshell

The essence of the time-tested USIR investment strategy:

  • Concentration in small portfolios of reasonably priced leadership stocks.
  • Effective diversification in a select group of rapid-growth sectors.
  • Avoidance of large, overly diverse portfolios that dilute performance.
  • Stop-loss limits on every portfolio position, raised as prices rise.

See for yourself. Click here for a trial subscription to US Investment Report.

 


© 2012 US Investment Report