by Jay Peroni & Jerry Robinson
In building the P.A.C.E. Portfolio, our desire was to create a solid game plan for 2012 and beyond. We'd like to take a few moments to introduce the following seven-part analysis our investment team uses along with an overview of how the portfolio is broken down.
1. We begin with an exhaustive list of moral and financial criteria to make our selection process much simpler. After excluding thousands of companies that don't live up to our stringent criteria as faith-based investors, the result is the "cream of the crop".
2. We start with 700 companies that meet our criteria and narrow this down to 200+ stocks. We let our senior analysts deem which companies are most likely to outperform the market over the next 12+ months.
3. We then look at the financial strength and momentum of each company. We forecast which company(s) rises will be short-lived and which will sustain their current trends.
4. Next, we look to see if each company's industry has good prospects in the near term future. Great companies in weak sectors can go down with the sector while weak companies in a strong sector can go up. We seek to find strong companies in strong sectors.
5. We also want to see what other analysts are saying about our companies. Studies have shown that companies who have recently been upgraded tend to outperform the market.
6. We strongly evaluate what each company is worth. We want to find "diamonds in the rough". We pour endless hours into finding strong companies with attractive valuations. What you pay for a company is almost as important as its long-term potential.
7. Lastly, we examine the “bang for the buck.” After narrowing the list down to our Top 100 ideas, we then look for our TOP PICKS for 2012 in each of the five P.A.C.E. categories – P = Precious Metals, A = Agriculture, C = Commodities, E = Energy, and lastly, we throw some world dominators into the mix. This is a list of strong, successful businesses and ETFs that we feel possess good risk-to-reward potential.
Finally, remember that this portfolio is designed for investors who are concerned about inflation and a weakening dollar, and therefore it is intended for individuals who can withstand fluctuations (ups and downs of the markets) and who are willing to hold for at least three to five years. It is not for those who are risk averse or looking to make quick gains. It is a long-term approach with a focus on building wealth along with inflation-protected growth.
Here is a breakdown of the current stocks owned in the portfolio (split into 5 parts):
