The recent stock market correction has erased all the gains it once had for the year, and then some. As of Aug. 24, broad market index S&P500 has lost 7.58% year to date. From its peak in April, the index lost about 15%. Many of GuruFocus model portfolios have lost their gains and are now in negative territory. The only portfolio that stands out is Buffet-Munger model portfolio, which gained 0.8% year to date.
Among the four model portfolios that are based on Guru strategies, the Most Broadly Held Portfolio did the best. It is outperforming the market by about 3%. All others are underperforming.
The four model portfolios based on GuruFocus value strategies did better. Buffett-Munger Screener top 25 gained 0.8% year to date. Top 25 Undervalued Predictable Companies lost 6%, bettering the market by 1.6%. Top 25 Historical Low P/S Ratio Companies and Top 25 Historical Low P/B Ratio Companies each lost about 12%, underperforming the market by more than 4%.
The reason why Buffett-Munger portfolio did best is because this portfolio focuses on high quality companies. These companies have long term consistent revenue and earnings growth. While growing, they can maintain or even expand their portfolio margins without incurring additional debt. These stocks stand well in down market, and they are never sold at large discounts. As a result, they do not outperform market dramatically during market run up, but they perform well in fair or overvalued market, which is probably where we are.
This is the performance of Buffett-Munger Portfolio over the last 12 months.
Buffett-Munger Portfolio is the top 25 stocks in "Buffett-Munger Screener". This screener filters for companies with high quality business at undervalued or fair-valued prices:
The Buffett-Munger screener is designed to find Buffett-type investments with extraordinary profitability, consistency and future prospects. Our monthly Buffett-Munger Best Bargains Newsletter picks one stock from the screener. Our in-depth analysis shares with you why Buffett and Munger would like this stock. If you are a premium member, you can download it here. If you are not, we invite you for a 7-day Free Trial.
Among the four model portfolios that are based on Guru strategies, the Most Broadly Held Portfolio did the best. It is outperforming the market by about 3%. All others are underperforming.
The four model portfolios based on GuruFocus value strategies did better. Buffett-Munger Screener top 25 gained 0.8% year to date. Top 25 Undervalued Predictable Companies lost 6%, bettering the market by 1.6%. Top 25 Historical Low P/S Ratio Companies and Top 25 Historical Low P/B Ratio Companies each lost about 12%, underperforming the market by more than 4%.
The reason why Buffett-Munger portfolio did best is because this portfolio focuses on high quality companies. These companies have long term consistent revenue and earnings growth. While growing, they can maintain or even expand their portfolio margins without incurring additional debt. These stocks stand well in down market, and they are never sold at large discounts. As a result, they do not outperform market dramatically during market run up, but they perform well in fair or overvalued market, which is probably where we are.
This is the performance of Buffett-Munger Portfolio over the last 12 months.
Buffett-Munger Portfolio is the top 25 stocks in "Buffett-Munger Screener". This screener filters for companies with high quality business at undervalued or fair-valued prices:
- Companies that have high Predictability Rank, that is, companies that can consistently grow its revenue and earnings.
- Companies that have competitive advantages. It can maintain or even expand its profit margin while growing its business
- Companies that incur little debt while growing business
- Companies that are fair valued or under-valued. We use PEPG as indicator. PEPG is the P/E ratio divided by the average growth rate of EBITDA over the past 5 years.
The Buffett-Munger screener is designed to find Buffett-type investments with extraordinary profitability, consistency and future prospects. Our monthly Buffett-Munger Best Bargains Newsletter picks one stock from the screener. Our in-depth analysis shares with you why Buffett and Munger would like this stock. If you are a premium member, you can download it here. If you are not, we invite you for a 7-day Free Trial.
