Model Portfolios for 2020

January 1st, 2020 | Posted by shauniekent in Uncategorized - (0 Comments)

 

The NAPS discretionary long has a mid cap blend bias whereas the NAPS discretionary short has a mid cap growth bias. There were no longs or shorts within the telecoms sector to select that fit the criteria.

Again i find it difficult choosing stocks within the rules as i often don’t have an opnion or i simply don’t want to buy housebuilders for example! But the rules are there for a purpose and i follow them. I was more than happy to include Capital Drilling and HAT who i believe are both going to benefit from a rising gold price.

I find the shorts much easier to pick however I did not like having to pick Hurricane Energy as a mechanical short – i have picked this as one of my 5 stocks for the stockchallenge.co.uk annual competition!

The selections for 2020 are below.

NAPS Discretionary Long 2020

NAPS Discretionary Short 2020

Mech NAPS Short 2020

Mech NAPS Long 2020

So how did these model portfolios do in 2019? The combined portfolio scores are on the performance page(weighting longs 2/3rds and shorts 1/3rd but the individual components are below:

The NAPS discretionary shorts performance for the year was -11.6% so pretty good. The shorts were very volatile – plenty of 100% swings in both directions. Noteably Codemasters was up 73.7%, it’s StockRank went from 25 to 75 over the year. The SR hit 57 in March so perhaps this might have been a trigger to cut the position if that was permissible within the rules. This would have kept the individual stock damage to around 40%.

The Mechanical short portfolio was up 33.6% – terrible! Silence therapeutics was up 570%! Despite this the comapnies stock rank is still 25 so a stock rank stop loss wouldnt have helped. Excluding this outlier then the portfolio would have returned +4% performance – what a diffrence one huge outlier makes. Team17 the second biggest gainer hit a stock rank of 68 in April and a stop loss here would have cut the damage to the portfolio in half. At a glance – it doesnt appear that any of the shorts falling (ie favourable direction) YoY had a rising SR that would have got stopped out by such a tactic during the year.

The mechanical long up 10.6% benefitted from 2 big winners. Notably about a third of the stocks now have a SR under 70 after one year.

The NAPS discretionary long portfolio was up 23.4% – a solid performance. Noticeable it had only 5 losers compared to the mechanical long’s 10 losers.

I’ll be picking the 2020 portfolios shortly and will post their composition.

Below are the portfolios and their 1 year performance.

Since starting investing years ago i have moved from barely tracking overall performance to annual reviews which attempt to track overall portfolio performance but this is hindered by the my various accounts, cash balances and leverages that have been used. My investing style was varied, entirely discretionary and ad-hoc.

I would like to more clearly track portfolio performance and furthermore i want to improve my investing returns which have led me to create a number of factor based systematic portfolios – heavily influenced by the collation and summary of investing research by the team at Stockopedia.

On my ‘Performance’ page you will see the portfolios i have ran in the past and those i will either continue or create.

Personal/StockRanks NAPS Mix (discontinued) portfolio.

This is the model portfolio i’ve tracked on this blog for 3 years based loosely on a NAPS High StockRank portfolio. I selected at the start of each year a numer of companies that either had a fairly high stock rank or that i simply found attractive for one reason or another. I will no longer continue this portfolio as i moved to a stricter rules based approach.

A year ago I created the following model portfolios to track – some of which are entirely mechanical, some are mechanical but allow some personal discretion, some also allow short positions. My hope is to build up a track record over time and discover whether i can beat the mechanical portfolio with a little of my own stock picking (within rules).

I’ll post the 2019 results in a separate post – but realise that i need to lay out the portfolios and rules first!

Description and Summary of Portfolios

StockRanks NAPS (long/short)

  1. A Portfolio of approximately 36 to 40 stocks. Half being long and half being shorts.
  2. Longs are stocks with a market cap > £20M and i pick two stocks (StockRank > 90) of my choice from each of 10 sectors on Stockopedia.
  3. Shorts are half the position size of longs with mkt cap > £150m and i select 2 stocks with StockRank <30 from each of 10 sectors. I can choose not to pick a short if none fit the criteria. In working out annual performance i will assume longs make 2/3rds of the annual performance figure and shorts 1/3rd.
  4. I have some choice in which stocks to choose as long as they fit the above rules i can select the ones i want – often this gives me a choice from a couple that meet the criteria. I may want to look at price chart for shorts for example to avoid bottoming or curving up charts.
  5. Portfolio revised and re-balanced annually.

StockRanks NAPS (long only)

This is the long only part of the above portfolio.

Mechanical StockRanks NAPS

This mimics the above portfolio but with no discretion – simply choose the highest or lowest ranked stocks.

  1. Longs are stocks with market cap > £20M and the two highest ranking stocks from each of 10 sectors are selected.
  2. Shorts are half size of longs with mkt cap > £150m and the 2 lowest from each of ten sectors are selected.
  3. Shorts are selected even if the stock rank of the lowest in the sector is not *that* low.
  4. I have no discretion or choice in stock selection – it is entirely rules based.
  5. Portfolio revised and re-balanced annually.

UK Large Caps StockRanks NAPS

  1. A portfolio of approximately 20 companies.
  2. Each company must be > £1bn minimum market cap at selection.
  3. I pick two stocks (StockRank > 90) of my choice from each of 10 sectors. If there are insufficent stocks with StockRank >90 I may move to choose from stocks >80 else I will not select a stock if none fit this criteria.
  4. Each stock will be a 4.5% position.
  5. I can then choose 3 positions at my complete discretion as long as they are over £1bn market cap. For 2019 these were tetragon and randgold.

Personal Purely Discretionary

  1. This is my bucket for purely discretionary stock picks and trading. This may include longs and shorts. In 2017 I included crypto currency trades in this portfolio however I may separate these in the future.
  2. Can include growth/excitement style.
  3.  The place where I can put resource companies, high growth and other stocks thta may not necessarily have a high stock rank.

General Guidance for personal portfolios.

  1. I want to be able to select high stock rank companies that other investors online also really like – it’s a double confirmation imo of a stocks appeal.
  2. Use stops (and limits) for every position so constant monitoring is not required.
  3. I only sell every 3 months – else I use limit orders. I can open a new position with a stop at any time.

Family Member Portfolio – Discretionary

This is a portfolio i’ve managed on a purely discretionary basis for a family member which is now discontinued as money was required for a property purchase.

UK Stock Challenge Competition

This is the 5 stock portfolio selected at www.stockchallenge.co.uk every year under alias shauniekent.

It’s a year since I created a rules based dummy portfolio which I’ve been tracking on Stockopedia’s fantasy funds. The aim of this was to see if I can’t beat an imagined institutional fund, by only investing in larger companies in an attempt to beat the market.
I also created some other model portfolios with which I want to track long term performance and I’ll try and get round to posting these before their annual review at Christmas.

I’m calling it ‘UK Large Caps StockRanks NAPS’. The rules for the first model portfolio are as follows:

  • Approx 20 companies. Each stock circa 4.5% position.
  • Each company must be >£1billion market cap
  • Pick of 2 stocks from each of Stockopedia’s ten sectors with stockrank >90. If there are none I will relax this to SR>80. If there are still no matches, I will not select a company.

I may choose up to 3 companies above $1m market cap at entirely my own discretion. For the year passed I selected tetragon and Randgold.

So how did I do? A rather disappointing -2.4% slightly under the FTSE350 performance I chose as a benchmark.


There was a broad range of winners and losers.

So on to this year’s picks. Following the rules most sectors gave me very little choice with only 2 or 3 companies within the criteria. Only utilities had less then 1 company with a stock rank above 80. Interestingly this year the selections are less recognisable than last year.
I want gold exposure so I’ve found two miners in Acacia Mining and Centamin from perhaps only 3 gold miners to choose from. I’ve also included IG Group.

 

Fiscal Responsibility

October 9th, 2018 | Posted by shauniekent in Uncategorized - (0 Comments)

I forgot to publish and share but this made me chuckle from the Mcturra blog…. well if you don’t laugh you might cry.

Democracy is doomed

Why every % matters…

October 8th, 2018 | Posted by shauniekent in Educational - (0 Comments)

Well obviously we want to build wealth, but it’s important to realize how even a little extra % gain each year can be significant. Making or losing an extra 1% may seem insignificant over a year, but over a period of several years it’s effect becomes very significant.

“Compound interest is the 4th wonder of the universe”  quote sometimes attributed to Einstein.

The below table illustrates a £10,000 starting amount growing annually at 7, 8, 9 and 10 %. It also shows the final value difference between growing annualy at 7% compared to 8, 9 or 10%.

Starting Capital Annual Gain % Capital after 15 Yrs Difference compared to 7% after 15 Yrs Capital after 20 Yrs Difference compared to 7% after 20 Yrs
10,000 7% £27,590 £38,697
10,000 8% £31,722 15.0% £46,610 20.4%
10,000 9% £36,425 32.0% £56,044 44.8%
10,000 10% £41,772 51.4% £67,275 73.9%

£10,000 growing at 10% annually turned into £67,275 after 20 years, which is almost 73.9% higher that the £38,697 it would have become if grown at 7% annually.

If we continue for 25 years, for a portfolio growing an additional 3% per year, the final value after 25 years is almost double what is would have been!

This brief analysis doesn’t factor in regular contributions or the inherrent variability of annual performance – but does highlight the importance of making a few extra % every year across the whole portfolio (stop chasing those individual multibaggers that almost always dissappoint). Doing so makes a large difference to the future size of your pot of money.

Have i mentioned before that the average private under performs the wider market….? Imagine a typical investor who would have had triple the amount in capital after 25 years – if only they had matched the market (perhaps by buying a index tracking fund). They have missed out on a lovely compounded growth in capital. The truth is they may have given up long before faced with continued disappointing investing results.

Ok, so how do I go about harnessing the power of compound interest…? See my next blog post for an overview of how i would tell a friend or family member to invest, if they’ve already decided they want to invest in the stock market.