Secret Recipe That Beat The Overvalued S&P 500-Update Model Portfolio 1-(Part 1 of 3) | FAST Graphs

FASTgraphs
3 Apr 202416:28

TLDRIn this video, Chuck Carnaval, co-founder of Fast Graphs, revisits his 2021 model portfolios designed for different investor objectives, such as income generation and growth. He updates the performance of these portfolios and introduces Fast Graphs' new Advanced Portfolio feature, demonstrating its capabilities in managing and tracking stock investments. The video highlights the importance of value investing in dividend growth stocks and the power of reaping dividend income for risk mitigation and long-term investment success.

Takeaways

  • 📈 The video discusses a 'shorefire method' for outperforming the stock market in terms of both total income and total return basis.
  • 🎯 Chuck Carnaval, co-founder of Fast Graphs, revisits model portfolios created in August 2021 and updates them using the new Advanced Portfolio features on Fast Graphs.
  • 💼 Three model portfolios were initially created: an income portfolio, a growth-oriented portfolio, and a high-yield portfolio, each catering to different investor objectives and retirement needs.
  • 🚀 The first model portfolio (income portfolio) has outperformed the market, with an internal rate of return of 8.99% and a current yield of 4%.
  • 📊 The video uses the S&P 500 as a benchmark to evaluate the performance of the portfolios, highlighting the importance of investing at fair value for long-term success.
  • 🌟 The Advanced Portfolio feature on Fast Graphs is introduced as a game-changer for stock portfolio management, offering detailed insights and analysis.
  • 📈 The second model portfolio (growth model) demonstrated an annualized rate of return of 11.44% and almost doubled the market's income.
  • 💹 The third model portfolio (high yield) also beat the market with an 8% annualized return and a significantly higher income generation.
  • 📊 The script emphasizes the value of dividend income as a risk mitigation strategy, as it provides a return of capital and reduces the amount at risk over time.
  • 🔄 The importance of a long-term investment strategy is stressed, noting that daily volatility should not deter the investor from the long-term growth potential of the stocks.
  • 🔍 The video provides a detailed analysis of individual stocks within the portfolio, including their performance, estimated growth rates, and dividend yields.
  • 📚 The script concludes with an invitation to invest in a Fast Graphs subscription and a teaser for upcoming parts of the video series.

Q & A

  • What is the main focus of the video?

    -The main focus of the video is to share a Shorefire method for beating the stock market in terms of both total income and total return by revisiting and updating three model portfolios created in August 2021.

  • Who is the speaker of the video?

    -The speaker of the video is Chuck Carnaval, co-founder of Fast Graphs and the Fundamentals Analyzer software tool, also known as Mr. Valuation.

  • What are the three model portfolios created by Chuck Carnaval?

    -The three model portfolios created by Chuck Carnaval are: 1) An income portfolio with equal-weighted dividend income stocks, 2) A growth-oriented portfolio focusing on both growth of income and growth of dividends, and 3) A high-yield portfolio with an overweight of certain stocks to generate higher current yield.

  • What is the purpose of these portfolios?

    -The purpose of these portfolios is to cater to specific investment objectives of different investors, such as young investors looking to grow their money over a 10 or 20-year period, and retired investors needing higher yield on their portfolios.

  • How does Chuck Carnaval evaluate the performance of the portfolios?

    -Chuck Carnaval evaluates the performance of the portfolios by comparing their internal rate of return, income generated, and current yield to the S&P 500 index, using Fast Graphs' Advanced Portfolio feature for a detailed analysis.

  • What is Warren Buffett's famous quote mentioned in the video?

    -Warren Buffett's famous quote mentioned in the video is 'Be greedy when others are fearful, and fearful when others are greedy.'

  • What is the significance of the green dot and gold line in the Fast Graphs tool?

    -In the Fast Graphs tool, the green dot represents the purchase price of a stock, and the gold line represents the cost basis line, providing insights into the stock's performance and valuation changes over time.

  • How does the video emphasize the importance of dividend income in portfolio management?

    -The video emphasizes the importance of dividend income as a risk mitigation strategy, highlighting that receiving dividend income effectively reduces the amount of capital at risk and contributes to a return of capital, in addition to the total return on investment.

  • What is the role of the Advanced Portfolio feature in Fast Graphs?

    -The Advanced Portfolio feature in Fast Graphs is a stock portfolio management system that helps investors track and manage their stock portfolios more effectively by providing detailed insights into portfolio performance, asset allocation, sector diversification, and individual stock performance.

  • What is Chuck Carnaval's view on the current market valuation?

    -Chuck Carnaval believes that the current market valuation is high, as evidenced by the S&P 500 trading at an 18 to 20 multiple, and he suggests that investors should be fearful, following Warren Buffett's advice, as others are being greedy.

  • What is the expected timeline for judging the success of these portfolios?

    -Chuck Carnaval suggests that a timeline of three to five years is appropriate for judging the success of these portfolios, as it takes time for companies to increase their earnings, sales, and business, allowing the stock price to eventually reflect these improvements.

Outlines

00:00

📈 Introduction to Stock Market Strategies and Portfolio Updates

The speaker, Chuck Carnaval, introduces the video's focus on revisiting and updating three model portfolios created in August 2021. These portfolios were designed for different investment objectives, such as income generation, dividend growth, and a mix of growth and income. The speaker emphasizes the importance of investing for specific goals, like a young investor looking to grow their wealth over a 10-20 year period or a retired individual needing higher yield. The video also introduces an Advanced Portfolio section on Fast Graphs, a new tool for better stock portfolio management.

05:02

📊 Performance Review and Comparison with S&P 500

This paragraph delves into the performance review of the three portfolios. The first portfolio, an equal-weighted dividend income portfolio, outperformed the S&P 500 in both growth and dividend income. The second portfolio, focused on growth, also exceeded market performance in terms of return and income. The third high-yield portfolio, which overweighted certain stocks, provided significantly higher income than the market. The speaker uses the Fast Graphs tool to analyze the S&P 500's valuation and historical performance, highlighting the importance of buying at fair value and the concept of being greedy when others are fearful, and vice versa.

10:02

🔍 In-depth Analysis of Model One and Portfolio Features

The speaker focuses on the first model, an equal-weighted portfolio, providing detailed statistics such as the internal rate of return and current yield. The portfolio's performance is compared to the S&P 500, showing a positive difference in both growth and income. The speaker also introduces the new Advanced Portfolio feature on Fast Graphs, which allows for a comprehensive analysis of the portfolio's performance, including asset allocation, sector diversification, and individual stock performance. The importance of long-term investment strategies and the role of dividends in risk mitigation are emphasized.

15:02

📝 Evaluation of Individual Holdings and Market Performance

The speaker evaluates individual stocks within the portfolio, discussing their performance, estimated growth rates, and dividend yields. The use of Fast Graphs' holding section is highlighted to provide insights into the portfolio's composition and the performance of each stock. The speaker notes that while some stocks are underperforming, the overall strategy remains focused on long-term growth and income generation. The importance of patience and giving the portfolio time to reflect the underlying business performance is reiterated.

🎉 Conclusion and Encouragement for Fast Graphs Subscription

In the concluding paragraph, Chuck Carnaval summarizes the video's content, reiterating the success of the model portfolios and the power of the new Advanced Portfolio features on Fast Graphs. He encourages viewers to invest in a Fast Graphs subscription and to stay tuned for upcoming parts of the video series. The speaker expresses optimism about the continued performance of the portfolios and the value of the tools provided by Fast Graphs for managing stock investments.

Mindmap

Keywords

💡shorefire method

The term 'shorefire method' refers to a reliable and effective strategy or approach that is being shared in the video for achieving success in the stock market. This method is aimed at beating the market in terms of both total income and total return, which means outperforming the overall market in generating income from investments as well as in the growth of the investment value itself. The video outlines specific portfolio models that were created based on this method, targeting different investor objectives such as income generation and capital growth over a period of time.

💡Chuck Carnaval

Chuck Carnaval is the co-founder of Fast Graphs, a software tool known as the Fundamentals Analyzer. In the video, he revisits the model portfolios he created in August of 2021 and provides an update on their performance. His role and expertise in valuation and portfolio analysis are central to the video's content, as he shares insights and strategies for successful stock market investing.

💡income portfolio

An 'income portfolio' is a type of investment portfolio that is specifically designed to generate a steady stream of income for the investor. This is usually achieved by investing in dividend-paying stocks that have a history of consistent dividend growth. The income portfolio mentioned in the video is equal-weighted and based on fairly valued dividend growth stocks, aiming to provide investors with both income from dividends and potential for capital appreciation.

💡growth-oriented portfolio

A 'growth-oriented portfolio' focuses on investments that are expected to appreciate in value over time, with the aim of achieving capital gains rather than generating immediate income. This type of portfolio typically includes stocks of companies that are expected to grow their earnings and dividends at a faster pace than the market average. The growth-oriented portfolio mentioned in the video is designed for investors looking to grow their money over a longer period, with a slightly lower yield but hopefully more growth in the portfolio.

💡high-yield portfolio

A 'high-yield portfolio' is an investment strategy that seeks to generate a higher level of income, typically through dividends, compared to the average market portfolio. This is often achieved by overweighting certain stocks in the portfolio that have higher dividend yields. The high-yield portfolio discussed in the video was specifically created for retired investors who need a higher yield on their investments to support their living expenses without having to sell their stocks.

💡fair value

In the context of the video, 'fair value' refers to the estimated value of a stock or the market as a whole that is considered to be reasonable or typical based on its fundamentals, such as earnings, dividends, and other financial metrics. Investing at or below fair value is seen as a prudent strategy because it allows for a margin of safety, reducing the risk of overpaying for investments and potentially leading to higher returns in the long term.

💡dividend growth stocks

Dividend growth stocks are shares of companies that have a track record of consistently increasing their dividend payments to shareholders over time. These stocks are particularly attractive for investors seeking both income and capital appreciation, as they provide a steady stream of income and the potential for the stock price to increase as the company grows. The video highlights the importance of investing in dividend growth stocks at a fair value to maximize returns and manage risk.

💡Fast Graphs

Fast Graphs is a software tool referred to as the Fundamentals Analyzer in the video. It is used for analyzing and managing stock portfolios, providing features such as performance tracking, valuation analysis, and portfolio comparison. The tool helps investors make informed decisions by offering insights into the performance and valuation of individual stocks and the overall market.

💡total return

Total return refers to the overall gain or income an investment has generated over a specific period, including any capital gains (or losses) from the change in the investment's value and any income received, such as dividends. It provides a comprehensive measure of an investment's performance, reflecting both the growth in the investment's price and the income it produces. The video discusses strategies for beating the stock market in terms of both total income and total return.

💡risk minimization

Risk minimization is the process of reducing the potential for loss in an investment portfolio. This can be achieved through various strategies, such as diversification, investing in assets with lower volatility, or choosing investments that provide a steady income stream, like dividend-paying stocks. In the context of the video, risk minimization is emphasized as an important aspect of building a portfolio based on value investing and dividend growth stocks, as it helps protect the investor's capital while still aiming for growth and income generation.

Highlights

Chuck Carnaval shares a Shorefire method for beating the stock market in terms of both total income and total return.

The video revisits three model portfolios created in August 2021, aimed at different investor objectives including income generation and growth over a 10 to 20 year period.

An income portfolio is discussed, which is equal weighted and based on fairly valued dividend growth stocks.

A growth-oriented portfolio is also covered, focused on growing income and dividends for investors with a longer time horizon.

A high yield portfolio strategy is introduced, which overweights certain stocks to generate higher current yield for retired investors.

The importance of Warren Buffett's investment philosophy is highlighted - to be greedy when others are fearful and fearful when others are greedy.

The video showcases the capabilities of the Fast Graphs software, a fundamental analyzer tool, in managing and tracking stock portfolios effectively.

The first model portfolio (equal weight model) is found to have outperformed the S&P 500 in both growth and dividend income.

The second model (equal weight growth model) produced almost twice the income of the market and a significantly better rate of return.

The third model (high yield model) also beat the market in terms of return and generated almost three to four times the income of the market.

The Advanced Portfolio feature of Fast Graphs is introduced, which is described as a game changer in stock portfolio management.

A detailed analysis of the performance of the first model portfolio is provided, including its current yield and total return since inception.

The video emphasizes the importance of value investing in dividend growth stocks and the risk mitigation strategy involved.

The transcript includes a walkthrough of the Fast Graphs software, demonstrating how to analyze individual stocks in a portfolio and their performance history.

The video concludes with a recommendation to invest in a Fast Graphs subscription and a teaser for upcoming parts of the series covering the other two model portfolios in more depth.