We are fortunate at Stockopedia to have a community of successful investors who have built portfolios worth more than £1m in their ISAs and kindly agreed to share their insights. In this series of articles we will explore their investment strategies and key lessons learned on how to pick stocks and manage risk when building a portfolio. Whether you are an experienced investor or just starting out, we hope that these interviews will provide valuable insights and inspire you to achieve your own investment goals.
Profile
Name: Michael
Job: GP and teaching professor at a university
Number of years as a private investor: 20
Portfolio Size: Over £1m
Investing Background: After paying off his mortgage and with a little more available cash than before, Michael read an investor diaries column article in the Independent. The article mentioned the Zulu Principle which encouraged him to buy Jim Slater’s books and “they just made sense to me.” He set up his own screen to identify Slater-style stocks and has used it to build a portfolio of mainly individual companies and some Investment Trusts.
Investing Goals: Continue to outperform the market
Getting Started
After paying off his mortgage, Michael had enough cash left over at the end of every month to begin investing in the stock market. As a GP and teaching professor he had a busy work schedule and needed a strategy to provide decent returns without taking up too much time.
He came across the Zulu Principle, a book written by the esteemed investor Jim Slater, designed to help private investors make “extraordinary profits from ordinary shares”. Slater is a strong advocate of the price to earning to growth (PEG) ratio which compares a company’s value (PE ratio) to the pace that it is growing. PEG ratios of less than 0.75 are enticing (according to the Zulu Principle) and when that is combined with strong profitability metrics (a high return on capital) and good momentum (strong relative strength), Slater says extraordinary profits might be on the table.
Michael said the ideas advocated by Slater, “just made sense to me,” so he set up his own screen to identify stocks without having to spend too much time doing research. In the early days Michael used Company REFS, the data screening business founded by Slater in the 1990s, for…
