Investment Philosophy

Marketbeaters aims to provide its subscribers a clear plan of action to achieve market beating returns.  To do this MarketBeaters adheres to three principals which have allowed it to consistently beat the market. These principals are:

1. Take a long term invested approach
2. Follow a proven and unique valuation model
3. Superior diversification

Principle 1 – Taking a Long Term Approach – This strategy removes much of the emotional aspect of trading stocks.  Long term investors are able to take highs and lows in stride and don’t feel the extreme giddiness associated with bubbles or the traumatic pain during capitulation.  The benefit of removing this stress from our lives alone makes it a worthwhile strategy.  Fortunately there are other pros to this form of investing the most significant of which is a massive amount of cost savings over frequent trading.

The cost savings comes from two areas; low commissions and lower taxes.  Because you are not buying and selling on a daily basis you avoid having to pay your broker for every transaction.  Discount cost brokers offer low commissions today but even these really add up over the years and put a serious dent into profits.  Buy and Hold investors also benefit by lower capital gain tax rates associated with longer term investments.

Principle 2 – Follow a Proven and Unique Valuation Model.  Our unique valuation model has allowed MarketBeaters to consistently beating the S&P since its inception in 2002.  It has helped to identify the best values in terms of profitability and growth.  To learn more about the valuation methodology behind the model check out the sections below:

  • Free Cash Flow – This takes the cash flow analysis a step further in uncovering the secret to long term company profitability.
  • Intrinsic Value – Find out what MarketBeaters and Warren Buffet have in common when it comes to valuing stocks.
  • Fundamental Analysis – Much preferred over Technical Analysis.  See what they are missing by staring at their charts all day.
  • GARP – Stands for Growth at a Reasonable Price.  Learn how to bridge the gap between value investing and growth investing.
  • Bottom Up Analysis – Preferred over Top Down Analysis. Learn why we like to pick great stocks rather than great industries.
  • Model Based Stock Picks – Take the emotion out of stock picking by leaving the job to a valuation model.
  • Principle 3 – Superior Diversification Diversification is essential to the individual investor but difficult to implement.  Understanding if you are fully diversified alone is a hard enough task but implementing a well thought out diversified investment plan can be very costly in terms of commissions and management fees.

  • Low cost Index ETF’s are a great way to achieve diversification in stocks. You don’t need exotic indexing strategies either. Such attempts to out-index the S&P 500 by experts such as Jeremy Siegel and Robert Arnott have underperformed since their inception by several percentage points.
  • Learn about the best low cost alternatives that provide superior diversification across industries and geographies.