David's Story

Before Stockopedia, how did you go about finding investments?

"Up until around 2008, my pensions were in a managed personal pension and a company pension, both of which were pretty opaque. The results that I was getting seemed to bear no relation to either the economy generally, or to the FTSE, and over time were underperforming both.

As I started to research I begin to understand a little about all the ways in which what growth there was was being eroded by fees at various levels. I decided that I could lose money more cheaply than paying someone else to do, so over a couple of years I started moving things into a SIPP.

My original investment was a little haphazard, picking what seemed to me good companies to invest in with no great understanding, the Motley Fool being my principal research tool. Some of them worked out well, others less so. Overall, I did quite well, more by luck than judgement."

In what way has Stockopedia changed your approach to investing?

My approach has been completely transformed.

"My approach has been completely transformed. Initially, I would base decisions on screens, particularly using the "screen of screens" as a starting point, then looking for what seemed like good growth or value characteristics. My analysis didn’t really go too much further than this, as I felt this was a little beyond my level of expertise.

Over time I have come to rely largely on StockRanks as my primary screening mechanism, strongly influenced by Ed Croft's writings on the subject and also on my own experience and observations. I temper this selection by excluding any that match one or more red flag criteria - largely drawn from reading Paul Scott's column.

After using Stockopedia to improve his returns, David has managed to pay off his mortgage and plans to return soon.

I usually select stocks with a high QualityRank that also has a high MomentumRank or ValueRank. My insistence on high QualityRank is based on an analysis I performed of my worst performing holdings in the last couple of years. Amongst those with high overall StockRank, I suffered losses disproportionately on those with low QualityRank. I do make exceptions to my ranking criteria if I find the case compelling, or if I feel that the rank doesn't truly affect the underlying data.

I rely almost entirely on Stockopedia to help me conduct this analysis.

One big lesson is 'no story stocks'. I only choose companies that are already by some measure successful. In general, I subscribe to the view that beyond a certain point, more detailed research into a companies does not improve returns. I rely almost entirely on Stockopedia to help me conduct this analysis."

Has this impacted your investment results and/or quality of life?

As a result I have now paid off my mortgage and plan to retire in June of this year.

"Over the last four years I have averaged a return in excess of 20%. This year (since last April, I track for the tax year) the return is over 40%. As a result I have now paid off my mortgage and plan to retire in June of this year, much earlier than I would have thought possible even three or four years ago. I shall continue to manage my investments in this way - I calculate that a return of 8-10% should leave me with a similar level of disposable income as I had while working."

What's your advice for investors that are just starting out?

"Subscribe to Stockopedia and read extensively. I have two friends who have done exactly that and as they grow in confidence are following the same path that I did and managing more of their pensions themselves, with quite satisfactory results so far."

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