Really intrigued by this! Wouldn't be surprised if it did very, very well. I admire all the work put into it. One question is how you will automate decide how many tech stocks to include for example. Arbitrarily choosing the number yourself will add bias and mean it is not so repeatable.
Hey KiwiCam, yeah hopefully it turns out well 😅. That's a great question, I suppose even deciding the weighting between sectors is bias in itself. The reason for having more tech stocks this time was simply that way, way more tech stocks were passing the checklist than other sectors, so I felt if I'm following the checklist I should follow that to some degree. So I may do that going forward, proportion out the sectors to how many pass in each one. I suppose the most un biased way would be to just have 6 of each, though I do feel I would be missing out on some of the higher growth then. Or even simply the top 30 scores, regardless of sector. This would lead to heavy weighting in certain sectors though, especially tech at the moment. But maybe that is what it should do, follow the highest growth sectors for each year. Lot's to think about, thanks for the question. How would you do it?
@@PhilPerryInvestor Your approach makes sense, you could do as you mentioned to proportion it out based on the ratio of how successful the sectors are at passing the checklist. Some years of course go from one animal spirits to another so just wary of a super heavy weighting to a singular sector which could have a terrible subsequent year. How would I do it? Hmm... I think I'd try to automate or follow pre-planned rules as much as possible. Though of course in the first few years finding the best rules is going to be the task. Personally, the lower the number of decisions needed in a 'passive' portfolio the better as they can pretty quickly become pretty active. I'll keep tuning in to see how you get on.
Great piece of work Phil - it must have taken a huge amount of time. I hope it does well - would you consider having a special -case whereby certain stocks are removed if there are significant bits of news that lead to major drops? Is your spreadsheet that you go through at the start available - I'd be interested in a copy if it were. Good luck - I hope it goes well.
Thanks Kevin, fingers crossed. I think for now I won't touch any of the stocks, whatever the news. I want the portfolio to be as passive as possible, besides the annual score calculations. Also you never know what may happen, a beaten down stock could get acquired for example. Having said that once I have a few years of data, if it's clear that removing the worst performing stocks part way through the year would improve results, then I may consider it. But for now I'm just going to let it ride. I'm sorry the spreadsheet isn't available, however it's fairly straight forward to make. Thanks for the comment.
@@PhilPerryInvestorHi Phil. Why do you not use the momentum score that Stockopedia calculates? It's not identical clearly, but does take earnings growth etc into account. Would save you those days of work!
Hi beartrap, great question! Stockopedia's momentum screen is quite different, even though it takes earnings into account, it also uses share price momentum. You won't find any stocks in there that aren't already in an up trend. I'll happily buy stocks that are already in an uptrend, but ideally I want to find those that are just about to turn and catch them as they break out of their phase one base. I use the exact same checklist for my active trading portfolio. On a separate note, for me personally I like to arrive at my picks myself, rather than be reliant on someone else. It gives me stronger conviction & accountability. It also means I can experiment & tweak things to fit my own investing style which I think is incredibly important. Not to say Stockopedia isn't an excellent resource though & I wouldn't suggest that anyone not use their scores. It may well end up being that just using their scores leads to better results over the next few years, but at least then I'll know. I consider everything I'm doing at the moment experimenting & learning, even if ideas don't work out I think the process itself is worthwhile to build knowledge & understanding of the markets. Thanks for the comment.
Some great stuff here, well done! I assume you get your EPS forecast figures from Stockopedia? Sharepad, which I use, states EPS in terms of either, company adjusted, Normalised or Reported. Which EPS figures do you use? Do you assume a minimum number of broker forecasts for the EPS figures?
Hi Pete, ideally I use non adjusted diluted EPS, however for UK companies, as you probably know, you rarely get forward estimates for this. So for the UK I tend to use normalised EPS. However the US is much better with this so I can use diluted there. I use Stockopedia for UK stocks & Seeking Alpha for US stocks. I don't have a barrier to cross in terms of number of broker forecasts, it could just be one. But if there are no brokers covering a stock & the company doesn't provide their own guidance I simply don't give any points. Which basically means it won't pass the checklist.
Really intrigued by this! Wouldn't be surprised if it did very, very well. I admire all the work put into it. One question is how you will automate decide how many tech stocks to include for example. Arbitrarily choosing the number yourself will add bias and mean it is not so repeatable.
Hey KiwiCam, yeah hopefully it turns out well 😅. That's a great question, I suppose even deciding the weighting between sectors is bias in itself. The reason for having more tech stocks this time was simply that way, way more tech stocks were passing the checklist than other sectors, so I felt if I'm following the checklist I should follow that to some degree. So I may do that going forward, proportion out the sectors to how many pass in each one.
I suppose the most un biased way would be to just have 6 of each, though I do feel I would be missing out on some of the higher growth then. Or even simply the top 30 scores, regardless of sector. This would lead to heavy weighting in certain sectors though, especially tech at the moment. But maybe that is what it should do, follow the highest growth sectors for each year. Lot's to think about, thanks for the question. How would you do it?
@@PhilPerryInvestor Your approach makes sense, you could do as you mentioned to proportion it out based on the ratio of how successful the sectors are at passing the checklist. Some years of course go from one animal spirits to another so just wary of a super heavy weighting to a singular sector which could have a terrible subsequent year. How would I do it? Hmm... I think I'd try to automate or follow pre-planned rules as much as possible. Though of course in the first few years finding the best rules is going to be the task. Personally, the lower the number of decisions needed in a 'passive' portfolio the better as they can pretty quickly become pretty active. I'll keep tuning in to see how you get on.
Great piece of work Phil - it must have taken a huge amount of time. I hope it does well - would you consider having a special -case whereby certain stocks are removed if there are significant bits of news that lead to major drops? Is your spreadsheet that you go through at the start available - I'd be interested in a copy if it were. Good luck - I hope it goes well.
Thanks Kevin, fingers crossed. I think for now I won't touch any of the stocks, whatever the news. I want the portfolio to be as passive as possible, besides the annual score calculations. Also you never know what may happen, a beaten down stock could get acquired for example. Having said that once I have a few years of data, if it's clear that removing the worst performing stocks part way through the year would improve results, then I may consider it. But for now I'm just going to let it ride. I'm sorry the spreadsheet isn't available, however it's fairly straight forward to make. Thanks for the comment.
@@PhilPerryInvestorHi Phil. Why do you not use the momentum score that Stockopedia calculates? It's not identical clearly, but does take earnings growth etc into account. Would save you those days of work!
Hi beartrap, great question! Stockopedia's momentum screen is quite different, even though it takes earnings into account, it also uses share price momentum. You won't find any stocks in there that aren't already in an up trend. I'll happily buy stocks that are already in an uptrend, but ideally I want to find those that are just about to turn and catch them as they break out of their phase one base. I use the exact same checklist for my active trading portfolio.
On a separate note, for me personally I like to arrive at my picks myself, rather than be reliant on someone else. It gives me stronger conviction & accountability. It also means I can experiment & tweak things to fit my own investing style which I think is incredibly important. Not to say Stockopedia isn't an excellent resource though & I wouldn't suggest that anyone not use their scores. It may well end up being that just using their scores leads to better results over the next few years, but at least then I'll know.
I consider everything I'm doing at the moment experimenting & learning, even if ideas don't work out I think the process itself is worthwhile to build knowledge & understanding of the markets. Thanks for the comment.
Some great stuff here, well done! I assume you get your EPS forecast figures from Stockopedia? Sharepad, which I use, states EPS in terms of either, company adjusted, Normalised or Reported. Which EPS figures do you use? Do you assume a minimum number of broker forecasts for the EPS figures?
Hi Pete, ideally I use non adjusted diluted EPS, however for UK companies, as you probably know, you rarely get forward estimates for this. So for the UK I tend to use normalised EPS. However the US is much better with this so I can use diluted there. I use Stockopedia for UK stocks & Seeking Alpha for US stocks.
I don't have a barrier to cross in terms of number of broker forecasts, it could just be one. But if there are no brokers covering a stock & the company doesn't provide their own guidance I simply don't give any points. Which basically means it won't pass the checklist.