Educational Programming Video
The Value Line Investment Survey - Small and Mid-Cap Edition
Program 6: Why Investors Should Use this Survey
For the past three sessions we have discussed the contents of The Small and Mid-Cap Edition. Now we would like to discuss why investors should subscribe to the product. There are many ways a subscriber can use The Small and Mid-Cap Edition publication. The first reason many subscribers cite is the Performance Ranking System.
Since we began publishing the Small and Mid-Cap Edition in March 1995, the stocks ranked 1 and 2 for Performance have outperformed the Russell 2000 index. From March 1995 to June 2000, the Russell 2000 index rose 99%. In the same period, the Rank 1 stock group rose 427% and the Rank 2 stock group rose 356%. For the nine-month period from January 1st to September 30th 2000, the Russell 2000 rose 3.3% while the Rank 1 group rose 27.7% and the Rank 2 group rose 29.9%. This brings us to an important point. Since the performance of both the Rank 1 and Rank 2 groups has been so good, we suggest that subscribers who buy stocks ranked 1 for Performance continue to hold them if they fall to Rank 2. This strategy would substantially reduce portfolio turnover with little sacrifice of performance and may improve net performance due to lower commission costs.
Now let's look at 1998, when the Russell 2000 fell 6.5% for the year. During those same twelve months, Rank 1 stocks rose 9.2% and Rank 2 stocks rose 11.1%. Rank 3s fell 7.4%, Rank 4s fell 17.4%, and Rank 5s dropped 18.8%. While this is the only year of general decline in the Russell index since March 1995, it provides evidence that investors who own Rank 1 and Rank 2 stocks are likely to do better in down markets as well as rising ones.
Another important reason to subscribe to The Small and Mid-Cap Edition is to find "new" companies as candidates to invest in. The companies may have gone public only recently since we sometimes cover stocks that have traded for less than twelve months. They may be a recent spin-off of a larger company that is in the process of restructuring or they may simply be a small- or micro-cap stock in a growing industry. In any of these cases, the stocks are probably not widely followed in Wall Street, and as such, some of them could grow rapidly before being discovered to become the next 'darlings' of the street. Knowing a company's early history will allow you to make decisions more quickly in the future, even if a company is too small for you now. When a stock is relatively unknown, it can provide more appreciation potential when unexpected good news is released. Also, as companies in The Value Line Investment Survey-Standard Edition are acquired or otherwise dropped, many Small and Mid-Cap Edition companies do move to The Standard Edition over time. If you already subscribe to The Standard Edition, The Small and Mid-Cap Edition is available to you for the deeply discounted price of $199 for the first year. The Small and Mid-Cap Edition will provide you with 400 more Rank 1 and 2 stocks to choose from. And since The Standard Edition follows mostly large-cap stocks, The Small and Mid-Cap Edition will allow you to diversify into the small-cap sector of the market. Looking at it another way, if a $199 subscriber looks at The Small and Mid-Cap Edition just ten times a year, the cost is only $19.90 per inquiry.
This ends our discussion of the performance results of The Small and Mid-Cap Editions ranks and why an investor might subscribe to The Small and Mid-Cap Edition. In our next session, we review the differences (and similarities) between The Small and Mid-Cap Edition and The Standard Edition.
Again, thank you for visiting us here at www.Valueline.com. Have a prosperous day.