On October 22, 2019 the Dow Jones Industrial Average was 26,823 (market opening). Today, October 18, 2020 the Dow Jones Industrial Average is 28,607. The DOW improved 6.65% in the course of one year (technically 361 days).
On October 22, 2019, I started out with $10,000 in a value investing based railroad fund. Today, the fund has a cash balance of $12,351.96 with no receivables nor stock position. This means, the fund had a return of $2,351.96 or a 23.52% return on the original basis of $10,000. This means, the fund performed 353% (a factor of 3.53) greater than the Dow Jones Industrial Average in the same time period.
How did this fund outperform the market? Two words explain the result – Value Investing.
Value investing is a style of investing whereby the investor uses business ratios to evaluate and set buy sell points for each of the respective stocks within a pool of stocks. The pool consists of similar companies within an industry. Each company within this pool has a buy/sell point and with this knowledge, the value investor simply waits for a trigger, a buy/sell point to occur, and automatically acts on the preset action. The results are undeniable, value investing generates significantly greater returns over the long run than the market does as a whole. It is simply a model that reduces risk and maximizes return on that investment pool.
