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The goal of QAV is to average a 19.5% annual compound growth with relatively low risk (Buffett, who averages 19.7% pa, says Rule #1 is Never Lose Money). We’re not trying to shoot the moon. The All Ords averages around 10% pa. So we want to out-perform it by 195% over the course of the year.
As of the end of Jan 2020, our portfolio, which we started on 2019-09-01, is still outperforming the ASX All Ords quite well (169%), despite taking a big hit in the last few days of January thanks to the Wuhan coronovirus dip. Tony’s not concerned, and believes market downturns are great buying opportunities if you know what to look for.
VALUE INVESTING CHECKLIST
Below is an 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: