Why Quentinvest? Here’s why!
For better-funded investors prepared to commit at least £25,000
Many people reading this will know that I already have two publications, Quantum Leap and Chart Breakout, which focus entirely on long-term growth shares, chosen by a mixture of fundamental and technical analysis. They have been in continuous publication for 33 years, under my editorship, so I can claim a bit of experience in this field.
It is perfectly possible to use either of these to build an exciting growth share portfolio. Nevertheless, as you will see below, I have just launched two new publications, Quentinvest for Shares about which more below and Quentinvest for ETFs (Exchange Traded Funds) about which I have more to say elsewhere on the web site.
So why do I need another shares publication, albeit an on-line one and why now?
My answer would be that Quentinvest (QV) brings something extra to what I do, which I think adds some serious magic.
The way I think of it is that QV is like an app, which, when added to QL or CB or just used by itself, helps you turn my stock market selections into real value. It forces you to make money by focusing not just on which shares to buy but what to do with those shares after you have bought them. It is not just about tips but offers a complete system of investment, a set of rules for building and scaling a portfolio based entirely on shares in fast-growing companies.
And just so you know, I am following the Quentinvest system to the letter myself, including acting on all the alerts and expect to do very well from doing so, maybe fantastically well.
As I hope you will agree, when you look at the historic performance figures for Quantum Leap (see charts in the performance section of the website), I am good at selecting top quality growth shares. Names like Apple, Alphabet, the newly named holding company for Google, Amazon, Facebook, Netflix and Tesla have all featured multiple times in QL and CB and have gone on to dominate the post-2009 bull market with gains up to around 2,000 per cent on my starting recommendation prices.
I have been equally successfully at identifying the top performers of the UK bull market, companies like Abcam, Accesso Technology Group, Ashtead, ASOS, Hargreaves Lansdown, Brooks McDonald, Craneware, Cranswick, First Derivatives, Fevertree and many, many more.
This success goes back a long way. Microsoft has been one of the best performing stocks of all time. I first wrote about the company in December 1990, when the price, adjusted for subsequent share splits was 90 cents. The latest price is $76.5, which is an 85-fold increase.
On the UK market one of the best-performing stocks has been online fashion retailer, ASOS. I first wrote about the shares in August 2004, when the shares were 55.25p and I said ‘the fun might be just beginning’. The latest price is over £58 and they have been as high as £71.95.
Incidentally I am sure that Chart Breakout has done equally well. It is just that with so many recommendations per issue calculating the total performance is a task I have just not yet had the time to complete. For the years, which I have looked at the performance is very comparable to Quantum Leap.
The question arises and is definitely one I ask myself, if I am so good at picking shares, why am I nowhere near as wealthy as multibillionaire, Warren Buffett. He is both a model for what I do and is famous both for his long-term approach to investment and also his skill at picking shares, which rise multiple times after selection.
No doubt there are many differences between Buffett and me. He is a recognized genius after all. Nevertheless, one difference that I think is critical is that, when I find great stocks I hold them for a while and then sell them. He just holds them.
He still owns stocks like Coca-Cola, which he bought in 1982 and there are others he bought even earlier. He started buying shares in American Express in 1964 and the stake held by his company, Berkshire Hathaway, is now worth almost $14bn.
Looking back through time I was shocked to realize that if I had held on to all those great shares that I have found and bought, just by not selling them, I would have made a fortune. Maybe not quite Sunday Times Rich List but definitely serious money, multiple millions.
It seems the key to success is so simple, at least in theory, although as I think we all, also know, it can be surprisingly difficult to implement in practice. The pressure to sell on bad news, to protect shrinking profits, can be so overwhelming. It takes steel to invest for the real long term like Buffett. Quentinvest has been designed to give you and me that steel.
Further consideration of what I have done in the past just hammers home the point. When I find great shares I often add to my holdings. I do exactly what I recommend in my publications, which is to back them again and again. Great performers like Amazon and Netflix have been recommended as many as 30 times in my publications.
The only problem is that I always sell them in the end and time and again that has proved a mistake. I take a decision to sell, often pocketing handsome profits, when I do so, which looks good for a week or two, even a month, maybe sometime even a year but in the real long-term has so often proved disastrous.
I don’t know at what prices I first bought ASOS, Amazon, Alphabet, Netflix, Google et al but it was way below the price they are now, probably around the price, when I first recommended them. Unfortunately the latest price is also way above the price at which I sold those early purchases. Often I would find myself buying and selling and then repurchasing the same share at a higher price. In retrospect I can see that I did it wrong again and again and again.
I took a winning hand and somehow managed to lose, not everything but a huge proportion of what I could have made.
Then I had my moment of revelation. The way to not sell is to always have it in mind to buy more. Imagine if I had bought Amazon or ASOS, way back when I did buy them and then bought more again and again. Imagine if I had done the same with all those other great performing shares that I found and featured in QL and CB. Over time, over years running into decades, I would have built very substantial holdings in all these star performers. What a portfolio I would have? What a base from which to plot total Warren Buffett-style world conquest?
Now, truth be told, the way I operate in my publications is fairly random or at least far from systematic. I am always looking for new stocks, updating my tables of existing and past recommendations. From this process I get my ideas about, which shares to feature in publications as they fall due. I do recommend shares again and again but not in a truly disciplined way.
This in turns means that many exciting shares, which I should have recommended time and again get missed for long periods. Although Accesso Technology Group has been recommended nine times in my publications since 2009 and has often featured in my personal portfolio, it went from 123p to 695p without another recommendation; that shouldn’t happen.
Suppose, I thought to myself, I made this process less random, suppose I subjected it to a rigorous set of rules and I have some very good rules for follow-up buying. I tried it with Amazon. What would have happened if I had my Quentinvest system in place, when I first bought the shares and operated by the QV rules thereafter?
I then back tested the figures to see what would have happened if I had done this, if I had made follow-up purchases, whenever my rules said I should. The results were unbelievable, so unbelievable I am reluctant to tell you what they were for fear of seeming to be indulging myself in total fantasy. If I had bought on my first recommendation, never sold and made additional purchases according to my rules just working with that one share would have turned a modest initial investment into literally millions.
If that is anywhere near what Buffett is doing and I suspect it is, then no wonder he is rich ($75.6bn) beyond anyone’s wildest dreams.
As an approach the Quentinvest strategy is incredibly powerful.
Apply the same strategy to all the great shares I have found and the whole thing gets exciting indeed. Keep doing it and whoever is doing it, me, let’s say or you, would end up with a sensational portfolio, a glittering who’s who of the world’s most exciting, fastest-growing businesses.
Nor would that be the end. Buffett became rich by creating a great portfolio. He became one of the world’s richest men by hanging onto that portfolio, tweaking it and adding to it just as you and I could if we could just create that great portfolio in the first place.
I can see what some of my readers might be thinking; that is all very well but we are all geniuses with hindsight. What about all the shares about which you become excited but which don’t go on to conquer the world? Even Warren Buffett makes mistakes and I certainly do. Nobody can predict the future.
That’s true but it doesn’t matter. My system doesn’t involve predicting what is going to happen in the future, it involves reacting to the present. The winners are so big that you can pick tons of duds and my strategy will still deliver a massively valuable portfolio. One notable US investor said recently that he had made more money buying and holding Netflix than he made from all the other 500 shares in his portfolio combined.
Part of the reason why my system works so well is because the rules positively require you to add to your big winners. It is also the case that every portfolio, even Buffett’s, contains winners and losers. In my case this is likely to be mostly winners. Why do I think that; because my live portfolio table, all the shares from QL and CB, which I still like and which are doing well, is much bigger than my dropouts portfolio, by a multiple.It is also the case that winners always dominate the value of any portfolio. The losers can only lose 100pc of their value, whereas the gains for winners are unlimited. Losers quickly shrink in value and cease to play a significant role and this helpful tendency is greatly heightened by the operation of the QV system, where you are buying more of your winners and leaving your losers to fade into obscurity.
Notice though that winners only dominate if they are allowed to do so. How many investors, including professionals, do the opposite of what I am suggesting above. They trim their winners, when they start to become too important to their portfolio, exactly what we don’t do with QV. On the contrary, if we were to cut anything it would be our losers except that is not necessary. We just allow nature to take its course.
Never average down, always average up.
Look back through past copies of my publications and you will see that I very rarely make a follow-up recommendation for a share at a price lower than the price at which it was last recommended. It is not quite a rule but it almost is; I never average down, I average up. Apply this across the board and it means that falling shares don’t get follow-up recommendations. Their price falls but you don’t buy more of them. You only buy more of your good performers. As a result the duds become less and less important as a percentage of your total portfolio. In effect, they sell themselves, while the star performers grow to the stars.Further than that, you will have noticed that if shares start to lose their way completely, they go from the live portfolio to the drop-outs table. Like Mr Buffett, I will eventually cut my losses to release funds for other opportunities but these sales are rare and are not important to the overall performance. Shares that are sold have usually already ceased to matter.
What is important and the absolute game changer is that you hold on to your star performers and buy more of them. In effect, you do something, which so few professional investors do but which all owners of businesses like Bill Gates and Jeff Bezos, do without even thinking about it; you hang on through thick and thin allowing miracles to happen and if you allow them to they will.
So that is the heart of the Quentinvest strategy. I will alert you, by email, to shares, which I think you should buy and then at periodic intervals, if they are doing well, I will alert you to add to your holdings. If they are not doing well there will be a deathly silence. All you have to do is do what I tell you to do; it is absolutely that simple. Like the game Simon says, when Quentinvest says, you do it.
Every share I alert you to buy I will buy myself and if they fall after I tell you to buy I will not sell. I will religiously follow the rules. Periodically I will alert you to buy more of your strong performers and when I do that I will be buying more myself, scaling my winners and deliberately neglecting my losers.
3G stocks are ‘must-buy’ stocks
It is a strategy of slow but relentless accumulation, which, if markets are friendly can actually deliver surprisingly rapid results. It is also totally rules based to the point, where I even have a rule for which shares I will feature in QV. There is more about this elsewhere on the web site but the key characteristic a QV stock needs is that it must pass my 3G test. 3G stands for great story, great growth and great chart. Put another way it must be a great business with great potential.
If it ticks all the boxes I want to buy. I would even say I must buy. If it fails to tick even one of them it won’t be chosen, not least because there are so many other fish in the sea. Stuff your portfolio with this carefully chosen collection of high potential businesses based on my lifetime of experience seeking out and finding such exciting companies and you will do well.
I have a mantra, which I call error-free investing. This doesn’t mean never making mistakes, never choosing shares that fail to perform. It is impossible to be an investor and not make that mistake. By error-free investing I mean never failing to follow the rules. Like a general, I, and you, if you are following me, have a strategy and we stick to it, to the letter.
It’s wonderfully relaxing really because thanks to Quentinvest you always know what to do.
Remember also that great businesses are led and run by great businessmen. Think what Messi means to Barcelona and you can see what great leaders like Jeff Bezos of Amazon, Reed Hastings of Netflix, Elon Musk of Tesla and many others mean to the businesses they lead. They have faith in themselves; you and I should have faith in them.
The power of leverage
There is another clever twist to the QV strategy, which you may or may not want to adopt. I use a carefully controlled amount of leverage (borrowed money) to help, particularly with the follow-up purchases. A bit of gearing amplifies your gains (and your losses, I know) and for most investors, with limited funds, helps you build a diversified portfolio more quickly than if you were only to use your own resources.
I know, borrowing to buy shares sounds scary and you do need to proceed with care. As we all know, shares go up and down, past performance is not necessarily a guide to what will happen in future and if you are borrowing to buy you can lose all the money you invested and more. Shares are risky, borrowings are risky; there is no doubt about that and if you find the idea of borrowing too alarming, by all means don’t do it.
If borrowing to buy is not your thing just buy shares for cash and build your portfolio that way. It can still work very well. It is after all what most people do. Nevertheless borrowing is not stupid, especially when funds are limited. It is the old story. It is easy to become rich if you are rich already. Buffett wasn’t when he started and he has also been very happy to borrow to buy, particularly in the early days. You just need to be sensible, just as you would be with any other type of borrowing.
As a warning, what you certainly should not do is use the limits that IG would allow. These are designed for short-term speculators and day traders and are wholly unsuitable for long-term investors. IG would let you put up just £50 in cash and buy £1000 of shares in companies like Amazon and Netflix. For a long-term investor that is madness. My rule is (a) never invest more than three times your cash and (b) have some money in reserve so you are never forced to sell, even if the general stock market crashes.
It is common sense. Borrowing to invest is OK but only within strict, prudential levels set by you, not by what IG might allow. My portfolio is all on IG but I am nowhere near making use of the borrowing they would allow me based on my portfolio. I want to be around for the long haul, not wiped out by the next general market sell-off.
The way the programme works with QV is that as I alert you to shares to buy you buy them, perhaps initially mostly or even totally for cash. Then over time, as your portfolio starts to make progress and I start issuing follow-up buy alerts for shares you already own, you can buy those with all or partially borrowed funds.
Follow-up purchases are typically made at higher prices so you should have profits on your initial investments. These profits create equity in your account, which can be used to fund the borrowings to buy more shares. It is exactly analogous to buying a house with a mortgage, seeing the value of the property rise and borrowing some extra funds against the increased value to make improvements. You do it safe in the knowledge that the improvements will add yet further value to the house justifying the extra borrowing.
In an exactly analogous manner I am suggesting that as your portfolio climbs in value you use some borrowed money to add to your positions in your best performers. It really does make sense and just as with your house you need to be sure that you don’t borrow too much and that your security, in this case a diversified portfolio of carefully chosen growth shares, is high quality, which, with Quentinvest it will be.
If you do decide to do this, like me you will need to open share and CFD accounts, with a broker like IG. IG is good because they are big, have been around a long time, have very strict rules including about what kind of accounts you are allowed to open and offer a very wide choice of shares, which can be bought and sold on their platform.
If you feel nervous just stick to buying shares for cash until you are more comfortable. By all means start slowly, get a feel for how it works, make some purchases, read the blogs on Quentinvest in Operation that will be regularly posted on the site and learn to walk before you try to run.
It is not rocket science but it is not quite a walk in the park either. Anything worth doing needs to be mastered and there is a lot to learn but QV is designed to give you plenty of help and make it as easy as possible.
That said, there is no denying that Quentinvest for Shares is demanding and aimed at investors, with some experience, people, who have already dealt in CFDs, who already have their own portfolios or who have been subscribers to my other publications. It is a follow-me strategy in that I will be doing everything I tell you to do. My portfolio is the QV portfolio. You can do it without knowing a thing but it helps if you do understand the whys and wherefores of what you are doing.
It is also entirely rules based. There is a rule for everything, what to buy, when to add to holdings and how much to invest each time you buy. My golden rule is to follow the rules and that way your chances of success are as good as reason can make them.
Just to help you decide whether you are a sophisticated investor, ready to invest in shares the Quentinvest way; there is a simple quiz on the site. Pass the test and you should be ready for Quentinvest for Shares.
If you find the test a struggle or even a complete mystery and don’t feel ready to build your own share portfolio you can look at our beginners’ option – Quentinvest for ETFs, which is simpler to operate but should still deliver exciting results over time. Again I am doing this myself and expect to do very well.
Whatever you do you will most likely need patience to be successful. Share markets are everything the regulators tell us to warn you about. They are risky, volatile and just when you think the skies look their bluest can deliver shocks but they are also perfectly geared to winning in the end for investors with patience and the right approach.
The FTSE 250, an excellent measure of UK share price performance, has been volatile, like all share markets but over the long haul the direction is, or has been, strongly higher. Since it was founded in 1986 the level has climbed from 1,838 to 20,146; that is why it pays to be a long-term investor, or at least it certainly has in the past.
Quentinvest is all about doing better than the index. Most professionals, judging by the performance of actively managed funds, do worse.
Come on. Give it a go. You won’t regret it. It could even change your life.