| ICLUB Insider |
April 13, 2004 |
THE LATEST NEWS ON
NAIC SOFTWARE BUILT BY ICLUBCENTRAL INC.
Summary
If you read this newsletter regularly, you’ve probably heard
us rave about the Investor Advisory Service (IAS) before.
Well, it turns out we’re not the only ones raving!
The Hulbert Financial Digest, the major independent
investment letter rating service, recently reported that IAS
beat the markets yet again, posting a gain of 38.1% in 2003,
versus an increase of 31.6% by the Wilshire 5000 broad
market index. According to Hulbert, IAS has gained 108.8%
over the last five years (an average of 15.9% per year),
versus just 6% for the Wilshire 5000, an average of just
1.2% per year.
I’ll repeat that, just for effect: According to the Hulbert
Financial Digest, IAS has gained 108.8% over the last five
years, during which time the Wilshire 5000 has added only
6%.
That means that if you had started five years ago with an
investment of $100,000 in the IAS's recommended stocks and
followed its guidance through the years, your nest egg would
now be worth $208,800. On the other hand, a $100,000
investment in the Wilshire 5000 would be worth $101,200.
Your IAS growth of $108,800 would be nearly 100 times as
large as the Wilshire’s $1,200 gain!
Wow! Now, IAS is unlikely to beat the Wilshire 5000 by a
factor of 100 every year, but when it does, we’re certainly
happy!
But we’re not bragging, really -- we just publish the
newsletter. The brains behind the stock picks are the
Chartered Financial Analysts at Seger-Elvekrog, a money-management firm founded by longtime NAIC investing guru,
Ralph Seger. So congratulations are in order to Ralph,
Maury Elvekrog, and Scott Horsburgh for racking up such
enviable numbers!
In celebration of this excellent performance, we’re offering
a limited-time discount on IAS subscriptions in conjunction
with local NAIC chapters. To learn the details of this
promotion, which runs only until June 1, please get in touch
with your local chapter representatives or attend a local
NAIC event. (And what a deal that is -- expand your
investment knowledge by participating in one of your local
chapter events or Investors Fairs and save a bundle on one
of the top-performing investing newsletters in the country!)
For more information on the Investor Advisory Service,
please visit:
http://www.iclub.com/ias/
It's been an exciting week! We've just released a couple
software updates to enable smoother functioning of our
various NAIC Software products on the same computer.
First, we released a patch to address the problems some NAIC Investor's
Toolkit users had encountered after installing the new NAIC
Stock Analyst. We traced this problem to the fact that the
installation of NAIC Stock Analyst was modifying certain
files that the program shares with Toolkit. We created a
very small (1 Kb) patch that resolves this issue and allows
users to run both Toolkit 4 and NAIC Stock Analyst on the
same machine. To download this patch, please visit:
http://www.iclub.com/support/download.aspx?file=tkfix.bat.
Note that you should download this patch if and only if
you've had difficulty running NAIC Stock Analyst and NAIC
Investor's Toolkit on the same computer. To run the patch,
simply double-click on it after saving it to your hard
drive.
Second, we have resolved a compatibility problem relating to
NAIC Stock Analyst and NAIC Classic Plus. After installing
NAIC Stock Analyst, some users encountered difficulty in
opening Classic Plus. This was due to modifications made by NSA to a file
called SSLstBar.OCX, which is an activeX driver used by both
programs. The good news is that the latest version of this
file allows both to run without any difficulty. So, if
you're having trouble using NAIC Stock Analyst and NAIC
Classic Plus on the same computer, you should download this
driver file from:
http://www.iclub.com/support/download.aspx?file=sslstbar.ocx.
Simply save this file on your hard drive under
C:\Windows\SYSTEM32 (or if you are using or upgraded from
Windows 2000, the directory would be C:\WINNT\SYSTEM32).
Installing this driver will also resolve a separate issue
reported by Classic Plus users from time to time in which
they receive a "Runtime Error 339" which indicates that this
file is missing or corrupt. This patch will kill two birds
with one stone!
If you don't have any of the above problems, then there's no
need for you to use these downloads. Let sleeping dogs lie!
If you have any problems or questions about these topics, or
if there's anything else we can help you with, please feel
free to call us at 617-661-2582. Or, for faster service,
just submit an email request at:
http://old.iclub.com/support/request.html.
CompuFest 2004 is shaping up to be one of the best NAIC
conferences in history! Already, registrations are running
at an all-time high, and time is running out to secure your
place at the NAIC Computer Group Advisory Board's national
conference on computerized investing. Also, registration
fees go up after April 26th -- if space is still available!
While much of the CompuFest 2004 curriculum focuses on
helping you to make the most of your personal computer, NAIC
Software and financial web sites, you don't need to be a
computer "expert" in order to participate. The CompuFest
program is jam-packed with seminars that teach the basics of
the Stock Selection Guide, PERT and other NAIC tools. If
you've never taken the leap and started using software to
help you make better investing decisions, CompuFest is your
opportunity to evaluate all the available programs and get
hands-on experience using them under the watchful tutelage
of experienced volunteers and experts from ICLUBcentral.
All of us at ICLUBcentral look forward to meeting you at
CompuFest 2004 in St. Louis, MO, June 18-20, 2004.
For more information, visit:
http://www.compufest2004.com/articles/000019.php.
(Editor's Note: NAIC's Stock Selection Guide is the cornerstone of the Investor Advisory Service, and is used by Ralph Seger and the analysts at Seger-Elvekrog to select and follow each company included in the newsletter. In this issue, we are pleased to offer the third of a multi-part series of tips that delve into the basics of the SSG and how it can best be used to identify stocks for your portfolio.)
Prior to 1954, the NAIC SSG did not incorporate P/E ratios
as a method of valuations. Alex Carroll brought this concept
to the NAIC convention that year, and it was quickly
adopted.
As earnings are gradually accumulated during a fiscal year,
the price investors are wiling to pay for the stock tends to
represent investors' valuations. In section 3 of the SSG,
the relationship between high and low fiscal year prices are
represented by high and low P/E ratios. If EPS decline
sharply during a fiscal year, the price does not always fall
a comparable amount as investors view this as a temporary
situation. Therefore, it is advisable to delete abnormally
high P/E ratios when proceeding to estimate what the future
P/E ratio will prevail. Please note all per share data such
as EPS, prices and dividends must be evaluated in a common
time frame, the fiscal year. Using annual price ranges to
calculate P/E ratios for EPS generated in a non-calendar
year is an exercise in lack of logic.
Making a judgment as to estimating what future P/E ratios
will prevail is a job requiring an understanding of what is
logical and what is speculative. There tends to be a
relationship of P/E ratios and growth of EPS, and this
relationship is affected by what institutional investors are
willing to pay for each dollar of earnings a company makes.
Some investors use techniques for determining the value of a
stock which does not relate to P/E ratios. (Technical
analysis and momentum investing are typical examples.) As we
saw during the March 2000 to March 2003 bear market period,
stock market bubbles that are fueled by emotion and hype
eventually explode, much to the regret of those who were
sucked in.
What is a reasonable P/E ratio to pay for a stock? This is a
question about which many people disagree. Perhaps a better
question to ask is what is an "excessive" P/E ratio?
Typically, the P/E ratio of large market capitalization
(price times the number of shares) stocks that are favorites
of institutional investors frequently sport P/E ratios that
are more generous than lesser known issues. Such generous
P/E ratios have built into them an expectation of future
favorable results. It is when such results fall short of
expectations that the price and P/E ratio of the stock takes
a tumble.
Sometimes the P/E ratio history of a company goes to the
other extreme. For example, stocks of home building
companies tend to sell at modest P/E ratios because of the
understanding that as mortgage interest rates move up, more
and more potential home buyers are going to decide that they
can't afford the required monthly payment and decline to buy.
Examining the historical record of P/E ratios is one way of
estimating what the future P/E ratios may be. This is a very
important judgment because Section 4 of the SSG uses P/E
ratios to calculate potential future high and low prices.
The high price is a multiple of the estimated future average
high P/E ratio and the estimated EPS five years in the
future. If one is too optimistic as to future EPS and/or a
future high P/E ratio, the SSG will suggest a stock is a
good buy. Of course, only future events will determine the
accuracy of the judgment. Unfortunately, too many investors
make an optimistic assumption which hard cold logic suggests
may be a route to a financial disappointment or disaster.
To be continued....
For more information on the Investor Advisory Service, please visit http://www.iclub.com/ias/.
Product Buzz: Updates on our NAIC Software Products
Is your computer fitted out with the latest and greatest NAIC software? Here's an overview of the programs currently offered by ICLUBcentral:
INVESTING SOFTWARE
NAIC Classic (Plus)....................................Current Version: 2.1.0043
[ Order ]
[ Info ]
[ Download demo ]
NAIC Investor’s Toolkit (Pro).........................Current Version: 4.0.18
[ Order ]
[ Info ]
[ Download demo ]
[ Updates ]
NAIC Take Stock............................................Current Version: 4.0.0
[ Order ]
[ Info ]
[ Download demo ]
NAIC Stock Analyst....................................Current Version: 3.0.0001
[ Order ]
[ Info ]
[ Download demo ]
[ Updates ]
NAIC Stock Prospector...............................Current Version: 2.5.0037
[ Order ]
[ Info ]
[ Download demo ]
TAX & ACCOUNTING SOFTWARE
NAIC Club Accounting..................................Current Version: 2.5.11
[ Order ]
[ Info ]
[ Download 2.3.5 demo ]
[ Updates ]
NAIC Online Club Accounting................................Always Current!!
[ Order ]
[ Info ]
[ Demo website ]
2003 NAIC Club Tax Printer.......................Current Version: 1.0.0020
[ Order ]
[ Info ]
[ Download ]
2003 NAIC State Tax Printer.......................Current Version: 1.0.0017
[ Order ]
[ Info ]
[ Download ]
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Copyright 2004 ICLUBcentral Inc. All rights reserved.
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