Putting NAPS into action: Five years in the real world of my SIPP

21st Dec '24 by Honey Badger

7 comments 445 reads

I can’t speak highly enough of the NAPS approach. I've always been interested in investing, but the portfolio structure and method has been by far the best way for me to really learn how the markets work.

I decided to use the NAPS approach for the bulk of my SIPP in 20/21. I thought the track record at that point was sufficient to give it a go. My year begins in August, so I’m always making my own selections rather than following Ed's January/July structure.

Year 1 (Aug 21 - Aug 22) I was fortunate to catch the massive summer-of-2020 updraft. That first year had Luceco (LON:LUCE) as my biggest winner (+167%) with Hummingbird Resources (LON:HUM) the biggest loser (-23%). I think Hummingbird was actually below the market cap limit, so not sure how it snuck in! All in all, a 48% return on the year. 15 of 20 stocks were winners. Easy!

Year 2: Reality check time. An overall decline of -6% - but considerably better performance than the rest of the portfolio which I had picked myself! Six winners out of 21 (Marshall Motors was bought and I recycled into Vertu. MMH was a great return, but Vertu ended up -17%). Biggest winner was Airtel Africa (LON:AAF) at +70%. The biggest loser was Ros Agro (LON:62UL) - the Russian agri conglomerate and “victim” of sanctions. It was suspended and has subsequently delisted from LSE. At the time, I was also holding Ferrexpo (LON:FXPO) and sold - but forgot to consider the Russian side of the equation. Macro lesson! Ros Agro had been performing very well up until that point, but ended up being a wipe out. Extraordinary circumstances and it would otherwise have been a winning year.

Year 3: Treaded water. -0.5% overall. Biggest winner ME International (LON:MEGP) +50%; biggest loser Shearwater (LON:SWG) -60%. Eight winners out of 20.

Year 4: Back to winning ways. +19%. 13 winners out of 20. Biggest winner Gulf Marine Services (LON:GMS) +102%; biggest loser Spectris (LON:SXS) -14.3%. The portfolio was actually +24% 10 days before “selling day” but was hit by a mini crash. It is what it is - and I figured I would be recycling into cheaper prices anyway. At selection time, I also had a dead heat between Coca Cola HBC AG (LON:CCH) and Warpaint London (LON:W7L).…

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Paul2148

21st Dec '24

Thank you for sharing this summary of using the NAPs system.

Ed has written in the past about slight alterations, such as sorting by QM and VM as opposed to pure Stockrank, selecting only one from utilities and telecom sector, so picking a third stock amongst two other sectors.

Which approach did you use? Highest Stockrank and two per sector?

Megan Boxall

Thank you for sharing this summary of how you have used the Naps and the lessons you have taken from it.

GloucesterBob

Hi HB, thanks for sharing. Do you know how you would have fared if a chosen stock had fallen x amount, say 25% , and you recycled the money into the next top share in that sector. It would have stopped some of the large percentage losses but would you have missed out overall.

Will do a NAPS next year, and interested if tweaking anything would help from someone who has lived it.

john2

'Do you know how you would have fared if a chosen stock had fallen x amount, say 25% , and you recycled the money into the next top share in that sector'

I have been thinking about what to do if I sell a share which hits a stop loss, and what I intend to try in future is to rerun the NAPS selection process across all sectors. My reasoning being that maybe all of the shares in the same sector as the one that was sold are going through a downturn, while another sector is performing better.

Robert Didymus

22nd Dec '24

Hi HB,

Thanks for sharing your experiences which provide me with even more confidence, following my own test over the weekend, of the Naps method set out in Ed's recent article. Like you I struggle to avoid listening to the noise surrounding us about weight-loss drugs, the rapidly expanding need for electrical cable and grid infrastructure and imagine that my reading must surely make me market savvy enough to buy into rapidly expanding companies to my lasting profit. However the truth is no matter how well read I am the last three months has seen my portfolio diminish by 3% compared with the 16% gain I would have showing if I had employed the Naps method on starting with Stockopedia. For me the way forward is a no-brainer and will simply incorporate any tweaks suggested by Ed and the team.

Silver Moon

A1, straight from the heart! I know this is a good path to take, now, perhaps, I can persuade myself to dump the worst half of my portfolio to make a new start with a Silver NAPS 2025. The virtual My NAPS 2024 begun last January is up 8.5% on valuation not counting dividends and has tracked the FTSE All-share Index on performance in the 5% gain which proves that any fool like me can at least conserve their pot.

Hi GloucesterBob, re

I see the Naps as a basic plan, 2 companies selected from the 10 Sectors, and am looking at encompassing a whole portfolio into a Silver NAPS 2025 there are 70 stocks in my ISA and feel it could do much better than it is doing now. Perhaps I could go , say, 4 stocks to a sector, and if a sector is poor in content, spread the surplus across others. I've just cobbled up a spreadsheet to be worked on, it's handy to have 2 desktop pcs to do this sort of thing below. Which is a bit of an eye-opener....

Putting NAPS into action: Five years in the real world of my SIPP

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Honey Badger

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