Long-term investing

• US 7,509,278 B2
• Filed: 12/11/2001
• Issued: 03/24/2009
• Est. Priority Date: 07/16/2001
• Status: Expired due to Fees

• Current Assignee: Jones W. Richard
• Original Assignee: Jones W. Richard
• Inventors: Jones, W. Richard
• Primary Examiner(s): Trammell; James P
• Assistant Examiner(s): Badii; Behrang
• Application Number:
  US10/015,003
• Publication Number:
  US 20030014343A1
• Time in Patent Office: 2,660 Days
• Field of Search: 705/36.R, 705/36, 705/35, 705/37
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 30/0245 Surveys
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

The present invention is a method, system and investment product for allocating or structuring investment assets (such as marketable securities, bonds, mortgages, or other property interests, options or derivatives). The system, method or product enables selecting or grouping a number of individual financial instruments together into a portfolio (e.g., a fund or trust) and assigning weight coefficients to the selected financial instruments based upon a predetermined scale. After assigning the weight coefficients, the system or method purchases the selected instruments based on the allocated total purchase for each instrument (i.e., the total price of each instrument reflects is the price per unit×number of units, which correspond the predetermined weight coefficient). Then, the purchased individual financial instruments are allowed to fluctuate and perform for a predetermined time period (i.e., a number of years and months) without any further significant adjustments to the initial portfolio.

Claims

1. A method of creating an investment fund or an investment trust, comprising acts of:

using a computer to identify, according to one or more criteria, a plurality of financial instruments publicly traded on an exchange, each financial instrument being associated with a company;

grouping the plurality of financial instruments, based on market capitalization according to a criterion, into at least a first group of financial instruments and a second group of financial instruments, each financial instrument of the first group of financial instruments being associated with a company having a market capitalization that is larger than the market capitalization of each company associated with each financial instrument of the second group;

using a computer to allocate a weight coefficient to each of said identified financial instruments based on a value of the market capitalization of each associated company relative to values of the market capitalization of others of the companies associated with the plurality of identified financial instruments;

wherein allocating weight coefficients includes assigning a weight coefficient to each of the plurality of financial instruments such that for substantially any financial instrument associated with a first company having a market capitalization that is larger than a market capitalization of a second company, the financial instrument associated with the first company is assigned a weight coefficient that is greater than or substantially equal to the weight coefficient assigned to the financial instrument associated with the second company;

wherein allocating weight coefficients includes assigning a weight coefficient to each of the plurality of financial instruments such that for each of the financial instruments of the first group, a ratio of (a) a first weight coefficient assigned to a first financial instrument of the first group to (b) a second weight coefficient assigned to a second financial instrument of the second group is less than a ratio of (c) the value of the market capitalization of the company associated with the first financial instrument to (d) the value of the market capitalization of the company associated with the second financial instrument;

creating an investment fund or an investment trust based on the identified financial instruments and the allocated weight coefficients by using a computer to purchase an amount of each of the identified financial instruments, the purchased amount being based on the weight coefficients; and

substantially maintaining said purchased financial instruments for more than two years.

2. The method of claim 1, wherein allocating a weight coefficient to each of the identified financial instruments further comprises selecting a maximum ratio of a largest weight coefficient relative to a smallest weight coefficient, wherein the maximum ratio is less than a ratio of i) the market capitalization of the company associated with the financial instrument to which the largest weight coefficient is assigned to ii) the market capitalization of the company associated with the financial instrument to which the smallest weight coefficient is assigned.

3. The method of claim 1 wherein substantially maintaining said purchased financial instruments for more than two years includes allowing reinvestment of dividends during the more than two years.

4. The method of claim 1 wherein substantially maintaining said purchased financial instruments for more than two years includes receiving new shares from spin-offs, mergers or acquisitions without subsequent selling during the more than two years.

5. The method of claim 1 wherein substantially maintaining said purchased financial instruments for more than two years includes putting cash proceeds into a money market fund during the more than two years.

6. The method of claim 1 wherein substantially maintaining said purchased financial instruments for more than two years includes distributing proceeds to investors during the more than two years.

7. The method of claim 1 wherein identifying financial instruments according to one or more criteria includes identifying stocks of the one thousand publicly traded companies having the largest one thousand market capitalizations and choosing a market segment.

8. The method of claim 1 wherein identifying financial instruments according to one or more criteria includes identifying stocks of the three thousand publicly traded companies having the largest three thousand market capitalizations and choosing a market segment.

9. The method of claim 1 wherein identifying financial instruments according to one or more criteria includes identifying stocks of the five thousand publicly traded companies having the largest five thousand market capitalizations and choosing a market segment.

10. The method of claim 1 wherein identifying financial instruments according to one or more criteria includes identifying stocks from a particular sector.

11. The method of claim 10 wherein said sector is one of the following:

health care, information technology, telecommunications, energy, utilities, and transportation.

12. The method of claim 1 wherein allocating a weight coefficient to each of the identified financial instruments includes dividing the identified financial instruments into a plurality of groups based on the market capitalizations of the companies associated with the identified financial instruments and, for each of the plurality of groups, allocating the same weight coefficient for all of the financial instruments in the group.

13. The method of claim 12 wherein the plurality of groups comprises exactly three groups, and a first group, a second group and a third group include 20 percent, 60 percent, and 20 percent, respectively, of the plurality of financial instruments.

14. The method of claim 13 wherein the purchase amount of each financial instrument in said first group is three times the purchase amount of each financial instrument in said third group.

15. The method of claim 14 wherein the purchase amount of each financial instrument in said second group is two times the purchase amount of each financial instrument in said third group.

16. The method of claim 1 wherein said financial instruments include one or more of the following:

common stocks, derivatives, stock options, commodity futures, and bonds.

17. The method of claim 1, wherein creating an investment fund or an investment trust comprises creating a mutual fund.

18. The method of claim 1, wherein creating an investment fund or an investment trust comprises creating a closed-end fund.

19. The method of claim 1, wherein creating an investment fund or an investment trust comprises creating a unit investment trust.

21. The method of claim 1, wherein identifying a plurality of financial instruments comprises identifying at least fifty financial instruments.

22. The method of claim 1, wherein substantially maintaining said purchased financial instruments for more than two years comprises substantially maintaining said purchased financial instruments for more than three years.

23. The method of claim 1, wherein substantially maintaining said purchased financial instruments for more than two years comprises substantially maintaining said purchased financial instruments for at least ten years.

24. The method of claim 1, wherein substantially maintaining said purchased financial instruments for more than two years comprises substantially maintaining said purchased financial instruments for more than two years.

25. The method of claim 1, wherein identifying financial instruments includes identifying growth stocks.

26. The method of claim 1, wherein identifying financial instruments includes identifying value stocks.

27. The method of claim 1 wherein purchasing the identified financial instruments comprises purchasing the identified financial instruments over time based on said initially allocated weight coefficients.

28. The method of claim 1 wherein identifying financial instruments according to one or more criteria includes identifying financial instruments associated with the one thousand publicly traded companies having the largest one thousand market capitalizations.

29. The method of claim 1 wherein identifying financial instruments according to one or more criteria includes identifying financial instruments associated with the three thousand publicly traded companies having the largest three thousand market capitalizations.

30. The method of claim 1 wherein identifying financial instruments according to one or more criteria includes identifying financial instruments associated with the five thousand publicly traded companies having the largest five thousand market capitalizations.

31. The method of claim 2 wherein said maximum ratio is 100.

32. The method of claim 1, wherein the purchased amount of each of the identified financial instruments is based only on the weight coefficients and a total amount of all the identified financial instruments being purchased.

33. The method of claim 1, wherein identifying, according to one or more criteria, a plurality of financial instruments publicly traded on an exchange comprises identifying a plurality of financial instruments publicly traded on an exchange according to one or more criteria input by a user.

34. The method of claim 12 wherein the selected financial instruments include one or more of the following:

common stocks, derivatives, stock options, commodity futures, and bonds.

36. The method of claim 1, wherein allocating a weight coefficient to each of said identified financial instruments based on a value of the market capitalization of each associated company relative to values of the market capitalization of others of the companies associated with the plurality of identified financial instruments comprises:

allocating a weight coefficient to each of said identified financial instruments based only on a value of the market capitalization of each associated company relative to values of the market capitalization of others of the companies associated with the plurality of identified financial instruments.

20. At least one computer readable medium having stored thereon instructions which, when executed by a processor, implement a method comprising:

identifying, according to one or more criteria input by a user, a plurality of financial instruments publicly traded on an exchange, each financial instrument being associated with a company;

grouping the plurality of financial instruments, based on market capitalization according to a criterion, into at least a first group of financial instruments and a second group of financial instruments, each financial instrument of the first group of financial instruments being associated with a company having a market capitalization that is larger than the market capitalization of each company associated with each financial instrument of the second group;

allocating a weight coefficient corresponding to each of said identified financial instruments based on a value of the market capitalization of each associated company relative to values of the market capitalization of others of the companies associated with the plurality of identified financial instruments;

wherein allocating weight coefficients includes assigning a weight coefficient to each of the plurality of financial instruments such that for substantially any financial instrument associated with a first company having a market capitalization that is larger than a market capitalization of a second company, the financial instrument associated with the first company is assigned a weight coefficient that is greater than or substantially equal to the weight coefficient assigned to the financial instrument associated with the second company;

wherein allocating weight coefficients includes assigning a weight coefficient to each of the plurality of financial instruments such that for each of the financial instruments of the first group, a ratio of (a) a first weight coefficient assigned to a first financial instrument of the first group to (b) a second weight coefficient assigned to a second financial instrument of the second group is less than a ratio of (c) the value of the market capitalization of the company associated with the first financial instrument to (d) the value of the market capitalization of the company associated with the second financial instrument;

indicating, based on the weight coefficients, an amount of each of the identified financial instruments to be purchased and held for more than two years.

35. The computer readable medium of claim 20, wherein the identified financial instruments associated with companies having a market capitalization that is amongst the bottom one third of the market capitalizations of the companies that are associated with the plurality of financial instruments are allocated weight coefficients that assure that at the time of purchase, at least fifteen percent of the entire value of all of the financial instruments to be purchased is allocated to the financial instruments associated with companies having a market capitalization that is amongst the bottom one third of the market capitalizations of the companies that are associated with the plurality of financial instruments.