2016 has been a remarkable year in the markets with Brexit and Trump creating so much market volatility. In this climate, it’s been proven to be a year for the stock pickers. The wonderful Paul Scott - who writes the Small Cap Value Report daily (now with Graham Neary) on Stockopedia - has absolutely smashed it in 2016. He runs his “Beam me up Scotty Fantasy Fund” on the Stockopedia site which very much reflects his conviction personal picks. After a moderate 2015 (up about 15%) it’s more than doubled in 2016 after a string of stunning wins including Boohoo, Avesco, Lavendon, Gear4Music and MySale. Anyone who has the dedication to follow Paul’s daily blog will have been able to learn about his selections and quite possibly will have mirrored some of his success. Credit to those who have and congratulations to Paul. You can follow Paul & Graham’s daily email update here.

But there are other approaches to the market which don’t take quite so much time and effort but still provide a solid probability of beating the market. And that’s where my own interests lie. As a 41 year old with 3 kids and the Stockopedia business to run I don’t get the time I used to to do the due diligence on individual shares. But in all my research over the last 2 decades, I’ve also learned that I don’t need to. As it’s the turn of the year, it’s time for me to elaborate on this and return to what’s becoming a Stockopedia tradition - The New Year NAPS.

Two years, and tens of thousands of readers

The NAPS portfolios have generated extraordinary interest in the last 2 years. The initial 2015 article has been read more than 40,000 times, while last year’s 2016 piece has been read more than 60,000 times. | don’t know if the articles are being read tens of times per reader, or whether they are more widely shared, but the simplicity of the stock selection philosophy has clearly hit a chord with many. At its core here it is:

Select the 2 shares with the highest StockRank in each of 10 sectors (ignoring microcaps) to create a portfolio of 20 shares. Rebalance.

This disarmingly simple strategy has a couple of key principles behind it.

  • The first principle is that in a diversified portfolio stock selection doesn’t matter.…

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