Since last week's update, the real-money Inflation-Protected Income Growth portfolio chose auto insurer Infinity Property & Casualty (NASDAQ:IPCC) as its newest pick. In the trading blackout window after that selection, Infinity Property & Casualty reported substantial earnings growth and raised its guidance for the year.

On that news, Infinity Property & Casualty's shares rose. By the time the trading window reopened and I actually opened a limit order to buy shares, the company's stock traded above my $65 buy-below price. As a result, the iPIG portfolio has not yet bought Infinity Property & Casualty. The market will do what the market will do, and as an individual investor, you can't win them all.

So now what?
Earnings releases change the publicly available information about a company and are a key driver of valuation shifts over time. In Infinity Property & Casualty's case, the results were solid enough to increase the iPIG portfolio's valuation estimate to $765 million from $750 million prior to the earnings announcement. It also increases the iPIG portfolio's buy-below price to $66.50, up from the original $65.

Of course, mentioning the company again resets the trading restriction period. Still, since the next earnings release is about a quarter away, it's not too likely that the iPIG portfolio's valuation estimate will change much between now and then. Once the trading window reopens, I expect to set a fresh limit order with the hope of buying below that new $66.50 price point.

The benefits of not overpaying
With this leap past the iPIG portfolio's buy below price, Infinity Property & Casualty may wind up following a path similar path to energy pipeline giant Kinder Morgan (NYSE:KMI). For several months after its original selection, Kinder Morgan was "the stock that might get away," since its price leaped past the iPIG buy below price before the portfolio could buy.

In Kinder Morgan's case, patience paid off in a couple of ways. For one, the company's stock price eventually dropped below the iPIG portfolio's buy below price, enabling the purchase. For another, Kinder Morgan still trades under that buy below level, several months after the iPIG portfolio bought its shares. Waiting on Kinder Morgan to drop to that buy below level may have seemed silly while the stock was substantially higher, but it did reduce the iPIG portfolio's downside exposure to the actual drop.

Using valuation to sell
At their core, all valuation estimates boil down to guesses regarding how a company's operations will perform in the future. Most companies can't tell you with certainty what they'll earn next quarter, but their market price and valuations depend in part on what they'll do -- or even if they'll still be around -- 20 years from now.

Valuation estimates provide sanity checks on market prices by giving investors a tool to describe what the market is projecting for a company when it places a price on the company's shares. You can then compare that projection to your own vision of the company's prospects and decide whether you think the market has it about right or is wildly off track -- and invest accordingly.

It was a valuation estimate that led to the iPIG portfolio's recent sale of Air Products & Chemicals (NYSE:APD). The industrial gas and chemical giant continues to perform admirably, but a recent valuation estimate revealed that its market price reflects optimism that activist investor Bill Ackman can make it even stronger. Ackman has called Air Products & Chemicals a potential $200 stock within three years, if it makes the type of leadership changes he's suggesting.

While Ackman may wield enough influence to make the leadership changes he's suggesting, there's still a lot of work between "change the boss" and "change the company." And even then, there's still no guarantee that the changes Ackman proposes will succeed well enough for Air Products and Chemicals' stock to truly be worth $200 in three years.

It's not perfect, but it generally works
There are no guarantees in investing, but generations of investors have successfully used valuation to guide their buy and sell decisions. The iPIG portfolio has used valuation as one of the key factors in its decision-making process. The portfolio finished last week at $41,194.26, up from its $30,000 starting point in December 2012 and up more than $175 over the week. Valuation may not be perfect, but it still seems to be working well enough thus far to help this portfolio perform well.

To follow the IPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the IPIG portfolio, click here. To see the iPIG portfolio's online tracking spreadsheet, click here.

Chuck Saletta owns shares of Kinder Morgan and his wife owns shares of Infinity Property & Casualty. The Motley Fool recommends Kinder Morgan. The Motley Fool owns shares of Kinder Morgan. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.