I’ve often said that you can’t judge a portfolio until you see how it does in both a roaring bull and a raging bear.

Did the market gods have to give me my wish?

My long-term portfolio, the Jubak Picks 50, has done just fine in bull markets. Based on my book The Jubak Picks and started on December 30, 2008, the portfolio http://jubakpicks.com/jubak-picks-50/ gained 57.8% in the bull year of 2009. (You’ll remember that the stock market bottomed in March 2009.) And it did okay in 2010, too, gaining 20.1% that year. In those each of those two years the portfolio beat the Standard & Poor’s 500 Stock Index hands down: The S&P 500 gained 26.5% in 2009 and 15.01% in 2010.

Then came the bear market test of 2011. The portfolio lost 18.59% last year. That’s against a 2.11% gain for the S&P 500.

For the three years, the Jubak Picks 50 was up 54.3%. That’s against a gain of 48.5% for the S&P 500.

That’s an extra 5.8% for the Jubak Picks 50 over the S&P 500. (Yes, the actual advantage would be lower since the Jubak Picks 50 incurs trading costs that an S&P 500 index wouldn’t. But I’m only doing 10 trades a year so, in these days of $10 trades (or less), we’re not talking about a lot of commissions costs.)

Is this a good or a bad result? Read more

How do you decide what to buy?

I get the question a lot and I think it’s a good one. The answer depends on things like how long I’m planning to hold the stock, whether I see it as a value or a growth play, and where the momentum is in the market.

If I’m looking for a long-term investment, though, I don’t start with any of that stuff of with any of the usual measures such as price-to-earnings ratios, earnings growth rates, PEG ratios, or price to book or price to sales.

I start with ROIC—return on invested capital. I don’t think there’s a single number that tells investors more about whether they want to buy and hold a stock. Read more