This editorial is from our monthly Shareholder Yield Letter published on 2023-09-06. Sign up here to get it in your inbox on the first Tuesday of every month.

If you want to know more about the newsletter, you can find additional information here: The best large cap investment strategy ever

Earlier this year, we embarked on a journey by introducing a fresh newsletter based on the finest large cap investment strategy we've ever put to the test.

We've recently dispatched the latest issue, and similar to my mention last month, the high-quality large cap businesses the strategy uncovers continues to astound me.

The performance since May has been quite commendable, averaging a +3.1% increase across 20 companies!

Even if we overlook the 6% average share buybacks yield, the portfolio's average dividend yield stands at 5%. An intriguing prospect, perhaps for inclusion in your income portfolio?

I'm unable to divulge the names of the recommended companies in this issue (that wouldn't be fair to our subscribers), but I can provide you with a rough indication, so here it is.

Changes in the Portfolio

Acquire Four

This month, we're introducing four new recommendations as the MSCI World index stands above its 200-day simple moving average.

The first is a UK-based financial services provider boasting a shareholder yield of 10.5%, share repurchases of 5.9%, and a dividend payout of 4.6%.

The second is a Switzerland-based natural resources producer and marketer exhibiting a shareholder yield of 12.8%, share buybacks of 4.9%, and a dividend yield of 7.9%.

The third recommendation is a UK-based public services provider with a shareholder yield of 10.0%, share buybacks of 8.0%, and a dividend yield of 2.0%.

The fourth and final recommendation hails from a Norway-based telecommunications company that delivers a shareholder yield of 9.3%, share buybacks of 1.0%, and a dividend yield of 8.2%.

Must I Secure all Suggestions?

 A subscriber posed the following question, a query that you might've pondered over as well:

“Am I obligated to acquire all the companies recommended in the newsletter?”

The clear-cut answer is NO, you should never invest in anything that makes you uneasy or in a company or investment that you don't comprehend.

Acquire all Concepts

However, if you understand and feel at ease with the newsletter's investment methodology and the companies it endorses, it's a wise decision to adopt all the proposed investment concepts.

Allow me to elaborate.

We all Harbor our Predilections

We all possess predispositions — some we favor, others we shun. The realm of investing is no exception. Similar to myself, I'm certain you have industries and companies you prefer to invest in while steering clear of others.

For instance, I have an aversion to investing in gold mining companies due to a negative experience from the initial stages of my investing journey (over 35 years ago!).

Conversely, I delight in investing in software and asset management companies because their business models scale remarkably well (as revenues surge, operating costs remain relatively stable, resulting in substantial profit growth).

Similar to these, I'm certain you harbor your own inclinations.

Biases Hinder, not Help

The conundrum lies in the fact that these biases impede rather than aid us; in fact, they diminish our returns. Due to irrational rationales, they dissuade us from investments that could yield high returns.

No one can forecast the future, therefore, excluding certain investment propositions due to personal bias is illogical.

Returning to the newsletter.

The newsletter's investment model diligently selects investment ideas with a high likelihood of yielding exceptional returns

Not All Ideas Will Flourish Enormously

It's a certainty that not every idea will yield remarkable returns.
Some will soar, others will stagnate, and some will plummet.

The predicament is that neither you nor I (or anyone else) can determine which investments will yield the greatest returns and which will falter.

Limit Exposure to a Single Idea to 2% and Employ a Stop Loss System

Given that not all investment notions in the newsletter will thrive (albeit the investment strategy will),
is why we integrated a prudent approach into the newsletter's investment strategy to assist you in precisely this.

We advocate against allocating more than 2% to any single idea.

This minimizes potential losses from any one company while ensuring that you reap the full benefits of the investment strategy.

This is also the rationale behind the newsletter adopting a rigorous trailing stop loss system. This enables swift divestment of underperformers and allows thriving investments to flourish.

In Conclusion – Your Most Efficient, Effortless, and Profitable Approach

In numerous studies on quantitative decision-making models that have proven to be effective (similar to the one employed by the newsletter), it has been demonstrated that the optimal outcomes are realized when the model is strictly followed.

Any filtration, either by you or me, will only lead to diminished returns.

Due to the unknown nature of the future, and our investment proclivities (biases) steering us astray, the simplest, most effortless, and most lucrative decision you can make is to invest (albeit not more than 2% of your portfolio) in all (or as many) of the companies recommended in the newsletter.

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