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Tags: Stock | Picker | Market

It’s Always a Stock Picker’s Market

By    |   Friday, 13 January 2012 07:49 AM EST

In the past 12 months, we have heard doomsayers claim that the big banks were all insolvent, the S&P 500 Index would be near 800, Europe was going to collapse and the worldwide financial system would implode.

This past weekend, I was at a party when someone said, “Billy, it’s going to be a stock picker’s market in 2012.”

Guess what? It’s always a stock picker’s market.

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In this supposed “lost decade,” where the Dow Jones Industrial Average is about the same as it was 12 years ago, my personal stock portfolio has compounded at almost 19 percent annually. How could that be when most stocks in that span are either lower or even?

Simple, I don’t own every stock. But by combining the power of compound interest and reinvested dividends on quality companies at excellent entry points, one gets a powerful Dividend Machine.

After studying Warren Buffett, Charlie Munger, Philip Fisher, Sir John Templeton and John Paulson, I decided on a dozen filters and formulas which help me enter low-risk, high-reward common stocks near or around their 52-week lows.

My selection process combines growth, safety, and income spiced with a slight dosage of leverage.

Don’t want to use any leverage? Your returns will still exceed double digits if you can get the proper entry points.

What’s ironic is that people think it’s totally normal to borrow money to buy a depreciating asset like an automobile but that it’s somehow risky to pay 4 interest to buy a stock with a 7 percent dividend.

Many market gurus will try and predict what’s going to happen in 2012 to the overall market.

I don't know what will happen — and neither to do they.

What I do know is that many quality stocks will at some point reach the proper entry point.

In the past 12 months, the S&P has risen 3.94 percent which despite all the ups and downs still beats cash.

But those who invested in the Dividend Machine portfolio as I advise are up 24.18 percent. Those who bought according to the Dividend Machine since inception are up 113.99 percent compared to 49.48 for those invested in the S&P and less than 6 percent for those invested in a money market.

My annualized return has been 31.87 percent compared to 15.74 percent for the S&P.

I tell you this not to boast, but to prove that it is always a stock picker's market.

If you want to gain an above-average return, become a stock picker yourself or follow someone else who has made a career of beating the market.

Trust me: It’s always a stock picker's market.

About the Author: Bill Spetrino

Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.

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Friday, 13 January 2012 07:49 AM
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