Updated: Dec 4, 2018
We should not judge people by their peak of excellence; but by the distance they have traveled from the point where they started.” ― Henry Ward Beecher
One thing I have found in over three decades of investing is this. In order to consistently beat the market, you must have an investing thesis than most investors are overlooking or ignoring completely.
Most of these are short-term observations. For example, accelerating wage growth, the lowest weekly unemployment claims in a half a century, rising labor participation levels and the highest consumer confidence levels since the internet boom; should have led investors to the conclusion that business should accelerate for mass market retailers like Walmart (WMT), Target (TGT) and Signet Jewelers (SIG).
This, of course, did not happen. This is confirmed by the big rallies these stocks posted after these companies blew away expectations with their second quarter results.
Occasionally, and hopefully at least once in every investor's life; they come up with an investment thesis than pans out for years or even decades. When we launched The Insiders Forum on June 30th, 2016, the goal was to put real metrics to something I had observed consistently over the years but never really put to the test.
The thesis was a quite simple one. Small and mid-cap stocks get less analyst coverage than their larger cap brethren. In addition, more small cap concerns are led by founders or management that has been there since the beginning. They know the business much better than any analyst that only shows up on quarterly conference calls. Therefore, insider activity could be a great 'tell' to a future direction of a stock.
Our goals were simple. We wanted to fashion a model portfolio of 20 to 25 attractive small and midcap stocks insiders were purchasing that would beat the Russell 2000 by five percent per annum. While this might seem modest, it bears in mind that over 75% of active managers fail to beat their benchmark over the long term.
In addition, a portfolio that grows 9% annually (around the average for the stock market over the past 100 years) will double roughly every eight years. A portfolio that grows 14% a year will double in just over a half a decade, a major difference to say the least!
How have we done in the almost nine quarters of existence! As you can see from the chart above, we have CRUSHED even the most optimistic expectations we could have had. As of Fridays's close, and since our launch on 06/30/2016, The Insiders Forum's model portfolio has generated an overall return of 86.69%. This is more than double the 43.53% return from the Russell 2000 over that same time span.
Not only has performance been stellar, it has been consistent. We have had only one down quarter out of nine since launch. In seven of nine quarters we have beat the Russell 2000. It also looks we are heading to our 5th quarter with better than a 10% return out of nine in 3Q2018. Not bad for the lowest cost service of the top 15 offerings on SeekingAlpha's Marketplace!
This Labor Day weekend we are giving those that have not tried The Insider Forum, a chance to do so and get 20% off their first year of membership. So the choice is yours this Labor Day. You can continue to work hard for your money or you can start making your money work hard for you.
To activate your free 14 day trial into the Insiders Forum and get 20% off your first year membership should you choose to stay past your free trial period, just click HERE before midnight EST on Monday when this offer will expire.
Thank You & Happy Hunting,
Bret Jensen, Founder