ACE'S OPERATIONS ~ GUIDING PRINCIPLES
ACE'S has one goal: To identify stocks that are estimated to increase in price by 20% or more in or within 12 months. ACE'S considers a 20% appreciation as a realistic, challenging and a worthy goal. To achieve an annual 20% appreciation for one's investment, consistently from year-to-year, would be an exceptional and most noteworthy achievement for ACE'S.
ACE'S stock picks, from October 2000 to December 8, 2020, have an averaged 12-month gain of 17.61% (vs. the S&P 500 Index gain, for the same period, of 5.06%). On a 10-yeat basis, ACE'S stock picks, from October 2000 to December 8, 2020 have an averaged 10-year gain of 197.42% (vs. the S&P 500 Index gain, for the same period, of 79.22%) or 19.74% on a yearly basis. Compared to the historical inflation-adjusted annual rate of return for the Dow and S&P 500 Index of about 7.0%, ACE'S current annual rate of return of 19.74% is notable.
STOCK SELECTION PHILOSOPHY
The long term price growth of a stock is primarily based on its core strengths: effective management; reasonable price-earnings multiple; and healthy revenue, earnings, and price growth.
ACE'S believes that the spark that actuates a stock's price growth is the effectiveness and creativity of the company's management. Given that, the company will more than likely have a healthy revenue stream from the successful performance of its products and/or services in the marketplace; a healthy earnings stream that covers-and-exceeds corporate expenses; and general financial health to provide dividends to its stockholders.
From this mix of core ingredients, ACE'S then distills the stock's timeliness, safety, relative value and price behavior. What emerges at the end of this process is a number of stocks each of which has a set of values which, taken together, determines whether a stock makes the grade or not. Those that makes the grade becomes ACE'S picks.
ACE'S picks are the results of a very rigorous, unbiased and detached process. Our monthly output of picks is an indication of this rigor: ACE'S had averaged just 2.8 picks a month. In some months (i.e., April 2009 and October 2011), we were only able to come up with 1 pick. In some months (e.g., October and November 2008), no stock made the grade.
Finding an ACE'S pick is a discovery process. At the beginning of each week, we start with a "basket" of stocks. It is not known at that time which of the week's harvest of stocks will emerge as a pick. The harvest of stocks are subjected to an evaluation process. Most are rejected; a few are singled out; and from this last select group, one or two "unknowns" emerges as the week's pick. It is a challenging ... and exciting process.
STOCKS' HOLDING PERIOD
The holding period employed by ACE'S for the selected stocks to realize their projected price gains is 12 months. The primary rationale for the 12 month holding period is to provide, for the benefit of ACE'S subscribers and readers, a time frame for the the stock picks' gain/loss evaluation. The 12 months does not necessarily mean that an investor needs to hold an ACE'S stock for 12 months. The investor's investment objectives and individual situation should determine the holding period's term.
In ACE'S 06/09/08 study ("Spiritedly Promising! A 48-Month Outlook for ACE'S Stocks"), ACE'S have shown that the 48-month performance of ACE'S picks were significantly superior to the 12-month picks. The average 48-month gains of ACE'S stocks was 218.06% and the S&P 500's was 18.78% (or, annualized, 54.52%/yr. and 4.70%/yr., respectively). Compare to the 12-month gain of ACE'S picks (i.e., 37.44% as of 07/31/08) and the S&P 500's (i.e., -1.12% as of 07/31/08). This suggests that, based on the time period studied, significantly higher gains are possible when ACE'S stocks are held longer than 12 months.