Our Investment Goals

1. Invest in companies that are in industries that are ranked in the top thirty.

2. Limit investments in companies to those that are rated 3 or better for both timeliness and safety.

3. Beta is a measurement of stock price volatility in relationship to the stock market. Look for betas near 1.00(0.80 to 1.20). Fast-growing companies have much higher betas but they can fall much faster as well.

4. Invest in companies where debt is no more than 1/3 rd of total capitalization; or when debt is higher, investigate to see if the debt is being used in such a manner that will reap benefits for the shareholders. Compare companies to other similar companies to see if higher debt seems to be necessary to run their businesses.

5. Look for current price-to-earnings ratios (P/E) that is no more than the average P/E for the last five years. [NAIC investors know this as a Relative Value under 100%.]

6. The Upside/Downside Ratio should be at least 3-to-1. This means that when bought at the current price that your chances are three times better for price increases than decreases.

7. Look for a 5-10 year history of sales and earnings growth with expectations of continuing growth.

8. Diversify in industries and in the size of companies. We look for 7-10% sales growth in large companies, 10-12% in mid-size companies, and 12-15% in small companies.

9. Seek companies where management has a record of increased pre-tax profits and return on shareholder'sequity.

10. Watch the trends. Beware of shopping traffic patterns and invest in companies that offer a product or services that you use and like.

11. Buy to hold. We do NOT try to time the market. We will continue to hold our companies as long as there is continued growth, or total return, potential. Keep track of your investments, with current Stock Selection Guides. It is said that we buy to hold... but not to forget.

12. Reinvest your dividends to reap the benefits of compound growth. Over time you will enjoy watching your investments grow. Invest regularly. We used to buy stocks almost every month... we now find that we may do so only every other month or so. We're always looking for the best companies at the best prices.

And after you purchase the stock:

1. Update the SSG on each company when the new Value Line report comes out, and if a company is not making a 15% return, to look at it more closely.

2. Watch for significant news items on each company.

3. Evaluate each stock against our original guidelines (which are based on the guidelines of the Beardstown Ladies,except for the price of the stock.

At our original meetings, our goals were (1) education, (2) "long term" investing, and (3) fun.

A new club's goals are to learn the basics of the market and stock investing, leading up to the use of the SSG to evaluate a stock and the SCG to select the best stock from among of the group. Ralph Seger recommends the next step up is to use the PERT Worksheet A as the next step beyond the SSG to evaluate a stock for purchase.

AS the club matures and purchases stocks: My first goal would be to learn how to follow each stock.

1. PMG - follow EPS & p/e changes

2. PERT Worksheet A - track the fundamentals

3. PERT Report - One -line summary of the SSG

4. Plot trailing 12 months data for sales, ptp, & EPS on the original SSG to make sure the stock is meeting your        predictions.

5. Horizontal, vertical, & ratio analysis of the balance sheet & income statement on a quarterly and yearly basis.

6. Follow stock by news stories (Internet wire services)

7. Use of the Challenge Tree to replace stocks

After that I would have goals to continue following the stocks, investigate new industries & stocks, and add education information about asset allocation, bonds, money market funds, retirement plans, etc.

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Last edited on 01/13/02