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When a value investor utilizes the four core principles of value investing, good returns follow. This is an example with Union Pacific Railroad.<\/p>\n
On February 27, 2020 I used the excess cash in my Railroad Fund and purchased 8.268268 shares of Union Pacific<\/span><\/strong><\/a> Railroad. The buy price was $156.39.\u00a0 See my article written on the 27th of February: Railroad Fund Update<\/a><\/strong> <\/span>for confirmation. Including $1 per share for transaction costs, I invested $1,304.65 to purchase those 8 shares. Today, when the market opened, the trigger for the sale occurred. Based on the value investing principle I’ve written about over several articles and a book: Value Investing with Business Ratios<\/a><\/strong>,<\/span> my sale price was set for $182.54. After paying transaction fees, I netted $1,501.02. The gain equals $196.37.<\/span><\/p>\n I didn’t know this until today after doing my research, since I was an owner of record on February 28th, I earned a dividend of 97 cents per share; thus, on March 30th, my railroad fund received $8.02. Just another benefit of the investing principle here.<\/span><\/p>\n Altogether, I earned $204.39 over 99 days. This equates to a simple annual return of 56.67%.<\/span><\/p>\n Again, value investing is a systematic process of investing whereby the investor uses ratios and comparative analysis of similar investments over an extended period of time. In this case, I compared the six publicly traded Class I railways in the United States. Then based on the results, I exercise buy and sell points for each stock within the fund. In this case, Union Pacific Railroad’s prior peak (high selling price) was $188.96. From the analysis, I determined that a minimum 17% drop in price from the peak warranted a buy trigger. In my evaluation<\/a><\/strong> <\/span>of Union Pacific Railroad, I determined that the opportunity to buy only happens about once every 3 years. The coronavirus market impact was the underlying force to drive the price down. I took advantage of this and bought low and sold high, the number one tenet of business<\/a>.<\/span><\/strong>\u00a0<\/span><\/p>\n As of today, my overall railroad fund stands at $11,068.99. This fund has grown 10.07% since inception whereas the Dow Jones Industrial Average has only grown 1.2% in the same time period.<\/span><\/p>\n Principles of Value Investing<\/span><\/strong><\/p>\n It works, I’m proving it with this fund.<\/span><\/p>\n Just for the purposes of making sure readers understand:<\/span><\/p>\n Act on Knowledge<\/span>.<\/strong><\/p>\n\n
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