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The goal of QAV is to out-perform the All Ords and achieve an average 19.5% annual compound growth with relatively low risk (Buffett averages 19.7% p.a.).
We’re not trying to shoot the moon. The All Ords averages around 10% p.a. So we want to out-perform it by roughly 2x year after year. Some years we will be up and some we will be down (that’s the nature of investing) but over the long term we want to double the All Ords.
During a downturn like the one we’re going through in early 2020, our goal is to decline less than the All Ords.
As of the end of May 2020, our portfolio, which we started on 2019-09-01, is still outperforming the ASX All Ords, but obviously the market is in a downturn and we can’t escape that.
Tony believes market downturns are great buying opportunities if you know what to look for.
* TR = Total Return (i.e. price growth plus dividends)
VALUE INVESTING CHECKLIST
Below is a screenshot of Tony’s QAV value investing checklist. This will give you an idea of the kind of numbers Tony uses to make his investing decisions.
Tony says the objective is to use the science of the checklist system to get your picks right 60% of the time. So we don’t expect to get it right 100% of the time. And remember the objective is to pick as many long-term winners as possible. This isn’t about day trading or having to watch your portfolio like a hawk. It’s about finding companies that are performing well, using some science to try to predict their future performance based on past results, and then to find the ones that are undervalued.
Warren Buffett says the important thing is to develop a “circle of confidence” and ignore everything outside of that, even when people are saying “swing, you bum”.
Here’s how he puts it: