Saturday February 13, 2010
Rich is the editor of Dow Theory Forecasts and Upside newsletters and is Research Director of Horizon Publishing Co., an affiliate of Horizon Investment Services.
His comments have appeared in such publications as The Wall Street Journal, Barron's, The Washington Post, The New York Times, Business Week, and USA Today. He also frequently appears on television, including CNBC, CNN, and Bloomberg.
Dow Theory Forecasts is written with the busy reader in mind. You will not find laborious "think pieces" that gratify the writer's ego but do nothing to fatten your pocketbook.
What you will find is a concise, punchy style geared for the individual investor who can't afford to waste hours sifting through convoluted and pointless writing. Our recommendations are to the point, a "just-the-facts" approach that is well received by our readers.
Dow Theory Forecasts stocks are categorized by five terms:
How does one judge an investment service? Certainly, longevity in any business reflects the ability to serve and satisfy the customer, and Dow Theory Forecasts' position as one of the oldest newsletters in the business speaks volumes. Since 1946, Dow Theory Forecasts has been meeting the investment needs of individuals just like you.
How have we managed to stay so successful for so long in a business where the failure rate is so high? By listening to our subscribers. By knowing their needs as individual investors.
By providing investment advice that, though not infallible, is unbiased and objective. Indeed, the fact that we receive no commissions from your trades, and profit only if you renew your subscription, puts us in a unique relationship with you.
You will not find such a relationship with your broker; he/she gets paid only if you buy or sell stocks. With Dow Theory Forecasts, it makes no difference if you invest a little or a lot, if you buy round lots of GE or odd lots of small-company stocks. You are treated with the attention you deserve when you put your hard-earned dollars on the line in the stock market.
To focus on stock selection without proper guidance concerning the overall market trend would leave out an important component of a successful investment program. The Dow Theory has stood the test of time, having been developed before the turn of the century by Wall Street Journal publisher Charles Dow.
And it is still going strong today. The Dow Theory's record of keeping investors on the right side of major market trends is impressive, and the theory is a tool that no serious investor should be without.
Quadrix® - The Science Behind Our Stock-Selection Process
Our proprietary Quadrix® stock-rating system uses more than 100 variables to score stocks in six categories - Momentum (recent operating performance), Quality, Value, Financial Strength, Earnings Estimates and Performance (stock-price action).
For these six categories and the Overall Quadrix score, stocks are scored on a percentile basis, with 0 the lowest score and 100 the highest. For example, a score of 95 means that a stock scores better than 95% of the roughly 4,100 U.S. stocks in our universe. Stocks with the best Overall Quadrix scores have outperformed handily over the past 17 years.
Stocks cannot be reduced to a series of equations, and no numbers-based ranking system can substitute entirely for individual company analysis. Still, a numerical ranking system like Quadrix can be a great first screen for building portfolios.
Because the system uses only quantifiable factors, it allows you to narrow your focus on companies achieving superior results. Similarly, because Quadrix is not influenced by the fear, hope, greed, and other emotions that can cloud the judgment of all investors, the system is an excellent tool for tracking current portfolio holdings.
After Quadrix has narrowed the vast universe, our team of experienced research analysts roll up their sleeves and do the kind of individual company analysis no computer can replace.
Preserve Capital - Focus on Value
Another factor behind our company's success is our investment philosophy. We are not investment "gunslingers," jumping on the latest fad in the investment world in hopes of generating short-term profits. Such tactics only make your broker rich through commissions. Rather, Dow Theory Forecasts believes in the preservation of capital as well as the accumulation of wealth.
You see, the stock market is a place where patience has its rewards. For that reason, Dow Theory Forecasts takes a long-term approach to investing, with our stock ideas on a one-year time horizon or longer. We prefer to focus on high-quality stocks - industry leaders with strong finances, attractive growth records, and market niches that should keep them at the top of their sectors.
Recommendations also focus on income-oriented stocks and investments that are especially vital to investors who need to generate healthy dividends from their stock investments. You will also find more aggressive recommendations for investors who are seeking growth. But the common thread is a concentration on investment value.