American Zang Investment Council

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In building a portfolio we generally follow a rule of having between 3 and 5 various mutual funds and perhaps even lots of a few carefully researched individual stocks in an account at any given time. This provides adequate diversification without becoming unmanageable. When the asset pool has grown large enough private portfolio devised by an asset manager may be desirable.

Recognizing that higher returns only come from owning pieces of healthy, growing companies (stocks and growth mutual funds), the most important advice we offer each client is how much of and what kind of companies and funds to own. In doing this, our goal is not to eliminate risk, which is impossible, but rather to understand it, to manage it, and to minimize its effects. Following are the rules that guide which stocks we buy and what types of mutual funds we purchase.

Rules of Company Selection

1. Buying stocks whose Price-to-Earnings ratio is lower than the market reduces risk more reliably when you are buying larger, widely followed companies. The consistency of the "High- Yield Dow" approach, which is an example of a successful low PE strategy, does not work as well with smaller stocks.

2. Buying stocks based on the previous year's earnings gains is dangerous if the value of those gains has already been bid into the stock's price in the form of an above market PE. This is another way of saying that today's high flyers that are getting all the good press are always good stories, but rarely good investments.

3. The most important variable for judging a "growth" stock is its Relative Strength. That is the strength of its price movement versus other companies in its industry group, as well as the relative strength of the entire industry versus the market as a whole.

4. The most important variable for judging a "value" stock is its Price-to-Sales ratio. Using this variable instead of the more popular PE ratio helps to weed out earnings gains that are a result of accounting adjustments and write-offs as opposed to those that come from a growing demand for the company's products and services.

5. Most small-capitalization strategies owe their superior returns to micro-cap stocks with market capitalization's below $50 million. This is a highly profitable area of the market but is also a very dangerous area. Because of the greater volatility and lack of liquidity these kind of stocks should only be approached with great caution. Often the best way to own these smaller stocks is through a well selected mutual fund.

Beyond Managing Money

Our Life Planning approach involves much more than just managing portfolios. As a part of our annual review with each client, we set their assets in the context of the amount of money they are likely to need for emergencies, children's education, mid-term goals and a financially secure retirement. This is the "financial planning" part of our work.

For clients who are pre-retirees, this involves setting appropriate goals for saving as well as investing. The kind of monthly saving targets that one sets for the last five to 15 years that you are working can dramatically affect the standard of living that you will be able to enjoy in retirement.

For many clients, this planning role includes reviewing and making recommendations about insurance coverage as well as investments. It can even at times involve the discussion of how to structure spending around mid-term and long-term goals to reward themselves and set aside money for ever important retirement needs.

American Zang Investment Council
709 Clarkson Street
Denver, CO 80218-3259
Phone: (303) 837-0872
Fax: (303) 894-9518
Contact: Rodney E. Greiner Email: rod@americanzang.com

Advisory services offered through American Zang Investment Council, an outside Registered Investment Advisor.

Investment Adviser Representatives of and Securities offered through Multi-Financial Securities Corporation, member FINRA and SIPC, an ING Company

American Zang Investment Council is unaffiliated otherwise with Multi-Financial Securities Corporation or ING.

This web-site is for informational purposes only and does not constitute a complete description of our investment services or performance. This web-site is in no way a solicitation or offer to sell securities or investment advisory services except, where applicable, in states where we are registered or where an exemption or exclusion from such registration exists. Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this web-site should be interpreted to state or imply that past results are an indication of future performance. Neither we or our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the user. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY 'LINKED' WEB-SITE."