New Year NAPS - Top Stocks for 2018 and the Benefits of Ignorance

Tuesday, Jan 02 2018 by
240

2017 has been a good year for stock market investors, but it’s been a great one for NAPS investors. Over the course of 2017 this remarkably effortless stock selection system (that I’m now calling the “no-admin-portfolio-system”) returned over 45% after dividends, beating the performance of 99.8% of 3295 professionally managed funds in the UK.

What’s more this was achieved in less than an hour’s work at the beginning of the year, with absolutely no research into any of the individual stocks in question.

So, I’m going to start the year with a review of the NAPS performance over the last 12 months before considering the difference between ignorance and stupidity.

Once I’ve convinced myself (again) that it’s absolutely fine to know almost nothing about the individual stocks I’m selecting, I’ll then publish the 20 stocks that have made it into the 2018 NAPS Portfolio.

And then I’ll sleep on it for another year.

2017 Performance in Context

I’ve been running the NAPS portfolio since the end of 2014, and the performance has been, you might say, more than satisfactory. The portfolio has more than doubled (+115% before dividends) in these three years, with an average 29% annualised return.

Over this time period, the FTSE All Share has returned about 18.8% before dividends - at an average annualised return of 5.9%. So the NAPS has devoured the performance of FTSE index tracker funds by more than 20% per year since inception, and it’s done this at considerably lower volatility.

NAPS_-_Performance_Charts_MASTER_-_All_Y

2017 has been the best year of the three years so far with 42.5% growth before dividends. The chart above contains three lines which are clearly labelled:

  • The dark green line is the 20 stock NAPS Portfolio (top two stocks by StockRank from each sector rebalanced annually).
  • The light green line is the performance of the top 20 stocks by StockRank (no diversification, rebalanced annually).
  • The orange line is the FTSE All Share.

Although it’s a small sample, I do believe the above charts provide validation of the core ideas behind the NAPS - namely:

  1. Factor investing can beat the market. (The green lines, based upon the StockRanks, dominate the market index).
  2. Diversification across sectors can further improve returns, and reduce risk. (The dark green line beats the light green line).

The NAPS…

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way

Disclaimer:  

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. 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. ?>


Do you like this Post?
Yes
No
242 thumbs up
2 thumbs down
Share this post with friends



Bloomsbury Publishing Plc is a global publisher. The Company is involved in the publication of books and other related services. The Company operates through four publishing divisions: Adult, Children's & Educational, Academic & Professional, and Information. These divisions derive their revenue from book publishing, sale of publishing and distribution rights, management and other publishing services. It specializes in the humanities and social sciences, and publishes over 1,000 books and digital services each year. The Company's digital products include Berg Fashion Library, Bloomsbury Collections, Bloomsbury Fashion Central, Churchill Archive and Drama Online. The Company's subsidiaries include A & C Black Limited, Bloomsbury Publishing Inc, Bloomsbury Information Limited, Bloomsbury Professional Limited, Bloomsbury Australia PTY Limited, The Continuum International Publishing Group Limited and Osprey Publishing Limited, among others. more »

LSE Price
218p
Change
0.5%
Mkt Cap (£m)
163.5
P/E (fwd)
14.1
Yield (fwd)
3.8

BP p.l.c. is an integrated oil and gas company. The Company owns an interest in OJSC Oil Company Rosneft (Rosneft), an oil and gas company. The Company's segments include Upstream, Downstream, Rosneft, and Other businesses and corporate. The Upstream segment is engaged in oil and natural gas exploration, field development and production, as well as midstream transportation, storage and processing. The Downstream segment has global manufacturing and marketing operations. The Rosneft segment has a resource base of hydrocarbons onshore and offshore. The Other businesses and corporate segment comprises the biofuels and wind businesses, shipping and treasury functions, and corporate activities around the world. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging. more »

LSE Price
550.1p
Change
0.3%
Mkt Cap (£m)
109,587
P/E (fwd)
11.7
Yield (fwd)
5.6

Forterra plc is a producer of manufactured masonry products. The Company is also a manufacturer of building products for the United Kingdom construction industry. The Company's segments include Bricks, Blocks and Bespoke Products. The Company's product range consists of clay bricks, Thermalite blocks, aggregate blocks, Red Bank chimney, roofing and flue systems, precast concrete and flooring products, and Formpave permeable block paving. It is a manufacturer of bricks in Great Britain and a manufacturer of Fletton brick, which is sold under the London Brick brand. It is a manufacturer of aircrete blocks in Great Britain sold under its Thermalite brand. It also manufactures aggregate blocks. Its bespoke products range consists of precast concrete, concrete block paving, chimney and roofing solutions, and structural wall insulation. It operates from approximately 20 facilities in total and is focused on the United Kingdom building and construction market. more »

LSE Price
265p
Change
0.6%
Mkt Cap (£m)
528.2
P/E (fwd)
9.5
Yield (fwd)
4.2



  Is LON:BMY fundamentally strong or weak? Find out More »


240 Comments on this Article show/hide all

Velo 3rd Aug 221 of 240

In reply to post #387789

Aug 3rd today finish, it is then.
Hopefully I can post by mid evening/
(or later evening if I'm still pushed for time).

| Link | Share
Velo 3rd Aug 222 of 240
1

Running well behind schedule - haven't even started on it yet!

Don't want to waste people's time unnecessarily - so it'll be very late tonight or tomorrow when posted.

| Link | Share
Velo 3rd Aug 223 of 240
5

Sad to report that much of the year's progress has been lost and dissipated away by the end of July (month 7) to this week ending, 3rd August 2018.

It limps in, at a big reduction to the last report at a measly gain of just 2.3%
Time to stop saying well at least it's beating FTSE - All Quant funds are taking a big hit this year - it's the worst year for Quant funds since - well see for yourself in this report in the FT last week - https://www.ft.com/content/e33...
(It's a funny pay site so paste into Google "Quant Hedge Funds Lose Their Allure" instead, if that link blocks you).
It reports that Quantitive Hedge Funds halved this year to their most sluggish pace since 2009!

Nothing much Ed can do about it. It's a much larger issue.

Anyway, dividends are now cumulatively running at £1,972.46 and come riding in to the rescue somewhat, bringing the full % gain up to just under 4.3% gain - a bit better, eh?

Only 7 shares are now showing gains this month, with 12 showing decreases and one bang on 0%

PLUS leads with 112% gain whilst INDV brings up the rear at -26% down.

STOCK RANKS:
* 4 shares currently sport an increased rating compared to Jan 2nd start,
* 1 remains unchanged
* Which means 15 have reduced Stock Rank ratings.

12 stocks are still with a nice green 90's or 100 SR rating ie., One sports a 100 Stock rank rating but there are now 5 'greys' ranging from S/R 76 down to S/R 61

Top 5 best performing shares are made up of 1 S/R 100,  3 in S/R 90's and a 5th at S/R 87
All Bottom 5 positions for poorest performance contain 2 in the S/R 90's and 3 all in the S/R 60's

Performance tables below:


% Increase/Decrease performance

images.stockopedia.com



Stock Rank rating changes

images.stockopedia.com


Tsk! Duh! I can see they're not opening, sorry about that. It's gone midnight - so I'll sort the tables tomorrow and re-post.

| Link | Share
Velo 4th Aug 224 of 240

.

| Link | Share
Velo 4th Aug 225 of 240
1

5b655ce862f8fPublication1.jpg

| Link | Share
Velo 4th Aug 226 of 240
2

5b655f959ea3cPublication2.jpg

| Link | Share
Velo 4th Aug 227 of 240
1

Are you seeing anything (tables?)

| Link | Share | 1 reply
letap73 4th Aug 228 of 240
1

In reply to post #388119

Yes - two tables - one for the change in stock ranks and one for performance.

| Link | Share | 1 reply
Velo 4th Aug 229 of 240
1

In reply to post #388134

Thanks letap73. Only taken me over half a year to learn how to upload tables here -
(With clour this time - colour!!! :) :) :)
(Get's up and does that David Brent dance)

The second table looks ginourmous to me, as the handles disappeared and just couldn't get it resized.

I've now custom measured page sizes on my DTP instead of leaving everything on A4 size as above, so maybe no distortion next tiime.


PS. Only just realised the little converter I use was set to PDF !

- No wonder I've had trouble all this year on here. No need for the DTP next time I'll be able to get the whole of both tables to post perfectly (I think).

Might be able to fit in the whole portfolio itself, rather than my transcribing of it.

| Link | Share | 1 reply
letap73 4th Aug 230 of 240
2

In reply to post #388139

The tables are very clear in what they show - which I think is far more important than perfect formatting.
Keep up the good work.

| Link | Share
Nick Ray 4th Aug 231 of 240
2

NAPS has had a hard time since about mid-June. Here it is compared with a few indices. (NB: the AIMONLY and FSMALLCAPS are not very accurate - I only track a subset of those categories.)

5b65a191c672cnaps2018aug2.png

The top performer is AIM100, which in fact has been the top performer for quite a few years now. AIM alone can be quite a risky set to invest in, but the AIM100 (Market Caps about £170M-£4B) has been a very successful hunting ground.

| Link | Share
Velo 31st Aug 232 of 240
2

It's the 2nd of the month on Sunday and time for the monthly update of the 2018 NAPS folio.

After progressing nicely since the last update, it has unfortunately, over this last week or so, been disasterous for the NAPS, if that's not too strong a word to use.

Currently the poorest performing NAPS on record since NAPS records began, but the year end is still a good way to go, in perhaps the best months yet to come? (ie., Sell in May and go away???)

Whatever, currently it's worse than last month's, by a slightly greater drop.

Got lawns to mow this weekend with bushes and trees to trim and brushland to decimate behind the garage but somewhere this weekend I should be able to update by Sunday latest.

In the meantime whether based on the general market performance or other means - try and guesstimate the % drop for the year to date as of this week's close :)

| Link | Share
dfs12 1st Sep 233 of 240

Lets go for a -1.5%. Complete guess. Looking forward to your update and hope the gardening goes well.

| Link | Share
Velo 1st Sep 234 of 240
1

Well, it's all done and dusted - just the infamous formatting to do - which I'll leave until tomorrow as up on other duties from 4:00am tomorrow.

But for defo, will have the latest NAPS performance up by tomorrow Sunday evening (early evening hopefully).

Nope DFS12 - add a couple of full percentage points decrease (but if you were mentally adding in the divis then you're in with a shot :)

| Link | Share
Velo 2nd Sep 235 of 240
2

Well a disappointing close to the month of August with an increased retrace since last month and so the 2018 NAPS is now showing a fall to date of 3% representing a £3K loss on initial investment. Let's hope the best months lie ahead.

- However the most important take-away from this exercise is the sheer importance of ..... DIVIDENDS!

This month contributes the biggest in terms of divi payments for August alone of £693+ making the cumulative running total of £2,666 in dividends alone, and as near as possible saves the folio from disaster to a much more presentable loss of just a mere 0.4% loss. 

Dividends - under rated by many growth fans, I'm sure (I just won't select a share if it doesn't pay a divi, no way!) - but once again dividends beaver away in the background, and saves the bacon this month as well!

You could almost claim that it helps give adherence to following Warren Buffett's two jokey principle rules of investing:
Rule No:1) Don't lose money   &   Rule 2) Don't forget rule No:1
:)

------------------------------
First table shows the number of shares showing a gain/decrease, is now down to just 6 shares showing a gain,
one at a neutral 0%,
thus leaving 13 showing a red decrease since Jan 2nd start, this year.

PLUS is top dog but with a reduced lead of a still nonetheless impressive 73% gain
whilst INDV gets worse, retaining the bottom spot with a worsening position, showing of -33% decrease.

------------------------------
Second table shows the Stock Ranks in comparison to starting out on Jan 2nd this year -

STOCK RANKS:
* 4 shares currently sport an increased rating compared to the start of the year,
with 3 in the S/R90's,
& one in the S/R80's,
* 3 remain unchanged,
* Which means 13 have reduced Stock Rank ratings. (But that's an improvement on last month).

Down now to only 9 stocks still showing in the green 90's (How many 90's did Ed start out with?)
with over half a dozen in the 80's,
2 in the 70's
and Vodafone sporting a S/R of 60
and VTC down in the dumps at measly S/R55

All in all, a poorly performing month but pulled back from the brink by the valiant efforts of the divi producing shares.
ALL HAIL THE POWER OF DIVIDENDS! :)

| Link | Share | 1 reply
Velo 2nd Sep 236 of 240
2

5b8c39bef33f9NAPS_SEPT_2nd_-_%_Gains.jpg

| Link | Share
Velo 2nd Sep 237 of 240
2

5b8c3a91d9bbeNAPS_SEPT_2nd_-_SRanks.jpg

| Link | Share
dfs12 2nd Sep 238 of 240
2

In reply to post #395469

Excellent update Velo. Many thanks. Over the last couple of months I've managed to convince a couple of old investing mates to sign up to Stocko - it'd be just typical if they join just as things get tricky. But like any system NAPS is bound to have periods of underperformance - and to be fair, the general markets aren't having the best of times so NAPS is doing OK. Like you I'm a big fan of dividends and love the fact they bail you out when the capital gains let you down.

| Link | Share
Velo 2nd Sep 239 of 240
1

Thanks dfs12 -

Dividends - I love marking up my calendar with all the dividends coming in (3 months at a time, with reviews in that time-frame as some companies fling them out with minimal notice - others eons of notice). Lovely feeling - I call it my little part-time salary (dividends just on the edges of achieving five figures per year in total).  And it does feel like that, seeing the amounts ticked off on my calendar - a salary from a part-time job :)

Anyway, thing is, over the past 12 months I've had at least 3 occasions where none came into my brokers accounts, even though they were due, so waited days and waited some more, finally phone the brokers (two of them) then silence as someone checks and rather unconvincingly they say that company is late paying but it should be with you in the next few days. I explain they've never done this before, but they don't budge.

The result is always the same, within hours the next working day the errant dividend appears in my brokers accounts. It's like checking your change. Wonder how many just accept the dividend will be paid automatically and never bother to actually check up?

| Link | Share
Nick Ray 3rd Sep 240 of 240
4

Velo is right. NAPS is having a bad time at the moment. Usually the NAPS follows the AIM100 index reasonably well. For example, last year:

5b8c6f625e226naps2018aim100.png

But this year something happened from the middle of June, and it also affected the SNAPS from the middle of August:

5b8c6f26bd9e2naps2017aim100.png

What was it? STCK VOD and INDV have under-performed all year and GFM has started to fall since June. Apart from VOD all of these have quite high volatility. So either NAPS2018 has more risky stocks than usual or perhaps it is just that more of its riskier stocks than usual have moved in the "wrong" direction. This isn't a complete explanation. Does AIM100 contain a different proportion of high volatility stocks compared with NAPS/SNAPS?  More importantly, was this just "bad luck" in the stocks NAPS chose or is there more that could be done? I don't know.

Note: In the table below the Volatility/Q/V/M/SR data is from January and the list is sorted by Volatility.


StockVolatilityQVMSR%ChgJan%ChgJun
JEL.L10.9598465852.8-0.4
OCN.L12.7939172980.95.8
VOD.L16.142849791-29.4-14.3
BP.L16.4627696946-3.7
TATE.L16.990728697-4.3-2.5
BMY.L20.48585939920.1-4.6
TW.L2196759599-18.4-10.3
VTC.L21.7955290959.54.5
STHR.L2595728798-4.210.8
MGNS.L25.4948394994.22.7
SCS.L25.79495931000.91.9
RPC.L27.386638293-18.5-10.1
FORT.L27.877609593-7.4-10.6
VLE.L30.15767777916.4-10.3
LSL.L30.5858490984.316.5
STCK.L31.482609795-28.8-23.3
SND.L31.8936892987.1-15.2
GFM.L37.295839999-8.6-30.9
PLUS.L45.17878979874.6-3.7
INDV.L48.498666994-33.3-43.8
| Link | Share

What's your view on this article? Log In to Comment Now

You can track all @StockoChat comments via Twitter

 Are LON:BMY's fundamentals sound as an investment? Find out More »





Stock Picking Tutorial Centre



Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis