The purpose of this book is simple. It is written so that you, dear reader, can very easily develop your own set of portfolios, which should outperform most of the professional money managers of the world. It is written with the K.I.S.S. principle in mind: Keep It Simple, Silly!
Since the last publication of this book, we have proven that our growth strategy works as well as the doctoral research said it should. Our model portfolio has outperformed the S&P 500 Index by more than two to one over a 12-year compounded rate of return. Our model portfolio has also outperformed Buffett's Berkshire Hathaway by almost two to one over this same time period. This outstanding performance was achieved without taking on more than market risk. And now, we show you how to hedge (insure) those portfolios in order to lower risk to a very manageable level.
During the interim between the first edition and this book, we've developed a dividend growth and income portfolio, which uses the Clean Surplus method as the basis for our stock selection. We want to select stocks with a 7 percent expected growth in dividends and another 8 percent anticipated growth in stock appreciation. This is a great portfolio, which all of us should have going into the future. We will show you how to structure your own dividend and income portfolio in Chapter 21.
We have added Chapter 25, which will discuss insuring our portfolios. Portfolio insurance costs money, but we will ...