With the stock market making new highs, many investors are in a quandary: They are anxious to jump in. But they are also feeling anxiety about the inherent risks — and for good reason!
The solution is two-pronged:
- Consider holding some broad-based hedges that are designed to protect you from a decline in the market averages. Plus …
- Buy strictly the highest-quality stocks that have the best potential to outperform the averages in both good times and bad.
How do you identify those stocks?
I was asked precisely that question in a recent MoneyShow.com TV interview with host Nancy Zambell. So I’ve decided to share it with you in two formats …
First, here’s the link so you can watch it online:
And second, here’s the transcript (edited a bit for clarity).
Inside the A-List
Transcript of MoneyShow.com TV Interview
Nancy Zambell: Martin Weiss is joining me today and we’re talking about stock ratings. Hi, Martin. How are you doing?
Martin Weiss: How are you doing Nancy?
Nancy: Good. It’s good to see you. Now, we’ve been on quite a roll in the stock market in the last year and specifically in the last couple of months.
A lot of investors have taken the dartboard approach — that whatever I invest in is going to be great, but now we are over the 14,000 level and how long can it last? That is a question. Can we be as indiscriminate anymore — I don’t think we can. What do you think?
Martin: I don’t think you can ever be indiscriminate. You need to be able to find a way to invest in stocks with relative safety.
Martin: In order to help investors select the relatively safer stocks, we created ratings in 2001 on almost all listed stocks in the United States.
We tracked the performance of those ratings for a 10-year period after we issued them.
And what we found was that our A-rated stocks — the stocks that Weiss Ratings gave an “A” to — have greatly outperformed the stock market through bull and bear markets. During that 10-year period, the S&P 500 would have given you about 46 percent.
Nancy: Which is really good.
Martin: It is good but it is 10 years. Let’s recognize that also includes dividends and reinvestment of dividends. And that’s the most you could have done during that period. In contrast, those A-rated stocks from our list outperformed — made 199 percent.
Nancy: That is more like it, so about 20 percent a year.
Martin: Yes, it was about four-and-a-half times better than the S&P or about 154 percentage points better.
Nancy: Now, of those stocks, is there a certain percentage that have dividends?
Martin: Most had some dividends, some didn’t. But the key is, among all of those stocks, none of them went down. In fact, if you were so unfortunate and happened to pick strictly the ONE worst performing stock in our A list, you still would have beaten the S&P 500.
Nancy: Oh, that is pretty nice.
Martin: So, there were no losers. And they all beat the S&P, some by a much wider margin obviously; and that is the key. It is not only the amount you make. It is the relative safety and security you have when going into a stock investment for the long-term.
Nancy: Now, are you looking at just fundamental or also fundamental and technical factors when you do your ratings?
Martin: Both. But, what distinguishes these stock ratings — now published by TheStreet — from most stock ratings is the safety factor.
Martin: Most of the ratings you see coming from all other sources are …
Nancy: Just based on return.
Martin: Right. And we are looking also at the consistency of return and the fundamental strength of the balance sheet, which most others don’t consider, or consider as a sideshow at best.
Nancy: So, how does an investor access those ratings?
Martin: They are available at www.weisswatchdog.com. There, you can get up to 10 free ratings. Plus we can track them for you and send you an email when they change — not only on stocks but also ETFs, mutual funds, your bank or insurance company, and even foreign sovereign debt.
Nancy: Oh, super. Well, great, thank you Martin.
Martin: Thank you.
Nancy: And thanks for being with us on the moneyshow.com video network.
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