To demonstrate how QAV works, we’ve been running an example portfolio since the beginning of the podcast.
The goal of QAV is to out-perform the All Ords and achieve an average 19.5% annual compound growth with relatively low risk and low effort (Buffett averages 19.7% p.a.).
We’re not trying to shoot the moon. The All Ords average growth is 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.
Despite a very challenging year for investors, the QAV portfolio is up 15% for the 2020 calendar year, versus only 4% for the XAOA (All Ords Total Return) index.
And, of course, that involved staying away from speculative tech and growth stocks, like Afterpay, etc. As value investors, we’re only interested in investing in companies with a strong history of generating cash and good management, that are momentarily undervalued by the market. Read my end of year wrap up here.
Club members get access to our live portfolio and can see all of our transactions in real time.
The official end of CY numbers are as follows.
QAV portfolio was up 14.83%.
XAOA was up 3.64%.
So we out-performed the XAOA by nearly 4X.
VALUE INVESTING CHECKLIST
The core of Tony’s method is the QAV value investing checklist.
It contains 20-30 data points that we grab from publicly-available sources and then we run some analysis over them to determine each stock’s “QAV Score”. Any stock which gets a final score higher than 0.1 goes on our buy list. When we have room in our portfolio (which we limit to 15-20 stocks), we buy the stock with the highest QAV score.
This screenshot will give you an idea of the kind of numbers Tony uses to make his investing decisions.
The objective is to use the science of the checklist system to get your picks right 60% of the time.
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.
You can watch some videos about how it works.
Club members get weekly updates of our Buy List and Watch List and access to our Excel spreadsheet checklist.