how to use the "investor advisory service" to find great stocks & build a portfolio

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  • 8/13/2019 How to Use the "Investor Advisory Service" to Find Great Stocks & Build a Portfolio

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    INVESTOR ADVISORY SERVICE USER GUIDE PAGE 1

    elcome to the I nvestor AdvisoryService! Since our newsletter wasfirst published in 1973, the I AS has

    come to be a trusted source of stock investingguidance for thousands of investors.

    With its unique blend of high-quality growthstock recommendations, a sensible long-termmarket outlook, and regular updates on past se-lections, the I AShas posted a track record thathas garnered accolades from its loyal subscrib-ers.

    I nvestor Advisory Service subscribers, espe-

    cially new ones, often ask how to interpret anduse the information that the service provides,or where the numbers come from and whatthey mean.

    The following is a summary of the componentsthat make up each issue, as well as guides that

    briefly explain the Stock Study and the Rank-ing Spreadsheets. These guides may be used asa reference when reviewing past and future is-

    sues of the I nvestor Advisory Service. Wehope you find them a valuable addition to yourinvestment research.

    Finally, a few Frequently Asked Questions areanswered here.

    On behalf of the staff and analysts at the I nves-tor Advisory Service, we thank you for sub-scribing and wish you all the best in building asuccessful portfolio!

    Scott Horsburgh, CFAInvestor Advisory Service

    W

    Scott Horsburgh, CFA

    TABLEOFCONTENTS

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    PAGE 2 INVESTOR ADVISORY SERVICE USER GUIDE

    Getting Startedhe I nvestor Advisory Service (I AS) was created in 1973 to servicethe needs of individual investors who wanted to follow the investingmethodologies of BetterInvesting, a non-profit investment education

    organization, but who would rather have professionals do much of the workof identifying and analyzing stocks.

    The name of our newsletter should make our mission self-evident: We pub-

    lish a serviceto adviseinvestors.More specifically, the I nvestor Advisory Service is an independent equityanalysis newsletter providing subscribers with three high-quality, growth-oriented stock selections each month. From these recommendations, sub-scribers can build a stock portfolio best suited to their personal needs.

    Investment Goals

    Our goal for each stock recommended in I ASis a doubling in value in fiveyears, from a combination of:

    Capital appreciation(the increase in the stocks price) Dividends(though not all companies pay them) Price/Earnings ratio expansion(that comes from the somewhat con-

    trarian practice of buying stocks that are undervalued compared withtheir historical trends).

    In selecting stocks with these guidelines, a portfolio of I AS picks may beable to reach our goal of an annualized 15% total return.

    Not all individual stock recommendations will achieve that goal, of course.Experience shows that some will do much better and some will do worse.

    Although we are proud the I AShas generated results that have consistentlybeen better than that of the Dow Jones Industrial Average and other marketaverages, there is no assurance the future will be as favorable.

    T

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    INVESTOR ADVISORY SERVICE USER GUIDE PAGE 3

    Diversify Your Portfolio

    A portfolio of ten to twelve stocks selectedfrom our recommendations has a better chanceof doing well than just a few selections. Ofcourse, since no one is perfect, price declineswill occur in some of the selected stocks. Ad-equate diversification is always prudent.

    Choose Your Own Stocks

    The I nvestor Advisory Service is an unman-aged letter advisory service. In other words,subscribers must choose on their own whichstocks to buy, as well as when to hold and

    when to sell. We try to help the decision-making process with the assistance of ourStock Studies and the Ranking Spread-sheets. Both of these will be explored in detaillater in this guide.

    Dont Fear Selling

    It is important to recognize that we do not ad-vocate a trading strategy.

    We have found that holding carefully selectedstocks over the long term produces the best re-sults. No stock follows a time schedule,though, and there are always ups and downs instock prices. If the fundamental assumptionsmade at the time of recommendation deterio-rate, a sale may be recommended and follow-up on that stock may be discontinued. Re-member, a torpedo can come out of the dark at

    any time.

    If you buy ten stocks, chances are two will domuch better than expected, two will be disap-

    pointments and the other six will follow theexpected course. When a mistake has beenmade, it is best to acknowledge the error and

    Investment advice and edu-cation since 1973, helpingyou become a successful

    lifetime investor.

    Douglas GerlachEDITOR-IN-CHIEF

    Investment Analysis Provided by

    SEGER-ELVEKROG INC.

    Scott Horsburgh, CFAPRESIDENT

    Dan Boyle, CFAVICE-PRESIDENT

    Miles PutnamANALYST

    Published byICLUBCENTRAL INC.

    711 West 13 Mile Road,Madison Heights, MI 48071

    www.investoradvisoryservice.com

    Customer Service:Please contact us at

    www.investoradvisoryservice.com/

    About/Contact-Us.aspx

    or by phone at877-33-ICLUB

    http://www.investoradvisoryservice.com/http://www.investoradvisoryservice.com/http://www.investoradvisoryservice.com/http://www.investoradvisoryservice.com/http://www.investoradvisoryservice.com/
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    PAGE 4 INVESTOR ADVISORY SERVICE USER GUIDE

    sell the stock. Waiting to get even is usually a self-defeating strategy.Ifyou would not buy a stock that is down 25% in price, knowing that the de-cline is well-justified, then why continue to hold it in hopes of recoveringyour investment?

    Publication Schedule

    An annual I ASsubscription includes twelve monthly issues, and each reportcontains three detailed stock recommendations, current market commentary,recent earnings announcements, and updated news for companies currently

    being tracked by the service.

    TheIASis published on the fourth Friday of each month. (Exceptions mayinclude the December and January issues when the publication dates may be

    adjusted due to the Thanksgiving and Christmas holidays.) The print editionis mailed to subscribers via First Class Mail on that date and generally ar-rives in subscriber mailboxes within two or three business days.

    The online issue of I ASis released on the subscribers-only website:http://www.investorsadvisoryservice.com

    on the publication date (the fourth Friday of each month) shortly after themarket closes, and an e-mail announcement is sent to subscribers when theissue is published on the website. Because e-mail messages do not alwaysarrive in a timely fashion, do not depend on the e-mail to notify you the is-

    sue is available.In addition to each monthly issue, we publish interim updatesseveral timesa year on theI ASwebsite during months in which many companies reporttheir latest quarterly results, as well special alertswhen appropriate.

    Make sure we have your e-mail address so that we can reach you with theseannouncements as well as send renewal notices for your subscription.

    http://www.investorsadvisoryservice.com/http://www.investorsadvisoryservice.com/
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    INVESTOR ADVISORY SERVICE USER GUIDE PAGE 5

    In Each Issueach monthly issue of the I nvestor Advisory Service is packed withinformation aimed at helping you make smarter investing decisionsabout the stocks in your portfolio. From helping you gain perspective

    on the broader economic outlook, to identifying new stocks to consider, I ASwill educate and inform you each month.

    Investment Comments

    The economy has an effect on corporate profits and hence stock prices. Each

    months Investment Comments are necessarily general in nature, but thecolumn does review market and economic conditions with an eye on whathas been happening recently and what the outlook may be for the future.

    Portfolio management is not carried out in a vacuum. Interest rates and thegeneral economy are important factors affecting stock prices. Each month,theKey Market Indicatorssection presents charts of short-term and long-term interest rates as well as the level of the Standard & Poors 500 Index.

    Earnings Reports

    The Recent Earnings Reportsgive the latest quarterly earnings per shareand the percent changes tabulation for companies that have reported this in-formation since the previous issue of I AS. This is an effort to keep you in-formed about the fundamental progress of the companies.

    Announced dividendsand stock splitsare also recorded here.

    Ranking Reports

    All of the stocks (typically 75 to 80) currently being followed by I AScan be

    found on the three ranking spreadsheets provided in the Service. The stocksare sorted by symbol, total return, and current price/earnings ratio(P/E).

    Please note: The I ASpublication schedule is fixed, so it is possible marketpric

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