Value Averaging Model Portfolio's

Everyone knows how volatile the stock market has been and how uncertain the world's economies have been over the last few years. The majority of investors have made little or no money from stocks or mutual funds for a very long time. This could be because the average investor does not have a trading strategy for making money from stocks, and therefore tends to “buy and hold” then sell at a loss. However, sometimes a bad year is a bad year no matter what investment strategy you use. 

For the past 12 months we have been working on testing and fine tuning a stock investing methodology based on the Value Averaging investment strategy and we are now pleased to announce the VA Model Portfolios. Managing the portfolio‘s over the past months has allowed us to fine tune the methodology to the point where we believe that is it a viable system for trading securities.

We have created these models as a way to show / teach investors how Value Averaging works and how to apply the strategy over time. The first model is called the VA Growth Strategy and it is intended to demonstrate that Value Averaging works across broad market sectors and is particularly valuable during times of high volatility. The second model is called the VA Internet Strategy and it applies the Value Averaging methodology to the largest companies primarily engaged in the internet industry. The model is designed for investors seeking aggressive capital growth with significant volatility. Over time we will add additional model portfolios.

We use ETF’s and Index Funds with a few select stocks for the portfolios.  Using Index Funds or ETF’s is a great way to achieve very good investment results because it sidesteps flawed decision making and psychological traps. The S&P 500 beats 80% of managed funds in long term returns. Therefore the investment vehicle you choose is far more important to your investments performance than the mechanical rules you follow to invest in it. 

Simple versus Complex

The majority of investors tend to prefer the complex and artificial as opposed to the simple and unadorned. Too many investors believe that stock market investing requires sophisticated strategies, the juggling of dozens of variables and complicated portfolio management. Nothing could be further from the truth. Value Averaging is simple to understand and easy to implement, requiring less than 30 minutes a month to execute.

Warren Buffet states that, to be a successful investor does not require one to have a high IQ but rather it requires two things: 1. A strong intellectual framework on which to base your decisions and 2. Not letting your emotions corrode the framework.

When making decisions, humans tend to view everything in the present tense. We time-weight information meaning that the newest thing always carries the greatest importance. Think of the last time you really screwed up. When the mistake was made you had to contend with emotion. The mistake becomes obvious when, drained of emotion and feeling, you take a historical perspective.

Value Averaging removes the emotion from investing, all you have to do is follow the easy to understand formula based system. No rocket science involved.

Monthly Trades

Each month we will trade a $1,000,000 virtual portfolio and produce a report showing the trades done and how the portfolio has performed. We will use the services of Marketocracy.com to manage the portfolio. Marketocracy provides access to exclusive tools to build investment skills and gauge success using virtual money while adhering to very real federal compliance rules and marketplace trading constraints. Each portfolio is allocated with a virtual $1 million – enough buying power to make lots of trades and to put together a diversified model portfolio. In addition, portfolios are monitored for compliance with S.E.C. rules for mutual fund managers so we can see how they respond when they are out of compliance. All portfolios are carefully monitored and every trade tracked for investment performance.

If anyone is interested in partnering with us to create a portfolio management business around the VA strategy please contact me to discuss further. 


To see the reports and the model portfolios please visit:  


http://www.vainvestmentsoftware.com/model_portfolios.html