Introduction

The portfolio year end is 14th October, however due to my working plans I may not be able to update the portfolio during this time and so I produce the results 3 weeks early.

My StockRanks £20k Portfolio 3 years on (Part 1),  is part of a series of blog posts about a real money portfolio based on the popular Stockopedia StockRanks.  With an opening balance of £20K the portfolio came into inception during October 2014.

Why real money to test the system?

The purpose of the portfolio was to help me understand the StockRanks system better and to change my approach to investing effectively.   I wanted to check my performance of stock selection based on a couple of hours work with StockRanks, over the year;  compared to my discretionary portfolios in which I spend hours of research each week. 

I wanted to feel the emotions of this important journey and learn how a StockRanks portfolio could affect me personally.  While I considered a fantasy portfolio, I believe the only way to learn, cope and adapt effectively to a StockRanks system was to do this using real money.  I believe decisions we make, risks we take, the fear and pride we feel in successful investing all come from real money experiences.  

I felt £20 000 was a good starting amount.  It is a recommended starting amount generally accepted within the investing community.

My Farming Rules  

  1. The Stockopedia QVM Recipe (Quality > 66, Value > 66, Momentum > 66)
  2. Dividend Yield 12 month rolling > 0
  3. Market Cap > £20m 
  4. Spread (bps) < 500
  5. Sector includes - One screener for each sector (10 sectors in total)
  6. Rebalance every 12 months
  7. A wide non destructive Stop Loss will be placed. [new rules going forward]

Exit Plan

A stock will leave the portfolio when it goes below StockRank 90 and a more suitable qualifying stock can take its place.  Once the Stock is part of the portfolio the Quality, Value or Momentum figures may go below 66.  That is ok as long as the Stock remains above 90 at the time of rebalancing.

Although I wanted to provide as little human intervention as possible under this system I was able to choose stocks from each sector that I thought would perform better than others.    I  also reserved my right to intervene when an extra-ordinary or surprise…

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