My StockRanks £20k Portfolio 3 year on (Part 2) - The Rebalancing

Friday, Oct 06 2017 by


My StockRanks £20k Portfolio3 year on (Part 2) - The Rebalancing is part of a series of posts about adopting the Stockopedia StockRanks system into a real money test portfolio.  With a starting balance of £20, 000 the portfolio came into inception during October 2014.

As a recap the results to 29 September 2017 was as follows:

The value of the portfolio increase by 19% past 12 months 

Compound Annual Growth Rate (CAGR) 20.22

More information about these results can be found here:-

My Stockopedia £20k StockRanks portfolio 3 years on (part 1)

I have now completed my third year of the journey and now rebalanced the portfolio. 

Changes to my rules

Stockopedia has wrote several articles in the past about StockRank styles which make up the different ways that StockRanks are exposed to the different drivers of Quality, Value and Momentum.  I had always aimed for SuperStocks in the hope that this would be give the best possible chance of success during different periods of market cycles.  Now with the introduction of RiskRatings as a classification of market volatility I wanted to add the risk ratings into the rules.  It has been my strategy not keep the rules to a minimum and so I felt that I would have to replace rules rather than add more.

Adding the RiskRatings but excluding Highly Speculative then most of the highest volatile stocks should dissapear therefore I felt Spread (bps) could be replaced.  I also felt that with expanding to a possible 20 stocks that I could introduce some of the smallest caps on the markets. So the Market Cap > 20 is now also removed.    I would be surprised to find any stocks with a market cap of less than £20m anyway however you never know.  If they qualify for the screener they would certainly be considered now.

  1. The Stockopedia QVM Recipe (Quality > 66, Value > 66, Momentum > 66) 
  2. StockRank Syle - SuperStock
  3. Risk Ratings excludes Highly Speculative
  4. Dividend Yield 12 month rolling > 0
  5. Market Cap > £20m
  6. Spread (bps) < 500
  7. Sector includes - One screener Two stocks for each sector (10 sectors in total) as long as they qualify.
  8. Rebalance every 12 months
  9. A wide non destructive stop loss will be placed.

Exit Plan

A stock will leave the portfolio when it goes below StockRank 90 and…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.

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13 Posts on this Thread show/hide all

Nick Ray 6th Oct '17 1 of 13

Hi Ian

Very interesting and useful post.

What do you mean by a "non destructive" stop-loss?

I am struck by the balance of risk ratings in your portfolio,which has clearly come out skewed towards the riskier (high volatility) side despite rules which you might expect to dampen risk. Looking at the yearly volatility of your chosen stocks I would say that some of your stops are quite tight. Will be interesting to see what happens.

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Logic 6th Oct '17 2 of 13

Just a very quick question, do you find Royal Dutch Shell (LON:RDSA) better than Royal Dutch Shell (LON:RDSB)? I know RDSA is cheaper, but iirc it may affect dividends.

May I ask how you determine your stop loss orders, and what qualifies as a "destructive" vs "non-destructive" stop loss order?

Other than that, congratulations on a successful portfolio, and it slightly warms my heart to see several shares I hold included in your portfolio (do not worry, it will not thaw).

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pedtrader 6th Oct '17 3 of 13

Hi Ian

Loving these posts - very insightful and giving me plenty of ideas. I am new to the investing game, started small with my ISA and recently setting up my SIPP. My plan is to get a healthy portfolio much like yours. Great tips on RiskRating. I too am a fan of NT - I have a slightly modified NT screener and bought a few stocks to mixed success. You mentioned you had a NT screener - care to share your criteria / rules?

Keep it up


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goldbug 6th Oct '17 4 of 13

In reply to post #226043

Hopefully I can answer the question about Royal Dutch Shell (LON:RDSA) Vs Royal Dutch Shell (LON:RDSB) .
My understanding is that Royal Dutch Shell (LON:RDSB) is the one that you'd buy as a UK person. I've got shares in that one.
The Royal Dutch Shell (LON:RDSA) shares are for Dutch shareholders and I think that they have Dutch withholding tax taken off them when dividends are paid.

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Redrichmond 6th Oct '17 5 of 13

I noticed H&l now have included a percentage trailing stop loss now.Saves time going in all the time :) I now dont use them now as got stopped out at 700 with BUR and had to buy back in more expensively its now nearly 1100 

I had 20-30 shares in a portfolio was spending so much time reading stockopedia I was losing money (panic selling , panic buying etc, holding for 4 months and moving on)

My portfolio has now 3 shares and I havnt touched it in 6 months. 

Its up 38%. BUR, SOM, MGNS

My sons is up 168% in about a year,  20k in 1 share.. Up to 44k now. BUR .

 This is his pension so I dont mind taking the risk, as its got another 60 years to grow

Its the reading of all the books recommended on stockopedia linked to the screens that has improved my trading (basically stopped my itchy finger of buying and selling) and to understand the business fundamentals before investing. I used to work in law and my old place used to charge £700 per hr for our lawyers so BUR is a no brainer. I have to hold that.Its a super moat. Incredible business model and realising that in future I will try and buy in industries I know

SOM was a mistake, a tip which I wish i never bought but will continue to hold. (The management did a phone conference with me to help me understand their figures)I think this is a 5 year plus hold. 

MGNS , this was using the metrics of stockopedia to pick and is up 12%, I will just ride it out and see what happens.

I continue to improve my knowledge and my home is scattered with all these good read stockopedia books

I hardly look now, before I was checking my stocks 20 a hr like  some city trader. I am now relying on the strength of the business model rather than momentum and following the herd. Its true human nature is probably the most important factor , theres so many books on it

Time will tell :)

Good luck with your investigations , its all highly addictive and fun and I never get tired of looking at patterns and reading...

There are times when I want to buy or sell but like an wound itching I dont scratch it and ride the pain, it seems to be working.. Boring at times but some of these books talk about share trading like watching paint dry. I want everything yesterday..I continue to learn

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covkid 6th Oct '17 6 of 13

Guess patience is the key word which we all have just too little of.........

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pka 7th Oct '17 7 of 13

In reply to post #226158

Hi Redrichmond, You wrote: "My portfolio has now 3 shares and I havnt touched it in 6 months. It's up 38%. BUR, SOM, MGNS. My son's is up 168% in about a year, 20k in 1 share.. Up to 44k now. BUR . This is his pension so I dont mind taking the risk, as its got another 60 years to grow."

With respect, even though your portfolios have done well so far, having portfolios comprising 1 or 3 stocks is extremely risky, in my opinion. It's not unknown for companies to go bust. If that happens to BUR, your son would lose his whole pension. There's a well-known saying that "diversification is the only free lunch in investing". One needs more than 3 stocks to have a diversified portfolio.

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Logic 7th Oct '17 8 of 13

In reply to post #226213

I think Greenblatt suggested that one only needed a relatively small number of shares to have relatively good diversification. Of course, that's easy to say if you are a financial genius who tend to always pick winners and only have to worry about overall risks to the sector. Most would recommend holding more shares than he recommends.

Personally, I would be cautious about holding only a small number of shares if I did not monitor the companies involved very closely.

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timarr 7th Oct '17 9 of 13

In reply to post #226258

If you reduce the number of shares in your portfolio then the dispersion in outcome becomes increasingly wide. To take the extreme position of a 1 share portfolio you have a potential 100% loss at the low end if you share goes bust and a potential maximum gain at the other, if you're holding the one share in the market that performs the best. 

As you add more shares to the portfolio the possible range of outcomes narrows until you get the optimum balance between number of holdings and probable outcome - i.e. when you add more shares and the outcome doesn't significantly change. However,  there's a widely held myth that you can get all the diversification you need by holding 15 shares. This is a statistical outcome of Portfolio Theory and is often misinterpreted. 

Firstly, it's not any 15 shares, it's 15 shares which historically are loosely correlated (*). Secondly it's a statistical finding and ignores the potential dispersion in the outcomes of individual portfolios: so the average, uncorrelated 15 stock portfolio gives the standard outcome, but when Peter Bernstein actually looked at real portfolios drawn on the S&P500 he found that 40% of them significantly underperformed the market, largely because they missed out on the handful of striking outperformers.

In short, to hold a concentrated portfolio with any confidence you really, really, really need to know what you're doing. If you don't then you're taking extreme levels of risk. And 15 shares isn't nearly enough diversification for the average investor.


(*) I once had an online argument with someone who was holding 15 small cap oil and gas shares and was convinced they were well diversified. I came to the conclusion that there's no point arguing with people online :-/

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gus 1065 7th Oct '17 10 of 13

In reply to post #226113

Hi goldbug.

I inherited a reasonable holding of Royal Dutch Shell (LON:RDSB) shares last year when they acquired £BG . As with most of my larger holdings I participate in the company's DRIP. Under the DRIP, dividends are applied to purchase Royal Dutch Shell (LON:RDSA) shares. So far as I can tell (from the periodic dividend statements) the dividends are the same on both share classes (currently $0.57/ share) and the same gross amounts are applied for both shares to purchase new shares (i.e. seems to be no WHT applied if proceeds are applied through the DRIP).

I haven't really thought about it before now, but do any other holders know the correct position? At face value, it would appear anyone planning on buying into Shell and using the DRIP should invest in the marginally cheaper Royal Dutch Shell (LON:RDSA) shares.


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daniele10 7th Oct '17 This post is under review

In reply to post #226278

good we are a Romanian company looking for a collaboration with your products if it is possible if you want to open a deposit in romania and sell on amazon the products await an answer

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goldbug 8th Oct '17 12 of 13

In reply to post #226293

Thanks, good to know re Royal Dutch Shell (LON:RDSA).

More info here, too complex for me to follow :)

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GrindertraderUK 8th Oct '17 13 of 13

Hi all, sorry for not replying . I have been travelling again to Africa for work and need some days to find my feet. I’ll promise to respond to all the great reply’s soon. Till then take care. Ian

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