A DIY Guide on How to Invest With Value Strategies

You have seen our “Value Strategies” model portfolios consistently outperform the market, and you are thinking of investing using them as a basis. Here is a step-by-step guide on how to invest in these portfolios with real money, and achieve similar results.

Three easy steps:

  • If you are not willing to accept more volatility and go with the Buffett-Munger Screener, please go to: /BuffettMunger.php. Otherwise, go to the current list of the Companies with Historical Low Price/Sales. The top 25 stocks from either list are the ones you will invest in. (GuruFocus Premium Membership Required)
  • Invest 4% of the fund into each of the top 25 stocks.
  • Repeat this once every 12 months.

Who Should Invest with Value Strategies?

If you believe that over the long term, undervalued stocks will outperform the market average as they have in the past, and you want to reduce the emotional part of investing, you may consider investing with Value Strategies.

If you are already investing in index funds, you should consider instead investing those funds using Value Strategies. Compared to those offered by an index fund, you will achieve higher returns investing with Value Strategies. You pay absolutely no management fees, which can consume at least 0.2% of a mutual or index fund’s portfolio every year.

Compared with actively managed mutual funds, investing with Value Strategies has a track record of outperformance over the 3-5 year timeframe. You pay absolutely none of the management fees that come with the actively managed mutual funds. You manage your own capital gains tax approach, to maximize your tax efficiency.

The only cost to you is GuruFocus Premium Membership fee of $449 a year, which, of course, includes a wealth of additional features, tools and information. (This is the link for the Free Trial)

Decide Which Strategies to Invest with.

The Value Strategies portfolios which yield the best performance are the “Buffett-Munger Screener Portfolio” and the “Historical Low Price/Sales Portfolio”. The “Buffett-Munger Screener Portfolio” is more stable than the “Historical Low Price/Sales Portfolio”.

Decide How Many Stocks to Hold

Since we want to concentrate on the most undervalued companies, we do not want to over-diversify. The ideal portfolio should be diversified enough to reduce the risk associated with individual companies, but not so much that its’ performance tends towards the average. We choose to have 25 stocks in the portfolio.

Find out the Current List of Stocks

If you are willing to accept more volatility and decide to go with the Buffett-Munger Screener, please navigate to: /BuffettMunger.php. Otherwise, go to the current list of the Companies with Historical Low Price/Sales. The top 25 stocks from either list are the ones in which you will invest.

Once you are ready, put 4% of your portfolio’s money into each of the 25 stocks. If you have new funds come in, always distribute it evenly among the stocks, with 4% going to each..


Although the Value Strategies list is updated every day, the lists themselves do not change very often. We recommend that you rebalance your portfolio once per year. It is also more tax efficient to hold your investment in any given stock for longer than 12 months.

Sell the losers before the end of the twelve months and sell the winners after the end of the twelve months. In this way you will pay long-term capital gain tax instead of the higher short-term rate.

We wish you success!



These are some FAQs we received from interested users:

1. How many stocks should I invest in GuruFocus Value Stratgies?

We recommend 25 stocks in the portfolio. Twenty-five stocks are reasonably diversified to mitigate business risk of individual stocks, but enough to take advantage of the systematic outperformance of the strategies.

2. What is the recommended minimum investment in USD for Buffet-Munger portfolio?

There is no actual minimum amount required. But we recommend that the portfolio needs to be large enough so that trading cost is less than 1% of the total portfolio.

3. How often are model portfolios rebalanced?

The portfolio is rebalanced once a year, at the beginning of the new year.

4. How much is the portfolio turnover historically?

Historically the portfolio turnover is about 50% per year.

5. The portfolio has been in place for several years. Can I start now?

You can start any time. The way to get started is to buy the top-ranked 25 stocks in the Value Strategies. The positions are equal weighted.

6. Can we apply this strategy to both tax-deferred and taxable accounts? Although it seems to better suit taxable accounts, it is relatively tax efficient as well.

It works for both tax-deferred and taxable accounts. In the taxable accounts, you can sell the losers that are ranked out before the year-end to take the tax loss.

7. How do I adjust weightings of the positions at rebalance?

Don’t trade any of the stocks that are still in the portfolio during rebalance. Sell those that are ranked out. Buy the new stocks equal weighted with the fund that are from the sales.

8. How do I add new money?

Buy the 25 stocks that are in the portfolio and keep the weighting unchanged.

9. Do we need to check for these signals constantly?

No. You are buying good companies at reasonable prices. You can sleep well.

10. If the market crashes, will GuruFocus Value Strategies lose money, too?

Very likely. But we believe that GuruFocus Value Strategies will hold better than the market.

11. Will GuruFocus Value Strategy outperform the market every year?

Unlikely. We don’t believe that any strategy can outperform the market every year. But we do believe that these value strategies will outperform significantly over time. The portfolio carries a smaller risk than the general stock market.

These Value Strategies tend to outperform much more when the market is undervalued.

12. Do people at GuruFocus invest in these model portfolios?

Yes. GuruFocus founder Dr. Charlie Tian puts his own money in Buffett-Munger Strategy. If you want to know how Charlie thinks, read A Message from Charlie.

Again if you want to invest with GuruFocus Value Strategy, now it is the best time. We are getting ready for the rebalance of the portfolios. An email alert will be sent to you on the day of the rebalance.

GuruFocus Premium Membership is required to gain access these strategies. If you are not a Premium Member, we invite you for a 7-day Free Trial.

Portfolio Performances:

(All Numbers do not include dividends, updated daily)
YearS&P 500Buffett-Munger Screener top 25Outperformance

(All Numbers do not include dividends, updated daily)
YearS&P 500Top 25 Historical Low P/S Ratio CompaniesOutperformance

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