New Year NAPS - Top Stocks For 2018 And The Benefits Of Ignorance | Edward Croft

2nd Jan '18 by Edward Croft

297 comments 106630 reads

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:

Factor investing can beat the market. (The green lines, based upon the StockRanks, dominate the market index).
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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Velo

3rd Aug '18

Sheesh, look at the time - gone midnight.

2nd of the month, so will try and get the monthly NAPS 2018 update posted by tomorrow. Was going to post on the full week closing on Friday, but the portfolio has blown all it's gains to smithereens, so thought well it's supposed to be the 2nd of the month so might improve by Thursday - but it's even worse now!
Only just remembered to prnt off the state of affairs just now, before it changed again tomorrow.

If you anybody sees this on Friday, please post if you prefer the Naps update to end on a full week, then this month would be run to the 3rd of August, and I'd post the results tomorrow evening.

dfs12

I'm keen to see the current state - whenever suits you.

The Third Man

Hi Velo
A vote for a full week report please. That way I get a weekend to digest the information.
Thanks

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

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.

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

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.

4th Aug '18

Are you seeing anything (tables?)

letap73

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

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.

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

Nick Ray

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.)

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.

31st Aug '18

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 :)

1st Sep '18

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

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 :)

2nd Sep '18

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! :)

5b8c39bef33f9NAPS_SEPT_2nd_-_%_Gains.jpg

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

2017 Performance in Context

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Edward Croft

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