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I think that we all need to remember that Stockopedia is not yet a profitable organisation.

It's Accounts (at Companies House) reveal that it has been a persistent loss-maker & is reliant on cash injections to continue trading.

This might explain why requests & upgrades take longer than requested.

Company accounts: https://s3.eu-west-2.amazonaws...

Absolutely! Keep magic formula score....Greenblatt's Little Book That Beats the Market is a must read IMO. Its not necessary to follow or even agree with his approach. I don't follow it but I do like to see when I am disagreeing with it as a sort of risk management thing. However, as a nice simple rational way for one to invest successfully and durably (including handling rough with smooth) its a great book.

I think that its effectiveness has decreased in recent years. I do not have a robust analysis for why but my guess is that magic formula investing can be a bit drowned out by growth and momentum markets and struggle with disruption/innovation (eg online businesses and perhaps a lot of the AIM market in general). 

I think it likely that it has also struggled with super low interest rates as this environment as this distorts and suppresses long term cost of capital which was a real motivating force in the magic formula trade off of return on capital and value.

It is a sophisticated reversion to mean sort of strategy and that has a reality check value.

Finally, now that the riff-raff are off do we get to be as abusive as we want to each other?  ;)

I totally agree with JTG regarding investment trusts.
I have made a very satisfactory profit from individual stocks over the last ten years or so. But I am one of Stockopedias older subscribers and for me investing in individual stocks, beyond a relatively small limit I have placed on myself, would now be a risk I am not prepared to take. And so I no longer do invest in individual stocks.
I am, however, researching the whole concept of investment trusts and have every intention to move the bulk of my money in that direction. Maybe I have missed something on Stockopedia but I am not aware of anything that meets the needs of investment trust investors.

I agree with JTG on this and have individually asked for this on feedback I have provided in the past.

I wasn't really aware that there is a free element to Stockopedia as I subscribed to have access to the technical data and tools. Now that I am, I support the plan to put articles behind the paywall - quality is better than quantity.

Wes Gray & Toby Carlisle wrote a book called Quantitive Value where they analysed the Magic Formula in detail. They found that all of the excess return was due to the cheapness metric - earnings yield. The quality metric actually reduced the alpha.

Here's Wes Gray talking about the book in more detail:

https://www.youtube.com/watch?v=QAtmJV1dPu0

So this explains why the Magic Formula hasn't performed that well of late, I doubt it has anything to do with returns on capital, it is more likely becaue the value factor hasn't performed that well. Although earnings yield has done better than the classic P/TB factor.

I'm not saying quality never generates alpha but not in the form that Greenblatt proposes, it seems. Here is a good summary, from Gray again on where the current state of research into factor investing is without having to read all the original papers on ssrn:

https://alphaarchitect.com/2017/02/03/factor-models-are-more-art-and-less-science/

Cheers for the link dangersimpson, I'll watch with interest

The 'Magic' formula is a little less magical than commonly thought

Just to mention that there is a totally dedicated Investment Trust event coming up in London on 15th May run by the Mello team that we have created due to the popularity of them so you really should be there...

30 ITs and funds exhibiting & presenting
10 great keynote speakers
6 panel sessions

There will be lots for you to enjoy and Stockopedia will be there too. It is £49.00 per ticket but I am happy for all those interested to use my VIP code and have a ticket for £10.....simply put VIP10 in the box when booking your place and i look forward to seeing you all there. https://melloevents.com/trusts-funds/

These are excellent events and you can see video coverage on the website of previous events www.melloevents.com

David

Thanks for this, David. Sadly I don't think I can get there, but I'll mention it to my daughter. They are also important for family advice and, I believe, have a renewed role as vehicles for pension savings for the young within SIPPs or ISAs. I've been bitten by recommending individual stocks and one went bead and was wiped out. The psychological comfort of an Investment Trust can be considerable in this regard. It can decline, but few die. And better than Unit Trusts too, as not subject to redemption runs as poor Neil Woodford is now experiencing.
What I see is that individual stocks can be great, but very few public companies remain great for 20 years, and the majority of people want to be informed but trade little.

Was that the Harry Lime Theme? I can understand your views but as a further thought have you considered ETF's a very informative book might help "The Ultimate ETF Guidebook" . Not as a substitute to investment trusts but as a part of the portfolio. Cheap to buy, no stamp duty and liquid. Try here www.harriman-house.com

personally I don't get the "internet is free" argument: demonstrably it is not. I go with the aphorism that if you are not paying for the product then you ARE the product. Given that Stocko doesn't use affiliate marketing nor do you hassle with ads then all of the content has a cost and a value and unlike Social Media, you are not monetising your customers. It's a personal choice what value one puts on that content but that is the same with any form of education. Ignorance in this space is pretty expensive and opportunity costs can be very significant.

As for conversion rates, I suspect that metric has changed over time as Stocko has increased its penetration of the addressable market. 

I've been along for most if not all of that journey, personally a couple of hundred quid for the full suite of services is a no-brainer but I recognise that not everyone has the same lens. I imagine that many will miss the community of the SCVR; it is a very powerful  Community of Practice (COP) .  The SCVR combines the three necessary ingredients to forming a COP below with great leadership from Paul and Graham.  The quality and value of the comments builds and augments the lead analysis so for me the resulting synthesis is often of most value. I get the counter argument that some of this will be reduced by imposing a paywall but equally that also helps to moderate behaviours and tightens the community. 

Great post - and I agree completely with the line "if you are not paying for the product then you ARE the product"... there's a lot of low-value clickbait content out on the web. 

I do completely understand the worry some have that reducing access may reduce the diversity of opinion.  But I personally don't agree.  There's an extraordinary diversity of investor types on Stockopedia - dividend investors, growth investors, traders, systematic investors, spreadsheet investors etc etc.  This is very much NOT a site of mindless StockRank followers, nor mindless SCVR followers - there's an enormous diversity of ownership & styles.   

Given the product roadmap, I expect we'll be attracting an even more diverse group of investors to the site in future.  I expect at some point many of the old-timers here will start complaining & getting nostalgic for the days when everyone was more aligned !

The only stock in my portfolio that comes from someone else's advice is currently French Connection. It's cost me a paper loss of 32% currently. Thing is though, I didn't see you write "French Connection will get you a Lamborghini tomorrow if you buy today!".

I saw you write interesting, well sourced and intelligent research on the company. Research which I read over, then did some of my own and found myself agreeing with. I had some opinions of where the company would go, which mirrored your own and I purchased. At the wrong time, as it had just been hyped at Mello I later realized.

I still have the stock. The company is performing pretty much according to how I thought it would, if a little bit behind schedule. A lot of investors have gotten cold feet and jumped ship. This caused more investors to jump ship as it always will and I now sit with my biggest on paper loss.

I can't say I'm overly upset. First of all, I still think it's going to turn into a winner. Second off, I learned a great deal from your research on this stock and I've learned a great deal reading some of your other reports (in terms of how you analyze a stock, what you value and why).

I haven't seen any of the drama but I can easily imagine it will have built up over the last year. Last July I left for a Brazilian beach. Two weeks shut out from work, it was about damn time. I barely checked my e-mail. I glanced at my portfolio. I'd rocketed up like a ballistic missile a mere few months after starting to invest with real funds for the first time.

That all stopped in July. I was left with one winner, everything else plummeted down to the negative 20-30% range. Not all at once. But little by little, month by month, my portfolio got redder.

Now I don't believe in magic money, so I hadn't invested more than I could afford to lose. Further, I'd done my research and had a plan behind why I purchased every share.

I use the financial data Stockopedia gives us a lot, it's my primary reason for being here (though I love the articles and forum and screeners for inspiration and education). The financials were clear. All my investments were as good today as they were yesterday. So I took a pair of charming students to watch the Brazil World Cup match instead of worrying.

The only truly bleak moment July gave me, was a restaurant full of Brazilians forced to watch their team knocked out of the world cup. My brutally red stock portfolio? My investments still had zero debt, they still had rock solid cash balances, they still had excellent profit margins (Save FCCN which were still developing towards one as predicted, if slowly). They were still in industries that, while they might have downturns won't go away anytime soon.

The market as a whole was in a panic. Worst case scenario, it stays depressed for a couple of years and I follow the Charlie Munger principle of discount profits waiting to be bought up.

Well the market is recovering. Some analysts (some of whom I respect) are saying it's a suckers rally before a larger crash and I'm inclined to believe we are due for a fairly severe reaction to the insane debt levels in the world economy. But I'm not worried. My portfolio is back in the black. French Connection is as red as ever, but I suspect time will turn that one black as well. If it goes down again, it goes down again. It will be my fault if it does. Just as it will be my fault if it keeps going up.

In summary Paul, you're an all right guy and I hope you keep doing what you're doing in a way that you enjoy doing it.

"if you are not paying for the product then you ARE the product"

Of course one can take this in a slightly different context.

In terms of the value I would place on the editorial content / discussion boards there are a number of contributors who I would absolutely say are part of  "the product".

This is why I personally find myself slightly conflicted by the decision  to put the editorial content behind the paywall. I absolutely accept that it is a commercial decision entirely in the hands of the Stockopedia management. Further, even though I am perhaps an exception  in that I can categorically say that I would not have become a Stockopedia subscriber were it not for the open content exposing me to what Stocko has to offer ; I can accept that Ed will have done the sums (I believe he's actually quite good at them) and identified that as a customer acquisition tool the editorials do not wash their face.

So Stockopedia are perfectly entitled to do this, of course.

But that's not to say that it doesn't give me some cause for concern over the health of the discussions.

When I first arrived at Stockopedia (on the back of finding that Paul Scott's blog had relocated here) I found an excellent community of civilised and intelligent discussion (as I think I have said before, very reminiscent of the Motley Fool UK discussion boards some 15+ years ago). Effectively, in my mind, the service that Stockopedia was providing in this respect was a 'meeting space'. TMF never found a way to 'monetize' this and in fact given their roots, it was ironic that they moved to selling 'tipsheets' as their primary income. What I have found from reading around is that some (perhaps a small number) of those I would like to exchange views with will no longer be part of this community. So if I wish to continue to exchange views with those I will have to find another space to communicate (I should stress, in addition to Stockopedia). I am also concerned that over time a 'closed user group' will over time become increasingly self congratulatory. I absolutely agree with Ed that actually here were are a pretty broad church and hopefully this will continue. Even now though, I do detect some degree of group think and suppression of dissent in some quarters - I know that many don't recognise that and indeed reject it out of hand (well they would, wouldn't they?) - nevertheless, this is my perception.

Ed has hinted a future paths to make some of the 'editorial' more freely/easily available and I hope that this can be worked on sooner or later (although I can't imagine what the model might be).

In the meantime, despite my concerns, I continue to regard Stocokopedia as just about the best resource I have access to, but my 'AAA+' rating on the discussion boards is 'under review'.

There - I've got that off my chest!

Hi Ed,

I’ve been following Paul’s market commentary for 5 years now and have enjoyed learning throughout the process so much. 5 years from now I’ll be well positioned to start building my own portfolio (when I’m mid 30s), for now it’s been an educational piece whilst I use mutual funds (portfolio size is too small to justify single stock selection).

I’ll dearly miss reading the small cap blogs, as well as the educational insights that Stockopedia has provided such as on factor investing or small cap insights, which have been high value in content. For now I can’t justify the subscription because of lack of investment engagement but I do hope to be back down the line, hopefully by then a competitor won’t have swooped my lifetime value with a different offering ;)

I can’t be bothered to manually go back through the archives on each stock to save all the commentary that I found useful – will old posts still be available for non-subscribers?

Thanks

I am also concerned that over time a 'closed user group' will over time become increasingly self congratulatory.

Dear Gromley,

I don't see this as a concern and believe yesterday's SCVR comments about a certain unprofitable on-line clothes retailer is just the latest illustration of this. If the regular posters were afraid to take opposing views to Paul and Graham, this might be a concern, but I see no evidence of this, and never have. And if you want even further assurance, I will still be here next week :-)

All the best, Si

I don't think it's accurate calling it a "Tip sheet". The primary service I consider myself paying for, is well organized and easily screen-able financial data. I used to calculate a lot of these factors myself in excel. Digging up accounts here and there. Double checking to see if I was getting it right etc. I'm not a professional accountant or investor and my time for learning, is limited.

Then enter Stockopedia which collects all the financial data your heart could desire in an easily sortable way. It provides all the most common maths related to it and presents, not one magic formula it's shilling, but all of it.

In addition they do experiments with factors of their own and present it in an unbiased and open format along with all the other factors.

I have my own criteria for investing, and I'm using "fake money" folio's to experiment with others. I make my own screens. I look at the performance of the different screens on here. I use some of Stockopedia's rankings to find stock to check against my own criteria.

Some people want to believe in magical get rich quick formulas. But it's not what Stockopedia is selling. Stockopedia sells data and an academic approach to that data. That's my opinion anyway. The internet has plenty of tip sheets sale but I don't think Stockopedia is one.

The discussion forum on here reflects that I feel and the financial data and screens they provide add a lot to those discussions in my opinion. We don't just talk about company names, we can link directly to hard data and maths with no effort or go look it up without ever leaving the website.

Gromley

“Even now though, I do detect some degree of group think and suppression of dissent in some quarters - I know that many don't recognise that and indeed reject it out of hand (well they would, wouldn't they?) - nevertheless, this is my perception.”

I agree with that. And I think that it’s sometimes as if some posters take offence on behalf of other posters who are fully capable of defending themselves.

However, compared to the style of posting found on ADVFN and London South East, this is still pretty hunkydory in my view.

But I have decided to give a bit less of my attention to posters when they are talking up their own book excessively. We all want to champion our own favourite shares, but recently the amount of hype certain shares are getting from certain posters is starting to grate a bit.

I regard it as purely a matter for you to make a business judgment as to the best pricing policy.
However, I think it would be good to review content and balance also.
The SCVR is a valuable resource - not least when the authors stray into general market commentary. It also provides valuable analysis of a section of the market which receives little analysis. However, I feel that by accident the site has become very small cap orientated. Not only do we have the SCVR but also Matylda's early commentary supplemented by Mr Contrarian's pithy notes. Most days there are between 30 and 50 comments on small cap matters. Very little appears on the FTSE 100 and 250 - where the majority of the money is. I do realise that these larger companies are well served by other commentators but you Ed have commentated that it is important in investment to aim for balance.

Efforts are being made in this direction - Ben's editorial this week is devoted to the FTSE 100 but has only attracted 3 small comments and Stephen Bland's series on High Yield shares has been a useful airing of this topic but of course this is only one aspect of large cap investing and he specifically pitches it at investors who do not want to spend a great deal of time on management. Maybe you could contribute to a rebalance by splitting your next Naps style portfolio either by size or style.

As to the SCVR maybe you could sit down with Paul and Graham to consider the ideal size to be covered. For me the top level of £500m with diversions into interesting events seems about right but I wonder whether it would be sensible to have a look at the bottom. Personally I very rarely invest below £50m and almost never below £25m.
Spreads and liquidity make companies of this size pretty difficult particularly in a bear market. I think your statistics could helpfully emphasise these factors more.

MH

Hi MH,

I hear what you are saying but FTSE100 companies are analysed to death by City analysts and most have impenetrable financial results that even a fully trained accountant would have difficulty getting their head around. It is impossible for Private Investors to gain access to FTSE100 company meetings, and to be honest, the company managements are completely uninterested in us and really don't care how small shareholders are adversely effected by some of the ridiculous corporate actions they get away with. 

Of course, this sometimes applies to small companies too, but it is much easier to invest in small companies where the management's interests are aligned with ours. The reason most of us are interested in small caps is because it's the one part of the market where PI's can get one over on the City and spot good companies before they do. Small caps have less moving parts, have far simpler accounts, and generally have management who are more responsive to interactions with the private investor community - the events that Carmensfella organises are a testament to this.

There is nothing to stop you from initiating discussions about FTSE100 companies but there are perfectly valid reasons why the majority of us are not interested in taking part i.e. what special insight can we find that is not already in the public domain for such large and over-analysed companies?

All the best, Si