Sticking With the Mechanical Approach

Today I will continue examine the portfolio produced by simple guidelines and managed on a mechanical basis. The root of the approach is a simple valuation model that is primarily based on the balance sheet. The system looks for stocks with solid balance sheets  that are selling at steep discounts to asset value and pays no consideration to the income statement. The early, quick-and-dirty results show substantial outperformance over a long period of time and I think it's worth further investigation. It also turns up some pretty good stock ideas.

On Wednesday, I examined a few of the stocks in the portfolio that probably would have never made it into one of my discretionary accounts. I either didn't like or didn't understand their businesses enough to consider buying these stocks. Today, I will examine a few of the model's picks that I am more enthusiastic about and which I would be happy to include in discretionary accounts....564 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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