Good morning, it’s Paul here with the first SCVR for 2021. I trust you had a relaxing break over Christmas & New Year, such as it was. Plenty of repeats to watch on TV anyway, we were spoiled for choice!

Stockopedia NAPS

Ed has recently published his 7th annual Stockopedia NAPS (no-admin portfolio system) article here, well worth a read. This system (based on StockRanks) delivered an excellent +27% in 2020, and has also significantly out-performed its benchmark in the previous 6 years. It demonstrates very well that a well-thought-out mechanical stock-picking system is a good way to beat the market, if you are time poor, or don't have confidence in your own stock-picking ability.

Trading updates in January

Out of curiosity, I looked back at last year’s SCVRs to see what companies I wrote about in the first half of January 2020. It was mostly Xmas trading updates from retailers. Given that, late last year so many non-essential shops were forced to close, plus the hospitality & travel sectors were largely locked down again too, in many parts of the country, then I’m not sure how things are likely to pan out this year.

Newsflow is likely to be short term grim, but the market is already looking beyond covid, since the positive vaccine news came through, rightly so I think. Will the big rally of late 2020 hold? Answers on a postcard - I haven't got a clue, as it's not my role to guess at short term market sentiment, anything can happen.

Some things (especially companies perceived as growth shares) do look pricey now though, and have maybe gone up too much? Tesla & Bitcoin, plus plenty of other areas of the US market are clearly now in euphoria or even mania, bubble territory. It's only a matter of time before things go pear shaped in the frothiest part of the market. We've seen all this many times before, and it always ends the same way.

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Given that short term company trading is likely to have been awful in some sectors, then balance sheet strength is the most important thing to me. Can companies survive, without having to do another placing, until conditions return to something like normal (best estimate on that seems to be some time in April, once enough vulnerable…

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