Introduction to the Cara 100

Investment simply means the act of buying and selling a monetary asset such as cash, precious metals, stocks, bonds, exchange-traded funds, and mutual funds. We invest money in these assets either for income or capital appreciation based on our analysis of the lowest risk-highest potential reward. The prices of monetary assets are in constant flux, so there is always a matter of speculation in making buy and sell decisions, but there is a major difference between speculation and investment.

It has always been my belief that to invest in an asset, we must study and understand the asset, which requires an understanding of fundamental and quantitative analysis, which in turn requires a company to study, rather than a pool of companies held by a fund.

Before we trade the securities of a company, we must understand that analysis will show that there are relatively good companies (lowest risk among peers) and bad companies (highest risk among peers). There are shares of many companies held by a fund, which means that when we buy a fund we are speculating. Moreover, we must also appreciate that a fund holds investments in some bad companies, which is counter to the reason we invest.

To help investors in selecting a relatively small group of high-quality companies to study. I created the Cara 100 list. The components usually, but not always, are industry leaders in corporate fundamentals like balance sheet strength and operating performance like cash flow, margins, earnings, and possibly dividends. This list is free of the business and personal biases of sell-side investment analysts.

Due to evolving business and economic conditions, the financial condition and operating performance of companies are always in flux. Hence, the Cara 100 is always a work in progress. Because there are tens of thousands of companies whose shares trade on various stock exchanges, I try to select the Cara 100 from among the S&P 500 index components, each of which trades on a major US exchange. The S&P 500 index represents the largest investable pool of company stocks in the world. To monitor relative performance I am now developing a Cara 100 index, noting that, like the S&P 500, there will be changes over time made to the Cara 100.

As of September 30, 2021, this is the Cara 100 list of company stocks at finviz.com: click here.

https://finviz.com/screener.ashx?v=111&t=AAPL,ACHV,AG,AGI,AKRO,AL,ALGT,ALK,ALLO,AMAT,AMRS,AMZN,APLS,ARVN,ATVI,AVAH,AVIR,BAM,BBIO,BCEI,BKR,BMRA,BTG,CHE,CMPS,CNQ,COP,CRBU,CRM,CRMD,CRWD,CVX,DAR,DIN,DIS,DOOO,EAF,EPD,EQT,ERF,FANG,FCX,FLXN,FSS,GH,GIL,GROY,HBM,HUBS,IAC,KGC,KRTX,LEVI,LUV,MA,MED,MGTX,MHO,MPC,MRNS,MRTN,MTDR,MTZ,NESR,NVDA,NXE,OSK,PATK,PAYA,PDCE,PRPL,PRTS,RIOT,RNG,RTX,SDGR,SGH,SMCI,SMP,SSRM,STLA,TECK,TFX,TPTX,TSEM,TSP,TWLO,UBER,UCTT,UEC,UROY,V,VFF,VIR,VRNT,VSTO,WFG,WPM,ZBH,ZEN&r=81

The Cara 100 is a list of companies that we consider investment-grade for trading purposes but is not a recommendation to buy or sell. There are always times to buy and sell, and in order for a trade to occur, the buyer and the seller must agree on those times.

As you know from our blog and our Lessons publications, a company is not a price. We trade prices and seek to find the best times to buy and sell these fluctuating prices. Political and social developments in the world are constant and result in macro-economic changes that cause price fluctuations in all securities. Over time, price motion in market prices impacts the trends and cycles of these securities. I trade at times that I perceive there are reversals in price trends and cycles.

We hope you find value in our Cara 100 list of Good Companies. But, as market prices fluctuate, at times these Good Companies will also be Good Stocks (i.e., with Trends and Cycles that are rising), and at times they will be Bad Stocks (i.e., with Trends and Cycles that are falling). So investing requires price and volume technical analysis. In my practice, I try to buy at times the price is low and sell when the price is high. Your trading system may be different. For example, you may buy high, especially on breakouts from a recent trading range, and sell higher, at a profit.

Suffice to say that each of us has our own research methodologies and trading systems. However, do not ignore the fact that successful investing is a matter of finding and understanding good companies (such as the Cara 100) and then trading the good stocks among those good companies

Here is the full excel file of Cara 100 Companies as at September 30, 2021: