Page 548 - How to Make Money in Stocks Trilogy

416 INVESTING LIKE A PROFESSIONAL

mary business is in that area. The typical institution might look at Boeing,
Raytheon, United Technologies, and two or three other big, well-known
names. Since WONDA provides more than 3,000 technical and funda-
mental variables on each of the 84 companies stretching back a number
of years, as well as the ability to display these variables quickly on identi-
cal graphic displays, it’s possible for an institutional money manager to
identify in 20 minutes the 3 or 4 companies in the entire group that show
outstanding characteristics and are worthy of more detailed research. It’s
a vital time-saver some of America’s very best money managers relent-
lessly use.
In other words, there are ways for an institution’s analysts to spend their
time far more productively. Yet, not all research departments are organized
to take advantage of such advanced and disciplined procedures.
How well has this approach worked? In 1977, we introduced an institu-
tional service called New Stock Market Ideas and Past Leaders to Avoid
(NSMI). Now titled New Leaders and Laggards Review, it is published
every week, and its documented, 31-year long-term performance record is
shown on the accompanying graph. These performance returns were
audited and verified by one of the top independent accounting firms in
America.
Over the last 30 years, positive selections outperformed avoids 307 to 1,
and positive picks outran the S&P 500 stocks more than 41-fold. Com-
pounding over the 30 years’ time helps make a superior long-term record
like this possible. For the entire 30 years ended 2008, stocks to avoid made
a teeny 19% gain. Institutions could have improved their performance just
by staying out of the stocks on our avoid list. As a service to our institutional
clients, we provide them with computerized quarterly performance reports
for every positive and avoid suggestion made in the New Leader Ideas ser-
vice. How many competing firms provide the actual percent performance of
all of their ideas over an extended period?
By having massive factual data on every firm and proven historical prece-
dent chart models over more than 100 years, we’re able to discover a stock
beginning to improve or get in trouble earlier—without ever visiting or talk-
ing to the company. It may be naïve to believe companies are always going
to tell you when they are beginning to have problems. By using our own fac-
tual data and historical precedent research, we discourage reliance on tips,
rumors, and analysts’ personal opinions. We don’t need such information.
We also do not have investment banking clients or market-making activities.
Nor do we manage money for other people or hire research analysts to pre-
pare long written research reports. So those areas of potential bias or under-
performance are nonexistent.