Last year was very much a year of transition as I moved from a hybrid high-yield/growth strategy to one focused on quality and momentum. This change was motivated by my increasing confidence in factor based investing (as seen in the Stockopedia StockRank system) and seeing investing friends take profitable advantage of high-quality shares with price/earnings momentum. It's not that I've made terrible returns in the past but I now know that I'm just not a value investor. My record here is patchy, as a result of buying shares that were cheap for a very good reason, and this led to my returns being somewhat volatile.

In addition to changing tack I also took on board the fantastic research done by Stockopedia around profit warnings and my approach since then has been to sell any companies that warn as quickly as possible. This is all about protecting capital and in a similar vein I now employ a 20% stop-loss in order to cut out shares where momentum turns negative; I've seen too many companies reach a peak before relentlessly falling and slashing my overall return. As a caveat this rule is implemented on a case by case basis since I don't necessarily want to drop a company if there really isn't any negative or recent news available.

What surprised me, in putting this review together, is just how many trades it took to achieve this rebalancing; on average more than one a week. For someone who is generally indolent, and believes that this is an excellent attribute for an investor, this level of activity feels like day trading! Anyway what follows are all of my trades and positions, warts and all, ordered by size of gain/loss along with a few comments on the companies that I own where nothing changed (for me) all year.

P.S. There's an obvious pattern to the type of share that I buy and this is because I employ a checklist (which I intend to write about soon). So if my reasons for making a trade start to become repetitive well I apologise in advance but that's the point of a checklist! Feel free to skip over some of my descriptions if this becomes a problem.

Losing trades

LXB Retail Sold at 20.3p after a series of profit warnings - Nov 17 - 45.7% loss


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