How to turn your strategy into a portfolio 

This is the third article in our series exploring how you can build a systematic portfolio of shares by using the tools on Stockopedia. Previously we examined why a strong underlying investment strategy is essential for any systematic investor. We also introduced an example value strategy as the first of three potential approaches to the market that might suit most investors (please note that it's important to do your own research or seek professional advice when deciding on your underlying strategy). In this article, we are going to show you how to take such a strategy and generate a potential portfolio of shares from it. 

A recap on the value strategy 

Our example value strategy has several components and we’ll explore the specific metrics behind them in more detail shortly. First, we have used Joel Greenblatt’s Magic Formula to find “cheap” and “good” stocks in the market and have added in an additional filter the Piotroski F-Score, a checklist that scores a company’s fundamental momentum – helping us to find stocks that are “improving”. 

As a quick aside, the thinking behind this combination is that it's a strategy that shouldn’t keep you awake at night. When market conditions aren’t playing to your favour, there should be some security in knowing that focusing on a diversified portfolio of cheap, good quality stocks with improving financials is a sound long-term philosophy. For that reason, you're unlikely to have to walk away from it, although - like any approach - it may experience periods of underperformance from time to time. 

Let’s do this… 

Because our value strategy is based on a couple of ‘guru’ screens that are already a feature of Stockopedia, there are really easy ways to blend them to get the result we want pretty quickly (more on that later). But because every single metric and parameter can be changed or amended depending on what you want to see, we’re going to go from the ground up and build this screen from scratch. The good news is that it’s really easy. 

From Stockopedia’s homepage, hover over the dropdown Strategies menu and select the option to Create a Screen. Here you’ll find the mission control page for building any kind of strategy that you want. After you have given your screen a name – in…

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