The Offense Report serves as a reminder of companies that may be overvalued. It lists all of the companies in your selected portfolio and highlights those whose reward/risk or return figures might indicate that the stock is a good candidate to be sold before the rest of the market recognizes that the Reward/Risk or Total Return are too low to sustain the current value.
Portfolio Offense Description
The portfolio Offense report is divided into several columns:
- Company, Ticker, Qtr End – These three columns show the name, ticker, and most recently ended quarter for each company.
- Relative Value and Projected Relative Value – Relative Value is a measurement of the difference between the Current and Average P/E for the last five years. There is no exactly perfect Relative Value, but it’s generally considered that a stock with a Relative Value over 110 may be over-valued, while a stock showing lower than 85 is considered a good reason to research why the market isn’t paying more for the stock. Projected Rel Val (Relative Value) is similar to Relative Value, except that instead of the current PE, Projected relative Value uses Estimated P/E instead of Current P/E.
- Rwd/RskRatio - The Reward/Risk Ratio is calculated by dividing the “distance” from the current price to the potential high price and dividing it by the “distance” from the current price to the potential low price. Put another way, how much risk (how much you lose if the price goes down to the low) versus how much reward (the price going from its current price all the way up to its potential high) is there, in buying the security. Again, there's no perfect number, but historically we suggest a 3 to 1 Reward/Risk Ratio.
- Total Return - The expected return on your investment, based on assumptions about price increases, and dividend yields from each security.
Highlight Colors on the report
When reading the Portfolio Offense Report, you may see some of the fields highlighted.
- The Reward/Risk figure will be highlighted if it is below 1 to 1.
- The Total Return figure will be highlighted if it is lower than 10.