This the editorial of our monthly Shareholder Yield Letter published on 2023-09-06. Sign up here to get it in your inbox the first Tuesday of every month.
More information about the newsletter can be found here: The best large cap investment strategy ever
You may remember earlier this year we started a new newsletter based on the best large cap investment strategy we ever tested.
We just sent out the latest issue and (the same as I mentioned last month) the high-quality large cap companies the strategy comes up keeps on surprising me.
Performance since May has not been bad at all, up +3.1% on average over 20 companies!
Even if you ignore average share buybacks yield of 6% the portfolio’s average dividend yield is 5%. That’s interesting, perhaps something for your income portfolio?
I can’t give you the company names recommended in this issue (that would not be fair to subscribers), but I can give you a rough indication, so here it is.
Four new recommendations this month as the MSCI World index is above its 200-day simple moving average.
The first is a UK-based financial services provider with a shareholder yield of 10.5%, share buybacks of 5.9%, and it pays a dividend of 4.6%.
The second is a Switzerland-based producer and marketer of natural resources with a shareholder yield of 12.8%, share buybacks of 4.9%, and a dividend yield of 7.9%.
The third is a UK-based public services provider with a shareholder yield of 10.0%, share buybacks of 8.0%, and a dividend yield of 2.0%.
The fourth and last recommendation is a Norway-based telecommunications company with a shareholder yield of 9.3%, share buybacks of 1.0%, and a dividend yield of 8.2%.
Must I buy all ideas?
The following is a question from a subscriber and is something you may have asked yourself as well:
“Must I buy all the companies recommended in the newsletter?”
The simple answer in NO, you should never buy anything if you feel uncomfortable doing so, or if it is a company or investment, you do not understand.
Buy all the ideas
However, if you understand and feel comfortable with the newsletter’s investment strategy and the company it’s a great idea to buy all the recommended investment ideas.
Let me explain.
We all have our biases
We all have our like or dislike (biases) and with investing it is no different. The same as me I am sure you also have industries and companies you like investing in and others you avoid.
For example, I don’t like investing in gold mining companies as I lost money on them when I started investing (more than 35 years ago!).
And I like investing in software and asset management companies because the businesses scale so well (as sales increase costs remain relatively unchanged which means profits increase substantially).
The same as these I am sure you have your own preferences.
Biases don’t help you
The thing is these biases don’t help us, in fact, they lower our returns. For irrational reasons, they keep us out of investments that can give us high returns.
No-one knows the future so excluding some investment ideas because of a personal bias makes no sense.
Getting back to the newsletter.
The newsletter’s investment model carefully selects investment ideas with a high probability of giving you great returns.
Not all ideas will go up a lot
It is certain that not all the ideas will give you great returns. Some will go up a lot, others not much and some will fall.
The problem is neither you nor I (or anyone else) know what investments will go up the most and what will fall.
Only 2% in any one idea and stop loss system
Because not all the newsletter’s investment ideas will do well (but the investment strategy will), is why we built the newsletter’s investment strategy to help you do exactly this.
We recommend that you don’t invest more than 2% in any one idea.
This keeps your losses from any one company low while making sure you get all the benefit from the investment strategy.
It is also why the newsletter follows a strict trailing stop loss system. This lets you sell losers fast and let winners run.
In summary – your simplest, easiest, and most profitable strategy
A lot of research of quantitative decision-making models that work (such as the one used by the newsletter), have shown that the best results are achieved when you strictly follow the model.
Any filtering you or I do will only lead to lower returns.
And because neither you nor I know the future, and our investment preferences (biases) lead us in the wrong direction the simplest, easiest, and highest return decision you make is invest (not more than 2% of your portfolio) in all (or as many of) the companies recommended in the newsletter.