Do Less, Make More Do Less, Retire Richer

thinkinglonger

A very long term, momentum-based strategy offering recommended stock portfolios for tax free/deferred accounts designed to beat the S&P 500 (and other) indexes upon which they are based.

Our portfolio recommendations and dashboards will be provided FREE to our initial subscribers.

METRICS OF
SUCCESS

Every investor compares his or her performance to one or more indexes. It is the standard metric of investment success.

Core
Insight

Our core insight is that every index is a weighted average of stocks; some pull the index up, some pull the index down. To do better than the index over extended periods of time, purchase only those stocks with superior price performance over extended periods of time.

Identified
methodology

We have identified a methodology for achieving investment success over extended periods of time when compared to various indexes.

Recommended
Portfolios

We only recommend stocks that have a very long track record of superior price performance compared to various indexes and selling stocks that fall beneath our ownership threshold.

Index beating performance

We have a back-tested history of index-beating performance from 1994 through 2019 compared to the S&P 500 Index. For other indexes, we back-tested performance based on available data (often shorter in duration that for the S&P 500 Index) with similar results.

RISKY
BUSINESS

There is always risk in investing; there can never be guarantees. In our view, long-term price performance is a good guide to purchasing and selling. As a subscriber, you will have access to our back-tested histories and you can decide for yourself.

METRICS OF
SUCCESS

Every investor compares his or her performance to one or more indexes. It is the standard metric of investment success.

Core
Insight

Our core insight is that every index is a weighted average of stocks; some pull the index up, some pull the index down. To do better than the index over extended periods of time, purchase only those stocks with superior price performance over extended periods of time.

Identified
methodology

We have identified a methodology for achieving investment success over extended periods of time when compared to various indexes.

Recommended
Portfolios

We only recommend stocks that have a very long track record of superior price performance compared to various indexes and selling stocks that fall beneath our ownership threshold.

Index beating performance

We have a back-tested history of index-beating performance from 1994 through 2019 compared to the S&P 500 Index. For other indexes, we back-tested performance based on available data (often shorter in duration that for the S&P500 Index) with similar results.

RISKY
BUSINESS

There is always risk in investing; there can never be guarantees. In our view, long-term price performance is a good guide to purchasing and selling. As a subscriber, you will have access to our back-tested histories and you can decide for yourself.

A ONE TIME INVESTMENT OF $25,000 THROUGH 12/31/2019

Dollar Value - Strategy
Dollar Value - S&P 500 Index

Over time, the value of each annual investment eventually outperforms an equivalent annual investment in the S&P 500 Index.

TWO KEY STEPS

Invest in the best performing stocks of a particular index each year measured initially by reference to spectacular price performance over the preceding ten years.
Invest through an IRA, Roth or other tax- preferred account so that profits can be reinvested tax-free over extended periods of time.
But, who am I to be giving you advice?

LOOK WHO’S TALKING

My name is Andrew Ellis. I am 67 years old and a retired lawyer. I am not an investment professional. I’ve never worked for a financial institution and I don’t manage anyone else’s money.

I wanted better returns than I could get with a S&P 500 Index fund but I didn’t want to pay 1% or more of my total assets for active management, especially active management that didn’t share the risk of loss in a meaningful way. I was stuck and unsure of how to achieve my goals.

So, I decided to spend time learning from others. Let me explain.

Ask Warren Buffett and Charlie Munger

I’m a huge fan of Warren Buffett and his partner, Charlie Munger (and I hope that I get to meet them one day). I think that Warren Buffett is probably one of the smartest men in the world and, luckily for us, he has spent a lifetime sharing that wisdom.

And Peter Lynch also had some important wisdom to share:

“I think you have to learn that there’s a company behind every stock and there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.”

If it isn't obvious, Warren. Buffett, Charlie Munger and Peter Lynch are not associated with ThinkingLonger.

Warren Buffett

“The stock market is a device for transferring money from the impatient to the patient.”

“Wall Street makes its money on activity, you make your money on inactivity.”

“The rich invest in time; the poor invest in money.”

Charlie Munger

“The big money is not in the buying and the selling, but in the waiting.”

“You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long time.”

“A great business at a fair price is superior to a fair business at a great price”

Charlie Munger

“The big money is not in the buying and the selling, but in the waiting.”

“You don’t have to be brilliant, only a little it wiser than the other guys, on average, for a long time.”

“A great business at a fair price is superior to a fair business at a great price”

A New Kind of “Winner”

My search led me to seek a new kind of ideal investment -- a new kind of “winner.” What companies matched up with Peter Lynch’s assessment? Perhaps, a company with a ten year history of at least 20%+ ANNUAL price appreciation might fall within the definition of a company that was “doing well” and/or had grown from “small to large.”

To lock in profits, could I sell these stocks when their 10 year annual price appreciation was not greater than the 10 year price appreciation of the S&P 500 Index by some predetermined amount?

To make my investment decisions easier, I would exclude certain stocks (those vulnerable to domestic and international political events or subject to governmental rate restrictions) and certain cyclicals (definitionally, a group of stocks whose performance was not consistent).

There was at least one major downside to this approach. By waiting ten years for a company to prove itself, I was likely to miss huge growth in that company’s stock price. But, I decided to sacrifice that growth. Even if the company’s stock price did not increase at the same rate after the measuring period, the long-term trend gave me a margin of safety and I could monitor the trend after my initial purchase. Would you like to see an illustration?

Back-testing in the Real World

A picture is worth a thousand words. So, let’s take a look.
Based on price performance between 2003 and 2012 (ten years), we identified 24 stocks that qualified for purchase in our system (i.e., as of January 1, 2013 -- the 2013 Vintage). A hypothetical portfolio of those stocks was created and performance was then tracked over six years (from 1/1/2013 to 12/31/19) (assuming an initial investment of $25,000, together with annual sales and new purchases over that period).

Dollar Value - Strategy
Dollar Value - S&P 500 Index
A ONE-TIME INVESTMENT OF $25,000 AS OF 1/1/2013 THROUGH 12/31/19
Vintage Date Dollar Value - Strategy S&P 500 Index ($ Value)
2013 1/1/2013 $25,000 $25,000
2013 1/1/2014 $37,029 $33,098
2013 1/1/2015 $42,922 $37,629
2013 1/1/2016 $49,231 $38,148
2013 1/1/2017 $50,156 $42,710
2013 1/1/2018 $64,042 $52,034
2013 1/1/2019 $68,596 $49,755
2013 12/31/2019 $91,633 $65,423

The 2013 Vintage beat the S&P 500 Index through December 31, 2019 over the same period by 39%. The dollar value of the 2013 Vintage increased from $25,000 to $91,000 – a 265% increase.

FYI, we also developed a set of recommendations for a 2020 Vintage. As of December 31st, 2020, the 2020 Vintage is up 31.8% from January 1, 2020; the S&P 500 Index is up by 18.4%. All prior Vintages (1995 – 2019) were up in 2020 between 31.8% and 40.9%, running well ahead of their S&P 500 Index counter-parts for 2020.

We’re In Development

We don’t want to waste your time or our money on website/app development unless we think that there is interest in the investor community.

Our service will be a dashboard that presents the portfolios that we recommend: a select group of stocks in each index and real-time presentation of the aggregate value of our recommended portfolios as well as each position in each portfolio. We also know that when we launch, we will have to provide access to the results of our back-testing for each index and the portfolios that our system previously generated. (This is the work that we’ve already done.)

For the moment, our first objective is to talk to you -- active investors -- and determine if we can provide a compliant service that you would find useful.

If you’re willing to share your thoughts and opinions, please complete the form below. We promise not to bother you with too many emails and you can always opt-out altogether. We won’t sell your email address or otherwise share it with anyone. Our current plan is to offer a discount to those who join our community as thinkers and contributors.

If you want us to tell you more about our purchase and sale rules, just indicate that on the form below. We will send you something short and it will be in Plain English.

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