New QVM strategy launches today!
QVM strategy launches!
I have just started trading a new investment strategy. It’s not original to me, and I give full credit for this to the team at Stockopedia, whose, website I wholeheartedly recommend. I am not doing this instead of my, core trend-following strategies, it is simply an additional strategy. Although I am a trend-follower at heart, this strategy is not a trend-following strategy, which is fine by me, because there are times, of course, when markets do not trend.
The QVM strategy is a stocks-only approach. The plan is to only trade once per year, buying one share in each of the ten sub-sectors of the economy. The theory is that one never knows, at any one time, which sector of the economy is going to do best, so I will invest in one company per sector.
But which share will I buy?, you ask. This is where I use the ranking system devised by Stockopedia. Some analysts recommend that one buys Quality (expensive) stocks, others recommend buying cheap stocks (Value). Others (like me) recommend stocks that have upward Momentum. This can all be quite confusing for most of us. Fortunately, the nice folk at Stockopedia have made things easier.
By analysing stocks and ranking them for all three of the above, they are able to come up with a ranking system (scored out of 100) to rank stocks that score highest on a combination of all three of the above issues. In other words, they fit into the sweet spot that is the overlap between all three of these qualities. They are able to do this with European, British and US stocks.
To implement this investment plan, what I did was to take my annual ISA allowance (£15,240), and divide it into 10 lots of £1,524. I then bought that amount of the highest ranking stock in each economic sector. Admittedly, the highest ranking stock was not always available to purchase in my account, so then I would work down to the next stock in the list. I had a filter that ruled out any stocks whose capitalisation was less than £10 million.
It can be seen from the graph below that stock performance, over the last three years at least, has correlated directly with QVM rank.
How many stocks should I buy? Well, it probably makes sense to have more than one stock in each asset class. But because I am only using one year’s ISA allowance initially, then I am just going for one stock per economic sector. Next year I will do two, and then probably keep it at two per sector.
The plan is to do nothing with the shares until next year, when I will sell my shares, look at the QVM rankings again, and reinvest in different companies that are scoring higher, unless the companies that I own are still scoring more than 90/100, in which case I will keep them.
Sounds easy! Well, actually it is. If you want to know which shares I have bought, you can do, by being a member of my site and having access to my members Facebook page. For your interest, five of the stocks are US-based, one is Dutch, one British, one German, one Swiss, and one Norweigan, so there is a moderate geographical hedging going on too.
Trend-following is still my main love, however, so if you are interested in becoming a member of my site you will have access to information about:
What’s not to like?
To give you an example of why I think trend-following is so good, have a look at the graph of the share price of Micron Technology. I bought a 'call option' on this stock a couple of weeks ago, the value of which has since increased by 22%. Not bad, compared to the building society!
By the way, this information, is just about what I do. I am not a financial advisor, thankfully, and, of course, have no idea about what is best for you. It’s all about what I do. But it might give you a few ideas!
I have just started trading a new investment strategy. It’s not original to me, and I give full credit for this to the team at Stockopedia, whose, website I wholeheartedly recommend. I am not doing this instead of my, core trend-following strategies, it is simply an additional strategy. Although I am a trend-follower at heart, this strategy is not a trend-following strategy, which is fine by me, because there are times, of course, when markets do not trend.
The QVM strategy is a stocks-only approach. The plan is to only trade once per year, buying one share in each of the ten sub-sectors of the economy. The theory is that one never knows, at any one time, which sector of the economy is going to do best, so I will invest in one company per sector.
But which share will I buy?, you ask. This is where I use the ranking system devised by Stockopedia. Some analysts recommend that one buys Quality (expensive) stocks, others recommend buying cheap stocks (Value). Others (like me) recommend stocks that have upward Momentum. This can all be quite confusing for most of us. Fortunately, the nice folk at Stockopedia have made things easier.
By analysing stocks and ranking them for all three of the above, they are able to come up with a ranking system (scored out of 100) to rank stocks that score highest on a combination of all three of the above issues. In other words, they fit into the sweet spot that is the overlap between all three of these qualities. They are able to do this with European, British and US stocks.
To implement this investment plan, what I did was to take my annual ISA allowance (£15,240), and divide it into 10 lots of £1,524. I then bought that amount of the highest ranking stock in each economic sector. Admittedly, the highest ranking stock was not always available to purchase in my account, so then I would work down to the next stock in the list. I had a filter that ruled out any stocks whose capitalisation was less than £10 million.
It can be seen from the graph below that stock performance, over the last three years at least, has correlated directly with QVM rank.
How many stocks should I buy? Well, it probably makes sense to have more than one stock in each asset class. But because I am only using one year’s ISA allowance initially, then I am just going for one stock per economic sector. Next year I will do two, and then probably keep it at two per sector.
The plan is to do nothing with the shares until next year, when I will sell my shares, look at the QVM rankings again, and reinvest in different companies that are scoring higher, unless the companies that I own are still scoring more than 90/100, in which case I will keep them.
Sounds easy! Well, actually it is. If you want to know which shares I have bought, you can do, by being a member of my site and having access to my members Facebook page. For your interest, five of the stocks are US-based, one is Dutch, one British, one German, one Swiss, and one Norweigan, so there is a moderate geographical hedging going on too.
Trend-following is still my main love, however, so if you are interested in becoming a member of my site you will have access to information about:
- My 10 min daily trend-following strategy
- My weekly asset allocation with timing, strategy
- My twice-per year asset class balancing strategy
- And now, ta da: my once per year, QVM investment strategy
What’s not to like?
To give you an example of why I think trend-following is so good, have a look at the graph of the share price of Micron Technology. I bought a 'call option' on this stock a couple of weeks ago, the value of which has since increased by 22%. Not bad, compared to the building society!
By the way, this information, is just about what I do. I am not a financial advisor, thankfully, and, of course, have no idea about what is best for you. It’s all about what I do. But it might give you a few ideas!
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