More about The ARRVIN Report
The ARRVIN Report “Computer formula takes guesswork out of playing the markets” St. Louis Post-Dispatch January 2, 2005 The ARRVIN Report is a guide to stock-picking and portfolio management. It uses The Almighty Formula to pick and track stocks. When a stock gets in trouble a warning alert is issued and specific defensive actions are recommended. It is always safe to sell on a warning alert, but sometimes defensive option strategies are also recommended. The report is a twice-a-month investment newsletter that is published at the Arrvin web site (www.arrvin.com). Subscribers are notified by e-mail when it is time to go to the web site and download their report. The ARRVIN System ARRVIN (Adjusted Reward Risk Value Indicator) is a computerized implementation of The Almighty Formula: GOOD STOCK = Good Business + Good Finances + Good Price That’s the secret to successful stock market investing. The trick is in applying the formula, and The ARRVIN Report does this for you and serves up the results twice a month. All you have to do is read and act. Here is an overview of the steps the ARRVIN system uses in applying The Almighty Formula: VALUING A BUSINESS Because a share of stock represents the right to share in a company’s profits, shareowners are primarily interested in the quality of a company’s business and the size of its profits. Three key questions are used to evaluate a company’s business: 1. What is the company’s plan for making money? 2. How well is it working? 3. Is it likely to continue working? These are the questions that guide ARRVIN’S analysis of a company’s business. VALUING FINANCES Even a company with a good business can founder if its financial position is weak. ARRVIN considers cash and debt in evaluating a company’s finances. Cash is good, and some debt is good, but not too much. Borrowing a dollar and making a fifty-cent profit after paying back the borrowed dollar with interest is good but there are limits. For one thing, the more a company borrows the more vulnerable it is to unexpected downturns in business. If business suddenly drops, the debt will still be there. Principal and interest payments will still be due, and during an economic downturn this could spell trouble. So ARRVIN is cautious and does not like to see debt get too high. ARRVIN feels a financially strong business should have enough cash on hand to more than meet its short-term obligations, and its debt should not be excessive when compared to shareholders’ equity, that is, the shareholder’s stake in the company. These are the conservative principles by which ARRVIN evaluates a company’s finances. VALUING PRICE Anything can be over-priced. An ice cream cone might be a great ice cream cone, but at $100 forget it. Likewise the shares of a company with a good business and good finances can be over-priced. In fact, good companies are often over-priced, and too often investors pay more than they should to own these companies. ARRVIN believes in not over-paying. To figure out if a stock is over-priced ARRVIN compares it to the 10-year U.S. Treasury note. This is done by projecting the expected reward of both the stock and the note over several years and then reducing the expected reward of the stock by a risk factor. Being cautious and allowing for a healthy margin of error ARRVIN likes to see the risk-reduced reward of the stock at least six times that of the note. Then the stock is interesting. PUTTING IT ALL TOGETHER If business, finances and price all evaluate well, there is still one more step before putting in a buy order. Sometimes the market inexplicably pays no attention to good stocks, and if the market is not paying attention the price is not going to move. So ARRVIN uses trading data to determine whether the market is paying attention, and only if this is true is a good stock worth buying. Once a stock has been bought it has to be watched. As it turns out, The Almighty Formula can be use to identify Four Horrible Dangers that can threaten any stock. The ARRVIN system watches for these and when danger appears warning alerts are issued and specific defensive measures are recommended. Subscribers to The ARRVIN Report will see the warnings, get the recommendations and know what to do. In addition to picking and monitoring stocks, sending out warning alerts and defensive recommendations, The ARRVIN Report includes two model portfolios selected and managed by the ARRVIN system. One portfolio is based on the monthly New Pick stocks and the other portfolio is drawn entirely from the 30 stocks that make up the Dow Jones Industrial Average. Both portfolios generally beat their benchmark indexes, the S&P 500 for the top pick portfolio and the DJIA for the DOW stock portfolio. Past performance, however, is no guarantee of future success. Letting The ARRVIN Report guide your investment decisions is simple, takes little time, and allows you to sleep at night. To order your subscription to The ARRVIN Report click here. To buy the book that fully explains The Almighty Formula click here. |