Vilfredo Pareto was an Italian economist, engineer, sociologist, and philosopher.
Maybe you’ve never heard of him — but trust me, you have heard of his famous mathematical calculation.
In fact, it was Pareto’s observation in early 20th century Italy that has had a lasting impact on modern-day economics.
It’s known simply as the 80/20 rule, or in academic jargon: Pareto’s Law.
You see, in 1906, Pareto discovered that 80% of Italian land was owned by only 20% of the population.
Much like the golden ratio, he began to see this 80/20 ratio throughout nature and everyday life. While working in his garden, he observed that 20% of the peapods in his garden yielded 80% of the peas that were harvested for the year.
Ever since, the 80/20 rule has been applied to everything from farming to business to investing returns and academics.
Take Toyota or Ford, for instance: 80% of their annual revenue comes from the sales of 20% of its product line. Or the Baltimore Orioles: 80% of their +30 home runs for the year will come from 20% of their batting lineup.
And so on and so forth…
And the exact same principle applies to investing.
Talk to any venture capitalist, and you’ll always hear them say: “It only takes one or two home runs out of ten investments to not only make up for the other eight losses, but to become rich.”
Money managers and mutual fund heads shoot for at least a 51% winning percentage — meaning of 10 stocks they buy, if 51% are up for the year, they’ll be successful.
That doesn’t sound like much, but it really is.
Why?
Because they know that within that 51%, there were will a few very big winners that’ll pull up the fund’s entire annual performance. That’s their baseline.
However, like all rules, you can beat it — and beat it dramatically.
Enter The Wealth Advisory
I started The Wealth Advisory in 2008. It was probably the worse timing in my life to start a new investment advisory.
But even though we were facing a financial crisis of epic proportions, I knew the trend would eventually work in my favor…
And that trend was a tsunami demographic shift. 2008 was the same year the very first baby boomers started to apply for the Social Security benefits. In other words, they were retiring.
So I decided to launch TWA.
The sole purpose of this advisory is to give baby boomers and current retirees the peace of mind that comes with owning stable, dividend paying investments.
Every single investment in The Wealth Advisory portfolio pays a dividend. Some pay quarterly, some pay monthly. There’s nothing better than sleeping well at night knowing that your investment capital is safe and sound…
Now, since 2008, TWA has posted a positive return every single year. Some years the return is higher, some years not so high — but we have never lost money on an annual return basis.
That brings me to today…
I just did a YTD analysis of The Wealth Advisory portfolio. We have 24 open positions. Of those 24 open positions, 16 are positive. That means 8 are negative.
However, that’s a 67% winning percentage. Pretty damn good.
Of the 16 that are in the green, 13 are making 52-week highs as you read this. And of the 13 making 52-week highs, 9 are making all-time record highs.
The Wealth Advisory is shattering the Pareto Law. Our current portfolio return is 34.5%.
I’ll give you a real example straight out of the current TWA portfolio: Medical Properties Trust (NYSE: MPW).
Medical Properties Trust operates as an REIT (real estate investment trust). It owns 58 medical properties (mainly hospitals) throughout the United States.
Our thesis on Medical Properties Trust was simple: Health care properties are going to go great guns with America’s aging population.
We purchased MPW in TWA on February 7, 2011, at a price of $10.94.
Take a look at the chart of MPW:
When we purchased shares, MPW was yielding 7.2%, paid every quarter… but the REIT has appreciated in price over 60% since our original recommendation. And when you throw in the dividends we’ve collected over the years, our total return is roughly 75%.
Because of the capital appreciation, MPW currently yields 4.8%. That’s still a great source of consistent income.
This is the fulfillment and validation of our core baby boomer investment thesis. And this thesis will be played over the next two decades. It’s here for a while.
We plan on making money on it every step of the way.
Even with Medical Properties Trust, there’s still a lot of room to run here…
MPW’s forward P/E multiple is 14. Its trailing 12-month P/E is 22. Therefore, this REIT could run up another 57% in the next twelve months. Our new target price is $29.
In the coming weeks, we’ll be bringing you more ground-floor Wealth Advisory opportunities just like the super-successful Medical Properties Trust. So stay tuned.
Forever wealth,
Brian Hicks
Check us out on YouTube!Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy & Capital. For more on Brian, take a look at his editor’s page.
