You don’t have to be a billionaire to pick stocks better than the world’s greatest investors.
All you need is a tried and tested strategy… and 30 minutes of your time.
A few weeks ago, we told you about such a system. We call it the PBD Elite 25.
Over the past 20 years, this strategy has beaten many of the world’s greatest investors… including guys like Carl Icahn, David Einhorn, and even Warren Buffett.
Today, we’re updating our list of the PBD Elite 25… And we’ll show you how in as little as 30 minutes, you can start beating the best stock pickers in the business…
Beating the Best
Last month, we published our first edition of the Elite 25. These companies crushed the S&P 500 over the past 20 years. Check out the chart below…
The PBD Elite returned about 21% per year compared to just 7% for the S&P. Over 20 years, that’s the difference between making three times your money and 50 times your money.
We want you to ride the red line. Here’s a quick refresher of how to do that.
First, you find all the companies that are:
- Earning a return on invested capital (ROIC) over 20% per year
- Growing revenue, free cash flow, and profit margins
Then you buy the cheapest 25 companies that match those criteria.
At the beginning of each month, you’ll go through the process again. Sell any companies that dropped out of the cheapest 25. Buy any that joined.
We call this “rebalancing.”
You don’t need to do any further research, read company reports, or learn about new technologies. You don’t need to spend hours keeping up on current updates or listening to conference calls.
Just do what the system says.
So let’s see how our first edition of the Elite 25 performed last month…
Our February Performance Report
In February, the 25 stocks we held lost an average of 1%. This overall market was up 3.7% for the month.
That’s okay. There will be occasional underperformance. We just need to stay focused on the long term (remember the red line on the chart above).
Here’s the updated list for March, listed in alphabetical order (buys shaded in green, sells shaded in yellow):
|Company Name||Ticker||Industry||System Says|
|American Outdoor Brands||AOBC||Retail/Guns||Hold|
|American Public Education Inc.||APEI||For-Profit Education||Sell|
|Brunswick Corp.||BC||Recreational Goods||Hold|
|Caesarstone Ltd.||CSTE||Home Improvement||Sell|
|HNI Corp.||HNI||Home & Office Furnishings||Sell|
|L Brands Inc.||LB||Retail||Hold|
|Lear Corp.||LEA||Auto Parts||Hold|
|Meridian Bioscience||VIVO||Pharmaceutical Equipment||Hold|
|Michaels Companies Inc.||MIK||Retail||Hold|
|National CineMedia Inc.||NCMI||Advertising in Movie Theaters||Hold|
|Natural Health Trends Corp.||NHTC||Natural Drugs||Hold|
|Nautilus Inc.||NLS||Sporting Goods||Hold|
|Patrick Industries||PATK||Building Materials||Sell|
|Qiwi Plc||QIWI||Payment Processor||Hold|
|Robert Half International||RHI||Professional Services||Hold|
|S&P Global Inc.||SPGI||Investment Information||Buy|
|Sally Beauty Holdings||SBH||Retail||Sell|
|Stamps.com||STMP||Digital Postage Stamps||Buy|
|USANA Health Sciences||USNA||Biotech||Sell|
|Verisign Inc.||VRSN||Internet Services||Hold|
We replaced seven companies this month. That’s not normal. The system generally replaces three companies per month. But we’re in earnings season… and that usually brings about a few more changes.
For example, Caesarstone (CSTE) became expensive after reporting earnings.
The extra work—about 30 minutes a month to read our update and place your trades—is worth it, though.
What 30 Minutes per Month Can Do
If you invested $100,000 into the S&P 500 20 years ago, you’d have about $420,000 today.
But if you put that same $100,000 in the Elite 25 (in a tax-deferred account), you would have more than $5 million right now.
The important thing to remember is that this is a long-term strategy. There will be good months and bad months… like February.
But over the long haul, the good will far outnumber the bad. And in the end, it could mean an extra $4.5 million in your pocket. And all you need to do is set aside 30 minutes every month to follow our system.
So stay the course… You’ll be glad you did.
Nick Rokke, CFA
Analyst, The Palm Beach Daily
Editor’s Note: Are you following the Elite 25? Does it take you less than 30 minutes to update your list? Let us know how you’re doing right here.
We told you last month that it’s about to become a stock picker’s market.
Too many investors are piling into passive investments like index funds and exchange-traded funds (ETFs).
Over the past few years, passive funds have been great investments as the market moved higher. But as the rally gets long in the tooth, active investing will perform better.
We’re starting to see this right now…
The Global X Guru Index ETF (GURU) tracks holdings of institutional investors and hedge funds.
As you can see in the chart below, GURU has outperformed the popular S&P 500 ETF (SPY) by 1.5% so far in 2017…
Be cautious of passive index funds. It’s now a stock picker’s market. Select your investments carefully.
2017 Will Be the Year This Technology Really Takes Off
Apple CEO Tim Cook recently announced augmented reality (AR) could be bigger than the smartphone. That’s big news coming from the man behind the iPhone.
Cook says Apple is embracing AR… And the next-generation iPhone is expected to feature the technology.
Palm Beach Letter subscribers wouldn’t be surprised by the announcement. PBL editor Teeka “Big T” Tiwari received a tip from one of his insiders that Apple was planning to add augmented reality to the iPhone before Cook even went public with the news.
Apple is the company that developed the smartphone sector and has the most to lose from mixed reality. That’s why it has been on a mixed reality hiring binge.
Worrying Signs: The cyclically adjusted price-to-earnings (CAPE) ratio is a widely used metric to assess future returns in the market. And it’s sending some ominous signs. For just the second time since 1871, the CAPE ratio reached 30. The last two times it reached those levels (in 1929 and 2000), the stock market crashed. Does this mean another crash is on the way? According to Bloomberg, the data set has a sample size of just two previous occasions. That’s far too few to draw conclusions about what is going to happen this time around. Meanwhile, we say be cautious and very selective when buying stocks. Or you could just let us do the work for you and follow our Elite 25.
Digital Gold: At the Daily, we’ve been fans of cryptocurrencies. We’re also supporters of gold-backed currencies. Now comes word of the world’s first cryptocurrency backed by gold. The new currency is called OZcoinGold (OzGLD). It’s issued at 100 coins per ounce of 24-karat gold. So each ounce of gold backs 100 OzGLD. The company claims OzGLD retains the benefits of both cryptocurrencies and gold without all the negatives. We’ll continue to monitor the currency’s launch.
The Truth About Trump: “The truth that many people long to hear is that Donald J. Trump is sweating over the Deep State with a hammer and tongs. They want to see him pound it… bend it… break it apart… and put it back together again. Then, pointing to record-high stock prices, they say: ‘See… he must be doing a good job.’” Longtime PBRG friend Bill Bonner says, so far, there is no sign of either hammer or tongs in the Trump program. Read why Bill think the Deep State is still safe under Trump right here.