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Curran Quality Index

One of our goals is to define quality for investors. We say Curran is Defining Quality.

It may seem strange to say we are defining quality. Where some people see quality others see mediocrity or even less. It is especially true when it comes to investing.

To say Curran is defining quality could prove thorny.  I have met many investors doing business with other advisors who believe their holdings are high quality. When I am asked to review their holdings, I must confess, I sometimes see speculation and even junk. It is safe to say most people would never knowingly buy junk yet it is my opinion many do. Certainly my discussion of quality could cause “bruised feelings”.  It is certainly not my intention.

I believe it is normal for investors to own securities that are not all AAA. Fixed income buyers may buy bonds that are below AAA for various reasons. Investors have a clearer notion of quality when buying bonds because of years of basing decisions on quality rating provided for bonds by Standard and Poor’s and Moody.

Stocks do not have the same familiar and trusted way to judge quality.  The result is stocks and quality determination are more subjective.   For example, a company that pays a high dividend is not necessarily high quality.  Still many people interpret dividend yield to be a marker indicating higher levels of quality.  To be clear, dividends yields do not signal high quality nor does the absence of dividends signal low quality.

Most important for now is to explain how we invest your money and how we define quality.

We define quality based on the following key variables:

               Quality companies have less than 35% debt.

               Quality companies have returns on equity greater than 10%.

               Quality companies rarely lose money.

               Quality companies usually sustain profit margins greater than 10%

When we apply our quality requirements to more than 10,000 publicly held companies traded in the United States, we find about 500 possible buy candidates. When we include all possible candidates in our universe of stocks we could possibly buy as many as 1000.   But the further we stray from the top 200 in our universe, the returns become more volatile and results become more erratic.

Why is it important?  Curran Core Growth started in 1998.  Since 1998 there have been three confirmed bear markets. In all three of the bear markets Curran Core Growth declined less and fully recovered sooner than the S&P 500.

The first occurred in March 2000.  Curran Core Growth’s lowest gross cumulative return was 21 percentage points higher than the S&P 500 total return’s lowest cumulative return during this bear market.   The recovery period to break-even for Curran Core Growth was 36% shorter.  Curran Core Growth’s gross cumulative return recovered past its break-even point in 44 months, 25 months sooner than the S&P.

The second bear market began in October 2007 and ended March 2009. Curran Core Growth’s lowest gross cumulative return was higher than the S&P 500 total return’s lowest cumulative return by 9 percentage points during this period. The recovery period for Curran Core Growth was 28% shorter. Curran Core Growth’s gross cumulative return recovered past its break-even point in 39 months, 15 months sooner than the S&P.

The third bear market began in March 2020.  During this bear market period, Curran Core Growth’s lowest gross cumulative return was 4 percentage points higher than the S&P 500 total return’s lowest cumulative return.  Curran Core Growth’s gross cumulative return recovered past its break-even point in 1 month, 1 month sooner than the S&P.

 Sincerely,
Thomas J. Curran
Chief Executive Officer, Founder

Curran Wealth Management® is Defining Quality®


Please check with your Curran Wealth relationship manager, 
or contact Curran Wealth Management if you have any questions.
 518.391.4200 •
info@curranllc.com

The material contained in this article is for educational and informational purposes only.  The information herein is considered to be obtained from reference sources deemed reliable, but no representation or warranty is made as to its accuracy or completeness.  This article is not, and should not be regarded as “investment advice” or construed as a “recommendation” or an offer to buy or sell a security.  The information contained in this article may not apply to your personal circumstances.  Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation.  Information on taxes is based on the tax laws existing at the time of publication.  Tax laws are subject to continual change.  In addition, tax laws vary by state.  This article is not, and should not be regarded as tax or legal advice.  We cannot ensure tax consequences of any transaction.  If you would like a detailed analysis of your tax situation, with specific tax recommendations, you can discuss the possibility of pursuing a formal relationship with Hippo Tax Services, LLC.