Replies to post #1338 on Advanced Automatic Investor

[aptus]

Hi 1step,

I don't know of any studies done on the future price predictions, although it would be an interesting study to do.

I think the best way to use VSS 4.0 is to have a long-term perspective. Find stocks that have high fundamental ratings (i.e. a minimum rating of 78), have strong economic moats (i.e. minimum moat strength of 5) and have their current price less than the indicated maximum buy price.

That will generally return a handful of stocks (for example, I just ran VSS 4.0 and it returned 8 stocks). Once you have this list, I would suggest going through each stock and reading the latest news to see if there are any unusual circumstances, that might negatively or positively affect the stock, that aren't captured in the VSS analyses.

You should also do other due diligence checks that you personally like and then select which stocks you want in your portfolio.

For example, I like to group stocks with high correlations together and then select one stock from that group. The way I select it is by checking its price performance relative to the other stocks in the group over a 6 month period. I choose the stock that has underperformed over the past 6 months.

In the short-term, you can use VSS to confirm a buy decision when the current price is below the maximum buy price. Similiarly you can use VSS to confirm a sell decision when the current price goes above the maximum buy price or the fundamentals rating falls below 78 or moat strength falls below 5.

For a longer-term strategy, you should only consider selling if the estimated target price is reached or the fundamentals deteriorate.

I hope that helps.

Regards,
Mark.