Often, investors sell quality investments during market declines because of emotional reactions. Later they get back into the market when it’s up and prices are higher. They’re paying more of their hard-earned wealth for a lesser share of the market because of an . . .
|Emotion 1||You watch a stock moving up. (Anticipation)|
|Emotion 2||You make the buy. (Greed)|
|Emotion 3||You check the paper daily as the stock goes sideways. (Impatience)|
|Emotion 4||Then what? Right! The stock’s price goes down. (Concern)|
|Emotion 5||It continues to fall. (Fear)|
|Emotion 6||It plummets below the price you paid for it. (Panic)|
|Emotion 7||You sell. (Relief)|
|Emotion 8||You check the paper and see that stock’s price is rising. (Anger)|
|Emotion 9||It goes above the price you previously paid for it. (Anticipation)|
|Emotion 10||You make the buy. (Greed)|
Dover’s portfolio management effectively eliminates one of the main impediments to successful investing . . .EMOTIONAL OVER-REACTIONS! We accomplish this by following our strategic selection process .
Utilizing a value-oriented approach to stock selections and sales, the Discipline seeks high quality companies who are doing things right, but whose stock prices do not yet reflect their success. Dover’s value philosophy bases its buy/sell decisions on four criteria: rising earnins expectations, low relative price to earnings (P/E) valuation, improving profitability, and low historical P/E valuation. Stocks passing all four screens are considered buy candidates and will be further evaluated to establish quality nd appropriateness for the portfolio.
Large Cap Growth Discipline
Dover’s growth philosophy begins by considering only companies greater than $5 billion in market capitalization and in the top 50% of earnings per share growth over the last three years. Dover then bases its buy/sell decisions on three criteria: return on investment (ROI), net sales growth, and free cash flow. Stocks passing these screens are considered buy candidates and will be further evaluated to establish quality and appropriateness for the portfolio.
Large Cap Core (Value/Growth) Discipline
Dover’s value/growth, or core portfolio utilizes a blend of the top buy ideas from both the pure growth and pure value philosophies. The intent behind this method is to maintain less volatile portfolio returns over the course of a market cycle. The portfolio is structured with an emphasis on diversification, utilizing a wide blend of high-quality holdings across the various economic sectors.
Stocks become sell candidates when any of the following occur:
|1. Deterioration of Fundamentals||Violation of one or more of original buy criteria.|
|2. Performance||Under-performing the market by 10%.|
|3. Exposure Reduction||Position becomes too large relative to remaining portfolio (i.e., a diversification concern.)|
Dover’s Investment Strategy Group directs all investment decisions based upon the Dover Discipline combined with continuous fundamental research and economic and market analysis.