Our mission is help you and your family stay secure, now and in the future. The investments we select are a major part of our achieving this mission. This page describes the process we use in making these selections and the investment fundamentals on which it is build.

The Foundations of Our Selection Method

Our first investment fundamental is that no one can predict the future. There are circumstances under which even supposedly "safe" assets will perform poorly. Thus, we emphasize diversification so that no one risk will keep you from achieving success. The result is a portfolio that as a whole is better than any one of its parts.

The second fundamental is Value Investing. As Value Investors we focus on the price being paid for an investment relative to the value one is receiving. We do not attempt time the market or guess whether a stock's price will be higher or lower in a year. Most investors do. Even most so called "fundamental" research is an attempt to determine when to buy. Instead, we make a point of determining the value of the investments we recommend. This is often difficult and uncertain process but our record of long term investment success shows that we are good at doing this.

See the Our Better Investment Method page for more details about the advantages of Value Investing.

The Steps in Selecting Your Investments

At Princeton Value Advisors, our first step is to personally get to know you, your current financial situation and your timeline for achieving your goals. We manage your portfolio with these goals foremost in mind and in concert with your other assets, maximizing the potential and safety of the whole.

Once we know you, your goals and your risk tolerance, our next step is to determine the mix of asset types that will best meet your needs. This step is very important because the types and level of risk one is taking is frequently determined by the types of assets one owns, and their relative amounts.

Within each type of asset, we look for specific investments that meet your goals, time frame, and level of risk tolerance. The result is typically a portfolio that contains a mix of cash (such as money market funds), fixed income investments (such as bonds and annuities), and stocks. The ratios of each asset type, however, vary greatly from client to client.

Once the initial portfolio has been created, we will meet with you regularly by phone or in person to monitor your outcomes and make adjustments to both your asset allocation and the investments in your portfolio. If the changes in your personal circumstances become significant enough, Princeton Value Advisors may advise a revision of both your investment plan and the asset allocation.

The part of your assets allocated to common stock investments will typically be divided between low-cost mutual funds/ETFs and direct ownership of common stocks in specific companies. The ratio will depend on your risk tolerance and our ability to find suitable individual stocks. For the part of your assets allocated to direct ownership of common stocks, Princeton Value Advisors (PVA) uses the highly successful stock selection methodology developed by PVA's Senior Financial Advisor, David Wertz, Ph.D. (See the web page with his 2000 - present stock picks for details of past investments.)

Stock Selection Methodology

Dr. Wertz has achieved phenomenal success as a stock investor by rigorously following a value investing approach based on investment fundamentals. Most investors, including most mutual fund managers and financial advisors, are not value investors. They buy a stock because they think its price will go up. This approach amounts to betting your savings on the irrational ups and downs of the stock market. This is folly in any market. This approach is especially risky today.

Dr. Wertz doesn't attempt to predict stock prices. He buys a stock only if its future dividends alone will provide a great return. Not only the profit but recovery of the stock's purchase price must come from dividends. His skils as a financial analyst enables him to estimate a stock's future dividends and convert this into a value for the stock. He buys a stock only if its price is well below its value. The 42% annual return of the average stock purchased by Dr. Wertz from 2000 - present shows the effectiveness of this method.

Dr. Wertz's stock selection process has 4 steps.

• Using the Bloomberg Professional Service™ stock screening function and PVA's proprietary screening formulas the 60,000 companies covered by Bloomberg are reduced to those with some chance of meeting our investment standards.
• The companies selected by the PVA screening formulas are investigated further. The first step is to examine information that the Bloomberg service has on the company. If the company still looks promising Dr. Wertz reads the company's recent financial reports and examines the company's web site for additional information. Any publicly available research reports are reviewed but usually they are so short term oriented that they seldom contain any truly useful information. PVA does not make on site visits.
• Based on information about the company, experience, and any other factors considered pertinent, one or more scenarios about how the company's business will evolve over the long term are developed. The value of the company under each scenario is calculated using computer programs written by Dr. Wertz that implements the discounted cash flow algorithm. If the computerized scenario valuation indicates that the company's stock will provide a superior risk adjusted return, it is purchased. The amount of the stock purchased depends on the expected return, an estimate of the risk of the company, and how the stock fits into the client's overall portfolio.

After stock in a company is purchased the performance of both the company and its stock are monitored. A stock is sold only if the company's business performs significantly worse than expected or if the price of the stock rises to the point where the stock is no longer likely to provide a superior return. Conversely, more shares might be purchased if the company's business performs better than expected or the stock price declines substantially with no change in the company's prospects.

Call (609) 683-8005 today for a no-obligation, complimentary consultation about creating or updating your investment strategy.