ValuScore Performance

When we first introduced the PowerStocks ValuScore, we showed that small portfolios of JSE shares with scores of six (4 shares) and five (9 shares) significantly outperformed all other stocks on average, over a 5 year period. The graph below illustrates this performance on an accumulative basis:


Notice how the portfolios of shares with scores of 5 and 6 really "powered" ahead from year 3. These were real "PowerStocks"! Also notice how from year one already, the PowerStocks were already pulling ahead of the rest of the pack, and stayed ahead of the pack for the entire 5 year bull market! In fact shares with ValuScores of four (12 in total) were the only other group of companies that kept pace with the PowerStocks in the initial 3 year period. This is illustrated below:


The above graph also shows us that the PowerStocks (and the "4" stocks) almost doubled the average growth of the whole market in years one, two and three. Also note how remarkably quick the recovery of the PowerStocks were, coming out of the bear market. They doubled in year one and by year two had grown by 240% versus the group average of 120%. This is promising as it means we may not have to sit forever to realise our gains.

The reason for this is by design - PowerStocks, when bought at the trough of a bear market are:

1. very undervalued/oversold compared to the rest of the market
2. are cheap in relation to their per-share earnings power
3. are financialy strong (enough to survive economic slowdowns)
4. have the highest statistical probability of superior price growth

Remember, this is not some concocted methodology we have devised. It is based on accepted and proven principles used by the greatest value investors of all time (including Warren Buffet) for the last 100 years. All we have done is prove and tweak them for the JSE, added some automation to the financial analysis (Piotroski) and devised a nifty scoring system to help you screen and build up portfolios of stocks. For your initial portfolios to capitalise on the new bull market, we feel that stocks of ValuScores of 6, 5 and 4 should be selected for the first 3 years as this will offer a portfolio of suffcient size (15-25 stocks) and appropriate diversification.

To get a list of all JSE stocks together with their current ValuScores (as at 29 October, still our current "bottom pick" for the 2008 bear market) go HERE.