Quentinvest and Visa

I am not talking here about paying for Quentinvest with your Visa card although that could be a good move if you want to make some money in the stock market. Instead I am referring to how you would have fared if you had used the QV system to buy Visa shares since the company floated on the New York Stock Exchange in March 2008 at $11 (adjusted for a subsequent 4:1 share split).

Visa is just the kind of share I might have suggested buying since my system involves finding exciting shares, with long-term growth potential that fulfil my 3G criteria (great story, great growth, great chart) and buying an initial modest stake. This, in itself, can be a lucrative thing to do if the company grows as anticipated.

Just for the record, the shares have featured five times in my other publications, Quantum Leap and Chart Breakout, at prices between $30 and $79 so I am talking here about a share, which I have liked for years.

The real magic, though, comes from what happens next, after the initial purchase. I have noted that really successful investors like Warren Buffett make their fortunes by buying great stocks, holding for the very long term (years and even decades) and rarely selling.

In order to make sure that is what you and I do with our carefully chosen investments I don’t just buy and hold, I buy and buy more. My strategy is based on a mixture of the passage of time and signs that the business and the shares retain the positive momentum that attracted me to them in the first place.

It’s not rocket science, just careful observation and patience. In the case of Visa, if I had bought the shares soon after the IPO and then made follow up purchases exactly on the lines of the QV system I would have made 29 separate purchases over the nearly 10 years since the IPO (Initial Public Offering). If I invested $1,000 each time I would have spent $29,000. In addition to that my commission costs, at $15 a time, would be $435.

Finally, if I was buying CFDs through IG and using a sensible amount of leverage I would also have interest costs currently running at 2.75pc per year. These I have assessed at around $5,500 over the period of the investments.

Note that because I am investing equal amounts of money each time the number of shares I buy is reducing on nearly all successive purchases. This is good because it keeps my average cost of purchase well below the latest price. In total I would have bought 965 shares. The cost would be $29,000 plus commission of $435 plus interest of $5,500 for a grand total of $34,935 or $36.20 per share.

Now here’s the fun bit. The shares are currently trading around $104 so my 965 shares are worth just over $100,000. This means I would have a profit of some $65,000.

It gets even better. Because a CFD account with IG is a margin account if the value of your shares rises, creating more equity on your account, you can buy more shares without putting in any additional funds. I estimate that I might have been able to make the purchases outlined above based on depositing cash into my account of as little as $5000.

Even if, for prudential reasons to make sure I was not taking too much risk, we double that figure to $10,000 then we can really see the power of the QV system. By carefully following the QV rules it has turned an investment of $10,000 into a $100,000 investment on which there is a $65,000 profit.

Incidentally the way this appears in your CFD account is as follows: – holding, 965 Visa shares, total value, $100,329, borrowings, $35,000, net equity (your profit), $65,000. I think that is a bit of a result and that’s just one share! Imagine the same effect happening with a whole diversified portfolio of carefully chosen exciting 3G shares.

That’s what’s on offer with my system and you won’t be investing alone. Every share I recommend I buy myself and I will be following the QV system as religiously as I hope you will.

All trading involves risk. Losses can exceed deposits. Quentinvest provides information only and subscribers should seek financial advice before acting on any recommendations. Past performance is not a guide to future performance.