Stars of the FTSE

16th Oct '20 by TheMechanic

63 comments 6791 reads

..STOP PRESS..2020 Portfolio up +10.6% compared to the FTSE All-Share down -18.8%..STOP

I am a subscriber to Stockopedia with a Mechanical Trading Strategy that is achieving great returns. In 2019 the ME Way investing in the FTSE250 produced +32.9% compared to the FTSE All-Share +18.2% and so far in 2020 to end of September +10.6% compared to the FTSE All-Share down -18.8%.

I wanted to develop a model that could buy and sell according to a screen based criteria; consistently apply the same criteria time after time with no emotion, full discipline and back tested to prove model. This led me to develop model after model after model until I reached the ME Way. A simple and successful Mechanical Trading Strategy.

The most famous Mechanical Trading Strategy is probably Michal O'Higgins best selling investment classic Beating the Dow. The logic is simple; markets over-react to bad news and the aim is to exploit the gap between reality and the markets distorted view. The ME Strategy is very similar in the opposite manner; markets under-react to good news and the aim is to exploit the gap between reality and the markets distorted view. Not 'Dogs of the Dow', but 'Stars of the FTSE'.

HOW I INVEST - THE ME WAY

'ME' goes against the efficient market hypothesis in a Momentum and Earnings led way.

M is for Momentum. Winners keep winning; great companies keep on growing and outperforming the market. Money is made by buying shares at high prices and selling at even higher prices.
E is for Earnings. The number one factor in the short and medium term that drives a share price forward. A PEG Slater helps ensure that the earnings/growth is established and consistent.

ME METHOD

The search method is 5 simple steps.

Step 1. Momentum. Strong momentum that is established with positive twelve months relative strength. Twelve months is a key driver. One month can just be a short term one-off blip. Three months provides reassurance but is still relatively short term. Twelve months the momentum is established. Winners must keep winning. (RS 1y greater than 0).
Step 2. Earnings. Highest earnings forecasts for next 12 months for growth companies (PEG Slater greater than 0), (EPS Gwth % Rolling 1y greater than 0).
Step 3. Comfort. Pays a dividend so not all cash is being used to generate earnings growth. (DPS greater than 0).
Step 4. Large…

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TheMechanic

9th Jan '22

Clarea,

Many thanks for your comments.

Will aim to do 2022 Portfolio in the week ahead.

Regards,

Andrew

Wattanut,

Many thanks for comments.

It is Rules Based so the Rules must be applied.

14th Jan '22

2022 ME WAY PORTFOLIO

I am pleased to announce the 2022 Portfolio selected 31/12/21.

Future (LON:FUTR) 3830p

Morgan Advanced Materials (LON:MGAM) 358.5p

Bytes Technology (LON:BYIT) 567.5p

Imi (LON:IMI) 1736P

Kainos (LON:KNOS) 1917p

Ultra Electronics Holdings (LON:ULE) 3180p

Ninety One (LON:N91) 277.2p

Oxford Instruments (LON:OXIG) 2630p

Softcat (LON:SCT) 1804p

Computacenter (LON:CCC) 2910p

The ME Way.

Momentum and Earnings led.

Specific Model Parameters.

1. EPS Gwth % Rolling 1y Greater than 0.

2. RS 1y Greater than 0.

3. PEG Slater Greater than 0.

4. DPS Greater than 0.

5. Index includes FTSE 250 index.

Thanks for reading.

Look forward to comments.

Rusty2

Thanks for the new selection.

Had a quick look, you do realise Ultra Electronics Holdings (LON:ULE) is in a bid situation?

The Phoenix

Thanks for sharing given the portfolio looks quite tech weighted do you think the results will be as good as previous years given we are now in a rate tightening cycle which normally doesn't favour tech/growth assets ?

Regards

Andy

Rustbucket,

Thanks for comment.

Yes thanks am aware and with it being a Mechanical Trading Strategy the rules are the rules.

Ultra Electronics Holdings (LON:ULE) under offer at 35OOp from Cobham (LON:COB) and understand Government Report out next Tuesday 18 January. If approved provides an immediate +10% return.

Andy,

Appreciate 6 technologies along with 2 industrials, 1 asset manger and 1 media publisher. Have to simply apply the rules, one interpretation with the amount of technologies is that post the pandemic the Market has under-valued their importance. Will see.

28th Jan '23

2022 was a very challenging year, especially if like me you only invest in the FTSE250.

ME Way down (24.5%) compared to the FTSE All-Share up +0.8%.

Overall ME Way average annual performance in last 10 years +17.4% and 5 years +12% compared to the FTSE All-Share +7.7% and +5.4%.

ME Way has Beat the Market 4 in 5 years.

Please note Dividends for the ME Way are on the actual dividends per annum and for the FTSE All-Share are on an assumed 4% per annum.

Soon to follow the 2023 Portfolio.

Thanks for the update, was looking at this yesterday and wondering if there would be an update.

I look forward to the new selection.

30th Jan '23

2023 PORTFOLIO

On 31/12/22 there was only 1 qualifying share Chemring (LON:CHG). Therefore the logic is to rollover the 2022 Portfolio adding Chemring (LON:CHG) which replaces Ultra Electronics Holdings which was taken over.

Chemring (LON:CHG) 297.5p 2.30%

Future (LON:FUTR) 1267p 0.29%

Morgan Advanced Materials (LON:MGAM) 314.5p 3.45%

Bytes Technology (LON:BYIT) 387p 1.86%

IMI (LON:IMI) 1288p 2.20%

Kainos (LON:KNOS) 1543p 1.75%

Ninety One (LON:N91) 185.9p 6.55%

Oxford Instruments (LON:OXIG) 2260p 0.92%

Softcat (LON:SCT) 1184p 3.22%

Computacenter (LON:CCC) 1911p 3.58%

Regards,

Andrew

aflash

31st Jan '23

STEP 1 impressed me when you first published because it is so different from anything I measure. The idea of Relative Strength over a year is strange when a week is a long time for me.

'Blips' are exactly what I look for, up or down.

Reversion to the mean then takes over.

All players have noticed the change and buy or sell accordingly.

STEP 2 is a trap, in my view, a lot of energy is expended by smarter analysts who nevertheless cannot foresee everything that may occur.

I certainly look at the PEG but skim earnings forecasts.

So I was relieved to read that the method does not always work well!

I'm surprised Chemring (LON:CHG) was the only stock selected, Momentum is quite low, only 46, earnings are OK. Why does 4imprint (LON:FOUR) not qualify?

1st Feb '23

Yes only Chemring (LON:CHG) .

4imprint (LON:FOUR) did not pass as selection criteria uses Jim Slater Peg which requires 4 consecutive growth periods, potentially including 2 forecast periods.

Regards Andrew

Agree no system is perfect and no system always works but have Beat the Market 4 in the last 5 years and average annual performance over 10 years +17.4% compared to the Market +7.7%.

Although early days in 2023 I am pleased to report in Month 1 ME Way up +4.9% compared to the Market up +3%.

Thanks, I did not realise about 4 consecutive growth periods, that explains why only 1 selected. I actually just bought some Chemring (LON:CHG, it looks good quality company.

4th Jul '23

2023 ME WAY PORTFOLIO 6 MONTHS UPDATE

Pleased to report that at the 6 months point the ME Way is Beating the Market up +4.5% compared to the FTSE All-Share up +2.6%.

Top 5

Bytes Technology (LON:BYIT) up +38.4%
IMI (LON:IMI) up +28.7%
Computacenter (LON:CCC) up +22.1%
Oxford Instruments (LON:OXIG) up +21.3%
Softcat (LON:SCT) up +21.2%

Please note Dividends are pro-rata and for the ME Way are on the actual dividends per annum and for the FTSE All-Share are on an assumed 4% per annum.

10th Jul '23

Thanks for your comments.

No method is perfect and results so far in 2023 may only be up +4.5% but still Beating the Market.

Full year will provide the full picture for 2023.

15th Jan

ME Way 2023 Annual Performance

Winners keep Winning

Pleased to report a strong year with the ME Way Beating the Market up +12.1% compared to the FTSE All-Share up +7.9%.

Bytes Technology (LON:BYIT) up +59.9%

Computacenter (LON:CCC) up +49.1%

IMI (LON:IMI) up +33.4%

Chemring (LON:CHG) up +20.1%

Softcat (LON:SCT) up +18.2%

Ninety One (LON:N91) up +5.5%

Oxford Instruments (LON:OXIG) up +3.6%

Morgan Advanced Materials (LON:MGAM) down -6.6%

Kainos (LON:KNOS) down -25.3%

Future (LON:FUTR) down -36.7%

ME Way has an average annual performance over 5 years of +13.1% compared to the FTSE All-Share of +7.4% and over 10 years of +14.8% compared to the FTSE All-Share +6.1%.

Soon to follow the 2024 Portfolio.

2024 PORTFOLIO

31/12/23

Baltic Classifieds (LON:BCG) 236.5p 1.27%

Bridgepoint (LON:BPT) 279.2p 3.40%

Volution (LON:FAN) 433.6p 1.95%

TBC Bank (LON:TBCG) 2830p 7.33%

Bytes Technology (LON:BYIT) 612p 1.89%

Discoverie (LON:DSCV) 790p 1.58%

Bodycote (LON:BOY) 594.5p 4.01%

Tyman (LON:TYMN) 314.5p 4.47%

4imprint (LON:FOUR) 4570p 3.57%

Softcat (LON:SCT) 1360p 2.99%

Stars of the FTSE

HOW I INVEST - THE ME WAY

ME METHOD

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TheMechanic

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