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

Tuesday, Jan 02 2018 by
232

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…

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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.


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185 Comments on this Article show/hide all

dfs12 1st Mar 166 of 185

In reply to Velo, post #157

Dunno if your still tracking this years NAPS - but another month has passed us by... just wondering if you could give us an update?
Many thanks!

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Velo 1st Mar 167 of 185
1

In reply to dfs12, post #166

Yes I am dfs, should be able to post an update over this weekend as the 2nd of each month is the data point - so tonight's close is the same as the 2nd.

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Velo 4th Mar 168 of 185
2

In reply to Velo, post #157

Racing to get just the barest details down before the weekend closes. The overall portfolio of the NAPS as at Friday, 2nd March 2018 close, stands at x5.2% down (ie., down x £5.2k) based on a £100k starting point.

(Can't get formatting to work)

Stock Rankings are:

Name  S/Rank         S/Rank         S/Rank
            2/Jan/18     2/Feb/18     2/Mar/18

SCS         100                  99                  100
TW.          99                     98                  97
BMY         99                   98                   98
GFM         99                   99                   98
RPC          93                   88                    88
FORT        94                   94                   93
MGNS      99                   91                   93
OCN         98                    97                  95
STHR        99                    96                  96
LSL            99                    98                  98
PLUS         98                    96                  99
VLE            83                     77                 78
SND           98                     98                 96
VTC            95                     94                 91
TATE          98                     96                 91
STCK          97                     95                 95
BP.              95                    94                  77
INDV           95                   88                  93
VOD            90                   92                  86
JEL              85                    85                   84


And the % capital gains/losses -

                   % down         % gain
PLUS                                         20
GFM                                           13
VLE                                               1
STCK                                            1
SCS                                              0.4
JEL                                                0.2
VTC                  -0.7
FORT               -5
INDV               -5
SND                 -5
STHR               -5
LSL                  -6
RPC               -10
BP.                 -11
TW.                -11
BMY              -11
OCN             -15
VOD             -15
MGNS         -17
TATE            -20

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Mark Charles 4th Mar 169 of 185

Great work to all that have contributed here, It’s jest a thought that really this should be viewed against an overall market comparison if the market was up 10% over the same time frame that’s not a great start to the year , if however the market has fallen by 10% it’s not as bad as first it would seem.
Maybe a comparison could be added to provide perspective.
Thanks for this thread iv found it most useful.

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Howard Adams 5th Mar 170 of 185
2

In reply to Velo, post #168

HI velo

Great data many thanks for taking the time to do this.

By way of contrast FTSE All share 02/01/18 4202.53, now 3899,70 down -7.21%. Thus SNAPS 2% better than an index.

For those experimenting with international portfolios.

S&P 500 2695.81 (02/01), now 2691.25, -0.17% S&P 500 beats SNAPS by 2.3%.
NASDAQ 7006.90 (02/01), now 7257.87, +3.58. Beats SNAPS by 6.08%.

Suggests it is useful to look towards a mixed US/UK portfolio for a while if you are so inclined. Which luckily I began to do Q4 last year, but I have found I needed to adjust my investing style for that market.

Regards
Howard

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dfs12 5th Mar 171 of 185
4

In reply to Velo, post #168

Great stuff. Thanks. Interesting to see both the ranks and the price changes. My portfolio is factor driven but I reserve judgement on the final decision on whether a stock is selected. Hence I avoid stocks that I don't like. The net result of my added judgement? I have managed to exclude several in the top half of the table and include several of the losers. For example happily ploughed into Tate & Lyle (LON:TATE) where results and dividends look good and sustainable but excluded SCS (LON:SCS) where I am nervous of the impact of a slowing property and retail market. Demonstrates how we tend to overrate our own ability to add value.

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tong 8th Mar 172 of 185

In reply to Nick Ray, post #162

It is a good idea

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Velo 31st Mar 173 of 185
6

April 2nd on Easter Monday and the first quarter of the 2018 Naps is now in and completed. As the markets closed on Thursday (before the Easter Holiday of the market commenced) and the holiday extends to April 2nd, I've used that date as it ties in nicely with the actual commencement date of the month the 2018 NAPS initiated from, back on Jan 2nd.

 

For the first 2 months I listed the S/Rankings for each share as they were written up in Ed's initial blog above. But the description of each company was neither alphabetical nor Stock Rank listed in order - so slight change this month - I've listed Ed's NAPS selections in stock rank order from the highest descending, as they were on Jan 2nd - then it's much easier to see over the months how each individual share increases/decreases its S/Rank rating.

 

In a couple of instances where I've been stalking a share or two expecting a pull back to a pre-determined point for personal buying, where a share SP has retraced - so has the Stock rank rating.

 

For instance, STHR was S/R 99 on Jan 2nd and now it's down to S/R 91 - in line with the SP decrease from circa 373p (inc costs) on Jan 2nd, down to circa 323p by close, currently.

 

In fact, I don't even list up the stock ranks movements for my own portfolios, but after doing this exercise, think I will add that job to my list of monthly actions, as currently I'm a bit ad hoc in monitoring my shares individual S/Rankings, and tend only to look when 'I get into trouble' :)

 

Here are the latest Stock Rank ratings for the first quarter of 2018 ending on April 2nd:

 

Name

S/Rank

 

S/Rank

 

S/Rank

 

S/Rank

 

2/1/18

 

2/2/18

 

2/3/18

 

2/4/18

SCS

100

 

99

 

100

 

99

TW.

99

 

98

 

97

 

95

BMY

99

 

98

 

98

 

100

GFM

99

 

99

 

98

 

99

MGNS

99

 

91

 

93

 

91

STHR

99

 

96

 

96

 

91

LSL

99

 

98

 

98

 

86

OCN

98

 

97

 

95

 

99

PLUS

98

 

96

 

99

 

99

SND

98

 

98

 

96

 

97

TATE

98

 

96

 

91

 

85

STCK

97

 

95

 

95

 

80

VTC

95

 

94

 

91

 

91

BP.

95

 

94

 

77

 

92

INDV

95

 

88

 

93

 

93

FORT

94

 

94

 

93

 

95

RPC

93

 

88

 

88

 

77

VOD

90

 

92

 

86

 

83

JEL

85

 

85

 

84

 

80

VLE

83

 

77

 

78

 

77

 

Bold = those shares that have increased their S/Rankings.

Italics = (one share only) = no change.

All the rest are down from their Jan 2nd initial S/Rankings.

- At the start back in January, there were only 2 shares selected that were below S/R90 but now there are 7 shares below S/R90. (Both the initial selections below SR/R90 were contained within the 8o's but now of the 7 below 90 there are two of them that have descended into the 70's).

 

(Will post the NAPS list of SP increases/decreases shortly).

 

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Velo 31st Mar 174 of 185
1

At the end of the first quarter the NAPS is down overall by 7% now showing £93k from a £100K starting point. I tracked the NAPS with initially HL's brokerage fees of £11.99 per transaction and unflattering purchase points intraday on the first day on Jan 2nd - so my figures may look a little more fiercely down than Ed's.

Here's how they lie:

 

Name

% Decrease

 

%  Increase

PLUS

 

 

28%

VLE

 

 

11%

VTC

 

 

5%

GFM

 

 

2%

INDV

 

 

0.2%

FORT

-1%

 

 

JEL

-4%

 

 

BP.

-8%

 

 

STCK

-9%

 

 

SCS

-9%

 

 

BMY

-10%

 

 

RPC

-11%

 

 

TW.

-12%

 

 

STHR

-13%

 

 

OCN

-13%

 

 

SND

-14%

 

 

VOD

-17%

 

 

MGNS

-19%

 

 

LSL

-21%

 

 

TATE

-22%

 


 

One less than last month in the gains enclosure with the top 5 looking like this:

PLUS 500  28% gain (S/R 99)

VOLVERE 11% gain  (S/R 77)

VTC         5% gain   (S/R 91)

GFM         2% gain   (S/R 99)

INDV       0.2% gain (S/R 91)

 

And at the very bottom worst performer is  -

 TATE  22% Loss (S/R85)


PS. I find the formatting on these boards next to impossible when trying to copy/paste spreadsheet tables. General word posts okay, copying spreadsheets over - as you can see, nightmare - spaced out, unecessarily.

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Gromley 31st Mar 175 of 185
2

I'm not sure if Ed intends to do a quarterly update, I hope so as I have been looking at a parallel project that 'circumstances' haven't allowed me the time to write up, so I decided a while ago that'll wait on Ed's next report and then earmark some time to write up the project together with the 'to date' results.

Meanwhile, just further to Velo's summary of a 7%* fall for NAPS, I note that over the same period the FTSE All share appears to be down 7.76%.

The comparative is probably slightly better as Velo uses "unflattering purchase points intraday on the first day on Jan 2nd" (not totally sure what that means) and include dealing costs of c. 0.25% whereas the FTAS figure I quote has no dealing costs.

So on this limited evidence this might suggest that NAPS only offers limited protection in a market downturn. Nevertheless an approach that can handsomely outperform the market on the way up and at least match it on the way down is still imho a valuable tool to have in the locker.

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Edward Croft 1st Apr 176 of 185
5

I have always used the end of year prices for performance tracking purposes. On that basis the portfolio is down 4.67% year to date (using the last price) vs the FTSE 100 down 7.3%. This does not include transaction fees, nor spread costs.  The process is run before the year end, but the article published after the New Year.  

I've always been categorical that the NAPS isn't a 'tip' list - it's the definition of a process - so I track the performance at the time the deal sheet is created, rather than the first opportunity a reader would have had to trade it (as that's never been the goal).  As many pointed out, if you actually ran the process on the 2nd January you'd have had a different list.

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Effortless Cool 3rd Apr 178 of 185
1

In reply to Velo, post #174

Velo,

Save the table you want to post from your spreadsheet as a picture (e.g. JPEG format). Click on 'show text editor' at the top right of the reply box on Stockopedia. Click on the image of a mountain and browse to select and paste in the table you saved as a picture.

Easy-peasy (Although I had to set up a new thread to find out hoe to do this).

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Velo 15th Apr 179 of 185

In reply to Effortless Cool, post #178

Thanks for that tip E/Cool.

PS.
NAPS 2018 looking a lot healithier, going into Monday - now only 2.5% down overall. (Still beating FTSE Index though). Been a good week for my personal portfolios too.

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Velo 1st May 180 of 185
2

Just in case there's the odd soul out there tonight wondering how the 2018 NAPS is progressing now the calendar has clicked over into May - I'm letting it run to May 2nd as all the reporting dates in previous posts have all fallen on the 2nd of each month - and I hope to post the update tomorrow evening (Wed) or during the day on Thursday; whatever if busy, I'll screen shot everything at close of May 2nd and post when free.

GOOD NEWS is that the NAPS actually hits pay dirt this month - it's best perfomance all year

- for the first time it's now clearly in profit. (Previously a loss every single month until right now in the past seven days). It's "getting there" The NAPS theory for that rocky start to 2018 is starting to sprout wings :)


PS. Haven't given a thought to add dividends to the results                                                                                 - will work on that as a sepertate add-on to the figures I post.

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covkid 1st May 181 of 185

I for one am very interested in how it’s doing & i’m sure i’m not the only one...........

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Edward Croft 1st May 182 of 185
4

I have the NAPS up 4.4% year to date. Plus500 is up 64% and Griffin Mining up 36% as top performers. 12 winners, 8 losers. Worst performer being Tate & Lyle - down 17%. I'll update fully at the end of June.

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Velo 3rd May 183 of 185
2

Bit late (formattring taking for ever. Excel won't format on here, nor Word tables, nore JPegs ....grrrr, but here is the NAPS 2018 by Stock Rank as at May 2nd.
.

NAME       Stock Rank    Stock Rank     Stock Rank      Stock Rank      Stock Rank
                     2/1/18           2/2/18                2/3/18              2/4/18              2/5/18

SCS                 100                  99                       100                   99                     99
TW.                   99                  98                         97                    95                     96
BMY                 99                   98                         98                  100                     99
GFM                 99                   99                         98                    99                   100
MGNS              99                   91                         93                    91                      94
STHR                99                   96                         96                    91                      90
LSL                   99                   98                         98                    86                       92
OCN                98                    97                         95                    99                       98
PLUS               98                    96                         99                    99                       98
SND                 98                   98                         96                    97                       96
TATE                98                   96                         91                    85                       84
STCK               97                    95                         95                    80                       76
VTC                 95                    94                         91                     91                       91
BP.                  95                    94                         77                     92                       96
INDV               95                    88                        93                     93                        96
FORT              94                    94                         93                    95                         95
RPC                93                    88                         88                    77                         78
VOD               90                    92                         86                    83                          80
JEL                  85                    85                        84                    80                           82
VLE                83                    77                         78                    77                          75

-------------------------------
Now gains and decreases:

The 2018 NAPS finally moves into positive territory this month with a 2% gain overall. Apart from the stockranks above I'm a bit concerned that I have only 8 stocks showing as a gain, whilst Ed has 12 and the overall gain difference. Might recalculate the starting prices on Jan 2nd.


NAME     % Increase      % Decrease

PLUS          70%
GFM           30%
INDV          12%
SND           10%
VLE            10%
BP.               5%
FORT           5%
VTC              3%
STCK                                     -3%
JEL                                         -3%
SCS                                        -5%
RPC                                       -8%
BMY                                      -9%
TW.                                       -9%
MGNS                                -10%
VOD                                   -10%
OCN                                   -10%
LSL                                     -11%
TATE                                   -14%
STHR                                   -15%

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Nick Ray 3rd May 184 of 185

One trick you can use if all else fails is to save your EXCEL table as an HTML file. Then open it with Notepad (or similar simple editor) and grab just the table itself (between <table> and </table>).

Then in Stocko, put the comment into the "text editor" mode (options at top right)  and click on the "<>" button which puts the text box into HTML mode. Drop the table in from the simple editor and click on "<>" again to get back into the normal text editor.

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dfs12 3rd May 185 of 185

In reply to Velo, post #183

Many thanks for the work to publish this info.

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Edward Croft

CEO at Stockopedia where I weave code, prose and investing strategies to help investors beat the stock markets. I've a background in the City and asset management but now am more interested in building great stock selection tools for the use of investors online.   Traditionally investors online have had very poor access to the best statistics, analytics and strategies for the stock market and our aim is to set that straight.  High Quality fundamental information has been prohibitively expensive in the past and often annoyingly dull. People these days don't just want to know the PE Ratio and look at a balance sheet. They expect a layer of interpretation over data, signal from noise and the ability to know at a glance whether a stock is worth investigating or not. All this is possible using great design and the insights gleaned from quantitative research.  Stockopedia is where we try to make it happen ! more »

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