How to create your ideal value investing strategy 

This is the second briefing note in a series that explores how you can build a portfolio of shares by using the tools available at Stockopedia. Previously we examined some of the key considerations that need to be made before getting started in the stockmarket (especially the fees trade-off when managing your own portfolio). In this article we tackle the main ingredient of any systematic approach to building a portfolio – the underlying strategy. 

An investment strategy acts like a prism. There are more stocks and possible investment opportunities than you can possibly analyse or keep track of. Having a way to filter out low probability candidates and decide what’s important will save you valuable time. As Lewis Carroll observed, if you don't know where you’re going, any road will get you there. Just as a road map can help steer you to your final destination, an investing strategy can help you get your investments back on track if the markets steer you out of line. 

Choosing a strategy is a highly personal decision for investors and you should do your own research or seek professional advice when deciding on one. To illustrate how best to use the tools on Stockopedia, this series will explore three of the most popular systematic investing approaches – value, growth and income. Some of the strategies we will discuss have made more than 30% over the past 12 months alone but past performance is no guarantee of the futre, of course. All of them are underpinned by strong academic and market evidence that they work in the long term but they will appeal to different investors depending on individual preferences and risk appetites. Later on in the series we will look at how you can use your preferred strategy to easily generate a portfolio. 

Get the value advantage 

The first of our preferred house approaches at Stockopedia is value investing, which is arguably the most successful stock selection strategies ever. We like value investing so much that we wrote a book about it – you can download it here. When Benjamin Graham began urging investors to scrutinise out-of-favour and apparently mispriced stocks in the aftermath of the Great Depression, he lit the touch paper on a technique that has not only endured but prospered. The success of…

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