What Works?

Burford is one of the largest (if not the largest) firms in litigation funding - a relatively new multibillion industry whose historically strong returns have begun to attract significant investments from pension funds, endowment trusts and the like. 

The company is popular with investors. Those looking to get a feel for the company as an investment over the…

I once observed two people facing the wrong way in one of those wave pools - it didn’t end well for them. 

What looked like a pleasant chat was interrupted by an artificial tsunami. They resurfaced after a second or two, coughing and spluttering, alive but very wet.

Looking at the year-to-date performance of Stockopedia’s 60 or so…

Back in April 2009 -- a little over 10 years ago -- world stock markets reached an inflection point. No-one knew it at the time (though some later claimed they did) but it was the moment when negative momentum triggered by the financial crisis stopped and equity prices started rising. These were the very early days of a new bull…

For many investors, the perennial appeal of fast growing stocks is their ability to deliver outsize capital returns. Forget value, forget dividend income… growth in its purest form is all about fast-paced earnings expansion lighting a fire under share prices. It’s about going big or going home. It’s the classic territory of popular traders like Mark Minervini and William O’Neil…

Not all profits are made equal.

For most investors and analysts, the Income Statement is the first port of call. That’s why it is home to all manner of financial shenanigans and accounting trickery.

Yes, company A and company B both generated net income of £100, but how did they generate that net income figure? The importance of this question…

One time I accompanied a senior analyst to meet the chairman of a company that was rolling out new units at pace. I was just out of university and what little knowledge I had of business came straight from the textbook. This was maybe my first chance to listen to actual professionals talk about the reality of running companies.

For a good chunk of 2018, the UK’s equity markets were under the cosh and index prices fell across the board. But since the start of this year, there’s been a sense of optimism around. Political and economic uncertainties aside, the FTSE All-Share has managed a 6.8 percent gain in recent weeks. It’s a modest result, but one I reckon…

Sixteen companies were forced off the Alternative Investment Market last year because of financial stress or insolvency. That was up from nine companies that suffered the same fate in 2017. When you add them to those that hit problems but somehow managed to cling on (albeit with broken reputations and battered share prices), it’s a reminder of just how perilous…

There’s just no getting around it - British stock markets have performed dismally in 2018. The black clouds of Brexit and political incompetence have hammered the indices with the FTSE All Share down more than 12% year to date at the time of writing. But there is one bright note. Savvy private investors have been beating the market handsomely.

Last…

Building the world brain

Global investment opportunities abound and yet investors rarely leave their home market. Is it possible to conquer home bias and invest profitably in overseas companies?

Pooling our experiences can be a great time (and pain)-saver in terms of learning lessons. A lot can be gained from reading the conversations in the comments section of this recent…

Informational edge or home bias?

• Many investors diversify across different stocks, industries, and asset classes

• Not so many investors diversify across different stock markets

• Home bias can increase risk and cost money in terms of missed opportunities

Do you only invest in the UK-listed stocks? I do, even though UK indices make up just 6% of the world stock market. Adding the…

Readers of the Stock Market Almanac may know that October is historically one of the most volatile months of the year for shares. The reason - if you believe in seasonal trends - is that many buyers return to the market in October (after selling up in May). And while that can send prices rising, the downside is…

In 2013, a year after we launched the subscription service on the Stockopedia website we had an idea. Having read through hundreds of academic papers, quantitative research notes and books on the subject of stock selection we realised there were some common threads. Why not bring those threads together into a simple, intuitive and effective rating system for stocks?

After a couple of minor roles in the City, I wound up at Goldman Sachs in their ultra high net wealth private client division. As is usually the case as a junior you are keen to make a good impression and find promising investments to pitch. The problem was I was rather independent minded and preferred to come up with…

Regardless of what the marketing departments at some major fund management firms might like you to think, the concept of ‘factor’ investing has been around for decades. The characteristics of Quality, Value and Momentum have long been credited as a source of some of the strongest returns in the stock market - it’s an open secret. But despite validatory evidence…

Back in 2012, shares in the media company Trinity Mirror looked surprisingly cheap given the amount of cash the business was throwing off. Despite its outdated business model, the newspaper publisher was still managing to juggle a high level of debt and a troublesome pension deficit. But what was more concerning was its seeming inability to adapt to…

In the aftermath of England’s early exit from this year’s Rugby World Cup came an intriguing but sadly familiar tale of misadventure in the stock market. During the tournament preparations it’s alleged that the team’s kit manager shared a tip about the ‘exciting prospects’ of a micro-cap oil exploration company. This apparently lulled some players into parting with…

In the ten years to 2014, shares in online fashion retailer Asos soared from around 7p to £70 each. The stock became the stuff of folklore among those that had either made a fortune or missed the chance of making millions by selling out too early. Its relentless growth seduced investors and created blistering momentum that pushed it to a…

When market valuations fell sharply this summer, Neil Woodford, the highly respected fund manager, described how sliding share prices can be overwhelming and distort rational perspectives. He said that while it can be difficult to remain focused on fundamentals when markets fall dramatically, it’s a chance to look for opportunities where the falls have been heaviest.

In…

When Warren Buffett raised his stake in Tesco in 2012, little did he know that he was breaking one of his own investment rules. He’d initially taken a position in the UK retail giant some years earlier. After a profit warning and news of increasingly fierce competition, Buffett chose to buy more shares as price started to slide. It was…

Faced with choosing between a $10 bottle of wine and a $90 bottle of wine, which would you go for? In one experiment - with the prices of each wine clearly marked - nearly twice as many people preferred the taste of the most expensive bottle. But unknown to the volunteers, the two wines were exactly the same.

This test was…

One of our subscribers today (dangersimpson ) sent me a marvellous piece of research by Michael Mauboussin entitled “Managing the Man Overboard Moment - making an informed decision after a large price drop".  The insights contained in this piece hold some great lessons for all stock market investors.  He shows how to decide whether to buy,…

Surely the simplest way to become rich in the stock market is to find the perfect young growth stock, fully invest, and ride it for 30 years. But a piece in the FT at the weekend caught my eye which illustrated just how hard it is to find long term winners in the market. The piece highlighted the biggest winners…

There’s a war at large in the stock market today that may be hurting your portfolio returns without you even realising it. Over the last hundred years the players in the stock market have had a fairly standard approach to reaping their profit - that of the stock picking ‘hunter’. But in the last 30 years, as the technologies of…