In recent five years, the S&P 500 gained 24.71% in 2009, 11.65% in 2010, 0% in 2011, 12.1% in 2012 and 28.76% until now. The market performance looks good. Could investors make more money by investing in GuruFocus Model Portfolios? It is time to check the performances. The following are the details of the performances of the four value strategies:
Value Strategies (Long):
* All numbers do not include dividends.
Up to now, except for the model portfolio of Top 25 Undervalued Predictable Companies, the other three model portfolios all outperformed the S&P500. We remember in Nov 6, 2013, the portfolio of Top 25 Undervalued Predictable Companies underperformed the S&P 500 by 3.84%. Now it only underperformed the S&P 500 by 2.15%. Since inception of each model portfolio, they all outperformed the market.
Both of the portfolios of Buffett-Munger Screener Top 25 and Top 25 Undervalued Predictable Companieswere started in January 2009. In 2009 and 2010, Buffett-Munger Screener outperformed the market by around 4% and 8%. In 2011, the market was even, yet Buffett-Munger Screener outperformed the market by 6.01%. In 2012, Buffett-Munger Screener was about even with the S&P 500. In 2013, it outperformed the market by 1.29%. From above performance figure, GuruFocus can be proud to say that Buffett-Munger Screener Top 25 outperformed the market almost every year except in 2012. Even the only underperformance was small compared to the stock market’s performance. Regarding to Top 25 Undervalued Predictable Companies, the portfolio gained 55.72% and 20.17% respectively in 2009 and 2010, almost double the return of the S&P 500 in that period. However, from 2011 up till now, the portfolio of Top 25 Undervalued Predictable Companies underperformed the market. In all, since inception, Buffett-Munger Screener Top 25 outperformed the S&P 500 by 35.11%. The portfolio of Top 25 Undervalued Predictable Companies outperformed the market by 37.13%, even higher than the Buffett-Munger Screener.
Without any doubt, Warren Buffett’s investment strategy is the most successful ever. He believes that to buy companies with “predictable and proven” earnings can be very profitable in stock market investing. Based on his strategy, GuruFocus develops the "Buffett-Munger Screener", which helps to find companies with high quality business at undervalued or fair-valued prices:
The other two model portfolios are for predictable companies that are traded at historical low P/S and historical low P/B ratios, respectively. Both of these two portfolios outperformed the market average in 2010, 2012, and 2013, but about even with the market in 2011. In all, since inception, historical low P/S outperformed the S&P 500 by 14.84%. The portfolio of historical low P/B ratios outperformed the S&P 500 by 16.56%. Please go to historical low P/S ratios and historical low P/B ratios for the complete stock lists.
All the portfolios are rebalanced once a year; therefore, no portfolio changes will be made at this time.
From above analysis, we can see for a single year, the performance of our portfolios may not beat the market, yet in the long run, it is profitable to invest using our model portfolios.
These are the summaries of the four value strategies mentioned above:
1. Buffett-Munger screener: Invests in predictable companies that have low debt, consistent profit margin, and traded at low P/E to growth ratios.
2. Undervalued Predictable Companies: Invests in predictable companies that are undervalued based on DCF model.
3. Historical low P/S: Companies that have high predictability rank, but traded at historical low P/S ratios.
4. Historical low P/B: Companies that have high predictability rank, but traded at historical low P/B ratios.
GuruFocus premium membership is needed to access the details of the portfolios and screeners. We also publish a monthly Buffett-Munger newsletter which features the picks from Buffett-Munger Screener. If you are a premium member, you can download this for free. If you are not a Premium Member, we invite you for a 7-day Free Trial.
Value Strategies (Long):
| Year | S&P 500 | Buffett-Munger Screener top 25 | Top 25 Undervalued Predictable Companies | Top 25 Historical Low P/S Ratio Companies | Top 25 Historical Low P/B Ratio Companies |
| 2009 | 24.71% | 28.65% | 55.72% | ||
| 2010 | 11.65% | 19.54% | 20.17% | 19.05% | 16.39% |
| 2011 | -0% | 6.01% | -3.32% | -2.01% | -1.87% |
| 2012 | 12.1% | 11.01% | 3.95% | 16.34% | 16.45% |
| 2013 | 28.76% | 30.45% | 26.61% | 29.68% | 33.62% |
| Since | Inception | 136.09% | 138.11% | 76% | 77.72% |
| Outperforming | the S&P | 35.11% | 37.13% | 14.84% | 16.56% |
| Screener | Links | Screener Here | Screener Here | Screener Here | Screener Here |
Up to now, except for the model portfolio of Top 25 Undervalued Predictable Companies, the other three model portfolios all outperformed the S&P500. We remember in Nov 6, 2013, the portfolio of Top 25 Undervalued Predictable Companies underperformed the S&P 500 by 3.84%. Now it only underperformed the S&P 500 by 2.15%. Since inception of each model portfolio, they all outperformed the market.
Both of the portfolios of Buffett-Munger Screener Top 25 and Top 25 Undervalued Predictable Companieswere started in January 2009. In 2009 and 2010, Buffett-Munger Screener outperformed the market by around 4% and 8%. In 2011, the market was even, yet Buffett-Munger Screener outperformed the market by 6.01%. In 2012, Buffett-Munger Screener was about even with the S&P 500. In 2013, it outperformed the market by 1.29%. From above performance figure, GuruFocus can be proud to say that Buffett-Munger Screener Top 25 outperformed the market almost every year except in 2012. Even the only underperformance was small compared to the stock market’s performance. Regarding to Top 25 Undervalued Predictable Companies, the portfolio gained 55.72% and 20.17% respectively in 2009 and 2010, almost double the return of the S&P 500 in that period. However, from 2011 up till now, the portfolio of Top 25 Undervalued Predictable Companies underperformed the market. In all, since inception, Buffett-Munger Screener Top 25 outperformed the S&P 500 by 35.11%. The portfolio of Top 25 Undervalued Predictable Companies outperformed the market by 37.13%, even higher than the Buffett-Munger Screener.
Without any doubt, Warren Buffett’s investment strategy is the most successful ever. He believes that to buy companies with “predictable and proven” earnings can be very profitable in stock market investing. Based on his strategy, GuruFocus develops the "Buffett-Munger Screener", which helps to find companies with high quality business at undervalued or fair-valued prices:
- Companies that have high Predictability Rank, that is, companies that can consistently grow their 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 other two model portfolios are for predictable companies that are traded at historical low P/S and historical low P/B ratios, respectively. Both of these two portfolios outperformed the market average in 2010, 2012, and 2013, but about even with the market in 2011. In all, since inception, historical low P/S outperformed the S&P 500 by 14.84%. The portfolio of historical low P/B ratios outperformed the S&P 500 by 16.56%. Please go to historical low P/S ratios and historical low P/B ratios for the complete stock lists.
All the portfolios are rebalanced once a year; therefore, no portfolio changes will be made at this time.
From above analysis, we can see for a single year, the performance of our portfolios may not beat the market, yet in the long run, it is profitable to invest using our model portfolios.
These are the summaries of the four value strategies mentioned above:
1. Buffett-Munger screener: Invests in predictable companies that have low debt, consistent profit margin, and traded at low P/E to growth ratios.
2. Undervalued Predictable Companies: Invests in predictable companies that are undervalued based on DCF model.
3. Historical low P/S: Companies that have high predictability rank, but traded at historical low P/S ratios.
4. Historical low P/B: Companies that have high predictability rank, but traded at historical low P/B ratios.
GuruFocus premium membership is needed to access the details of the portfolios and screeners. We also publish a monthly Buffett-Munger newsletter which features the picks from Buffett-Munger Screener. If you are a premium member, you can download this for free. If you are not a Premium Member, we invite you for a 7-day Free Trial.
