Asset-Based Investing Works

I came across some old computer files last night that were very interesting. In 2008, I kept a portfolio of my Real Money picks during the first part of that volatile year. That August, just before things really went south, I formed a model portfolio and tracked it. After a while, I moved everything to the cloud and forgot about the file. When I stumbled on the old file last night, the evidence for asset-based investing was compelling.

The portfolio returned about 16.7% annually compared with a market return of just 2.45%. I was sufficiently impressed with this number until I noticed a tracking error. The portfolio of 39 stocks had experienced a fair amount of takeover activity, with eight companies being merged or acquired. The program was counting them all as a 100% loss since the tickers no longer existed. After adjusting for this minor mistake, I recalculated the asset-based portfolio of returns and came up with an annualized return of 21% -- almost ten times the markets return over the same period....454 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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