VALAD PLUS® Investment Advisors (VPIA®) - Investment Rules

1. SURIS®- The best Investment Strategies are Simple and Understandable Risk and Investment Strategies (SURIS®). And its corollary rule 1A: Execution is the hard part.

2. The Traditional 60% Stock / 40% Bond Portfolio is designed in a way that generates smaller Returns than a 100% Stock Portfolio.

3. Compounding is the 8th wonder of the world. For example, if you invest $1M for 25 years at 5% per year, your Investment will total over $3.3M. But if you earn 10% per year, your Investment would be worth over $10.8M. The simplest way to understand Compounding is the Rule of 72s.

4. VPIA® Investment Assets are limited to Assets that generate Cash Flow. Tulips, gold, art, crypto, etc. are not Investment Assets since they do not generate Cash Flow. In addition, VPIA® requires some amount of Liquidity in Investment Assets.

5. Discounted Cash Flow is the best way to Value an Investment.

6. Great Companies have Great Earnings / Cash Flow, Great Balance Sheets, Great Management, a Respect for the Margin of Safety Concept, Proper Employee/Officer/Director Incentives, and Sustainable Advantages over their Competition.

7. In the long haul, buying Great Companies at Good Prices beats buying Potentially Great Companies at most any Price.

8. Price is not Value.

9. Management Matters: Exceptional Managers create exceptional Returns. And its Corollary Rules 9A & B: A. Nothing is more dangerous to a Good Business than Bad Management, with Complacent / Inattentive Management a close second. B. Never Invest in an Industry where the only Business Plans that appear to succeed require operations that are Immoral, Illegal, or both.

10. Incentives Matter: Like Gravity pulls Objects towards the Earth, Incentives (intended or not) change Behavior.

11. Liquidity Matters: In and of itself Liquidity has Value.

12. Timing Matters: Being Right but being early or late is still being Wrong.

13. Volatility is not Risk.

14. No Event is fully Priced-In until it has occurred. And its Corollary Rule 14A: Event Risk cannot be accurately measured until after the Event occurs.

15. Investments should be made with the Margin of Safety Concept as part of the Risk assessment.

16. The Risk of an Annuity, a Corporate Bond, or a Municipal Bond is unknown to most Purchasers and unknowable to almost anyone not trained as a high priced and experienced finance lawyer.

17. The Market is Efficient in the Long Term but is often Inefficient in the Short Term.

18. Never set a Limit Price that expires later than the end of the trading day. And its Corollary Rule 18A: Since almost every Stop Loss gets implemented, just sell it now while the Price is higher.

19. The Inclination is to sell Winners too early and keep Losers too long: Don’t.

20. The Inverted Yield Curve did not predict the 2020 recession.

21. Every Dollar should be respected. There is no such thing as an excess Dollar, but your first dollar has a greater Value than your last dollar.

22. ESER•3®- Earn as much as you can, Save as much as you can, Earn as long as you can, and Retire when you can live annually on 3% of your Liquid Assets.

23. The S&P 500 is and always has been the Benchmark for VPIA®. Since WWII through the end of 2023, the S&P 500 has an Annualized Return of over 11.3%* a year, with no 15-year period having Returned less than 1.7% per year and nearly 60% of those 15-year periods Returning over 10% per year. 11% annual return doubles your Investment Asset Value roughly every 6.5 years.

24. VPIA® analyzes Bond Returns uses the iShares Core US Aggregate Bond ETF (AGG) for comparisons. From 2004 up to and including 2023, AGG Returned an Annualized Rate of a little better than 3%**.

25. Both the VEP and the dividend Equity portion of the VIP are designed for buy and hold investment. Perhaps 10% of these Equities, however, are subject to a continuing active review by VPIA® that may result in more turnover then would be expected in a buy and hold Portfolio.

26. In making Investment decisions, VPIA® uses the 3-bucket approach of Berkshire Hathaway:
     I. Yes
     II. No
     III. Too Hard.



VPIA® ©2024 All references to past results do not guarantee future performance. All returns discussed herein are total returns where dividends and interest are reinvested. Please note that the preceding “Rules” are not viewed as absolute truths by VPIA®, but as foundational concepts for VPIA® investment decisions.

* https://dqydj.com/sp-500-return-calculator/
** https://www.morningstar.com/etfs/arcx/agg/performance