Primary Stock Portfolio
Overview (Spin-Off Stocks)
(Additional
Performance Data)
This is our flagship portfolio
and receives the highest recommendation of any of our portfolios.
It consists of spin-off stocks. Spin-offs are defined as existing
subsidiaries or divisions that are separated from the parent
company that then become independent publicly-traded companies.
On average, spin-off stocks
have outperformed the market by a wide margin, but timing
is extremely crucial and only certain types of spinoffs outperform
the market. For information about why spin-off stocks tend
to beat the rest of the stock market, go here.
Other than their performance,
the best thing about spin-off stocks is that they aren't plentiful
enough or large enough to make it worthwhile for mutual funds,
hedge funds, and pension funds to join the party. But there
are more than enough spin-offs for individual investors to
construct a portfolio.
This portfolio generally outperforms
all of our portfolios, including the High-Dividend
Blue Chip Stock Portfolio. However, because stocks
in the Primary Stock Portfolio tend to be smaller, they do
carry extra risk. Stocks in most of our other portfolios
tend to be larger and less volatile.
Cautious stock investors will
likely want to have a portfolio comprised of both large and
small stocks. Extremely cautious investors may wish to opt
only for larger stocks and mutual funds that invest only in
large companies. Aggressive investors may want to invest mostly
in small stocks, realizing that to benefit from the higher
growth potential of these smaller stocks, they have to take
on additional risk.
Ideally, an investor will
invest an equal amount into each of these growth stocks (for
suggestions on how to time your initial investment in this
portfolio, go here).
Stocks in this portfolio are held for an average of nearly
three years. We recommend investing at least
$100 into each stock. If you use a discount broker that charges
$5 or less per trade, your commissions will be less than what
many full-service brokers charge for one trade (for a list
of discount brokers that we recommend, go here).
For those that can't afford
to invest in all of the stocks, we recommend investing in
the stocks that have most recently been recommended (i.e.
the stocks at the top of the list on the next page) or starting
with one of the mutual fund portfolios (available
here).
Remember, the more stocks
and industries you invest in, the greater your diversification
and safety. So beware having your whole portfolio invested
in only a handful of stocks. However, if your goal is to beat
the market, you have to be careful not to take diversification
too far. If you took diversification to the extreme, you would
buy all of the stocks available in the stock markets. You
would then obviously achieve returns that would match the
market, thereby negating the goal of beating the market. We
attempt to design this portfolio to have enough stocks and
industries to provide the optimum amount of diversification
to earn high returns while providing adequate safety for long-term
investors.
As always, keep in mind that
investing in individual stocks or mutual funds involves risk.
Past performance is never a guarantee of future performance.
Performance
of Our Primary Stock Portfolio |
|
Gain
Since Inception1
|
| Portfolio Gain: |
2,007.1%
(31.9%
per year) |
| S&P 500: |
-6.9% (-0.7%
per year) |
|
(Top of Page)
|
