How I'm Beating The Market

Maynard Paton

By

Maynard Paton

Published in Investing Strategy on 22 April 2009

... and you could, too, with this simple five-point plan.

Last Christmas I outlined a five-point plan to recoup the losses from last year's crash. It was a simple approach. Essentially the strategy involved i) ignoring market fluctuations, ii) focusing on good, cheap shares iii) using a watch list, iv) topping up on existing holdings, and; v) avoiding obvious trouble. And the good news... the plan is working for Champion Shares.

The Christmas article referred to the 31 'buy' recommendations I made for the Fool's share-tipping service during 2008. They covered 18 different companies of which 13 were recommended twice. This table outlines how their performance has picked up during the last four months.

DateAverage 2008 tip*FTSE All-Share*
22 December 2008-14.8%-17.2%
21 April 2009-4.8%-19.5%

I'm really pleased how those 31 shares are now beating the index by almost 15%.

Even better are my recommendations for 2009. I have made eight so far this year for Champion Shares and they've gained an average of 23%:

DateAverage 2009 tip*FTSE All-Share*
21 April 200922.6%3.1%

I should state none of this year's recommendations operate in trouble areas such as banking, building and car dealing, which have rebounded strongly of late as investors 'dashed for trash'. Instead the 2009 market-beating performance has been founded upon businesses with cash-positive balance sheets, proven leaders and decent dividends. Given today's brutal economy, I much prefer my Champion Shares members to back companies with greater quality.

All told, the full Champion Shares scorecard now looks like this:

DateAverage tip*FTSE All-Share*
21 April 2009-6.1%-12.5%

I'm happy with that overall performance. Mind you, I believe my lead over the index can be widened in time. I should add Champion Shares was launched during September 2005.

What now?

Of course there are no guarantees with my Champion Shares recommendations. Some have been removed from the service at significant losses and any of those that remain could lose you money over time. But I'm confident my five-step plan -- and focusing on decent businesses in particular -- can continue to help the Champion Shares community improve their portfolios during 2009 and beyond.

You can discover the companies that have driven the performance of Champion Shares through this free 30-day trial. It provides full access to the service and every recommendation -- past and present -- is documented fully. I hope you can take advantage of this no-obligation opportunity and the possibility of index-beating returns. Happy investing.

 

* Champion Shares returns are based on mid prices taken on publication of the 'buy' advice and include due dividends but exclude costs. FTSE All-Share returns are based on the FTSE All-Share total return index, which includes re-invested dividends and excludes costs, and taken on publication of the 'buy' advice. Returns include all current and 'sold' recommendations, and are calculated using closing prices on 21st April 2009 or at the time of the 'sell' advice.

For all Champion Shares subscription enquiries please e-mail ChampionShares@Fool.co.uk or call 0845 226 3237.

Risk Warning

You run the risk of losing money when investing in shares. Prices may change quickly, they may go down as well as up and you may not get back the full amount invested. You should not invest using money you cannot afford to lose. We have taken all reasonable care to ensure that all statements of fact and opinion contained in this publication are fair and accurate in all material aspects. Investors should seek appropriate professional advice from their stockbroker or other adviser if any points are unclear. Champion Shares gives general advice only, and the investments mentioned may not necessarily be suitable for any individual.

Authorised by The McHattie Group, St Brandon's House, 29 Great George Street, Bristol BS1 5QT | Tel: 01179 200 070 | Fax: 01179 200 071 | E-mail: enquiries@mchattie.co.uk

The McHattie Group is authorised and regulated by the Financial Services Authority

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

jonesjeff 22 Apr 2009 , 11:44pm

Well done -excellent track record.

I'm not a subscriber at the moment, but there must be some delighted customers out there waiting to comment?

boyrussell123 23 Apr 2009 , 3:32pm

Well done! Yet another shameless plug for the champion shares service. This one doesn't even have any worthwhile information or wider market comment. MF has lost all credibilty since introducing this service. Even aricles that tip shares are just teasers for Champion shares.

solarstone 23 Apr 2009 , 4:21pm

motley fool has seriously lost its way.

Pedros143 23 Apr 2009 , 4:58pm

i agree with boyrussell123 above... where was all the sage advice and market warnings before the credit crunch? Referring to champion shares without saying which they are is pointless for comparison reasons. It is all a bit like saying the stable door could have been bolted now we know the horse was going to leave. Come on MF, change back to the subject format you used to be, that made you once famous.

SnorteySnoots 23 Apr 2009 , 5:03pm

MF is now little more than naked advertising and mainly advertising its own service.

Dealsie 23 Apr 2009 , 5:16pm

I'm a bit bored of the non stop shameless plugging too, it almost makes me want to cancel my subscription.

TMFMayn 24 Apr 2009 , 8:23am

Hello Pedros143,

i agree with boyrussell123 above... where was all the sage advice and market warnings before the credit crunch?

Here:

http://www.fool.co.uk/news/investing/investing-strategy/2007/08/31/cashed-up-and-ready-for-the-next-bear-market.aspx
http://www.fool.co.uk/news/investing/investing-strategy/2007/05/24/prepare-for-a-downturn.aspx
http://www.fool.co.uk/news/investing/investing-strategy/2007/07/16/tracker-dividends-have-gone-flat.aspx

That is why CS is beating the market.

Referring to champion shares without saying which they are is pointless for comparison reasons. It is all a bit like saying the stable door could have been bolted now we know the horse was going to leave.

It would be pointless for us to reveal the share names because nobody would then subscribe to the service. Take advantage of the free trial and all the names, scorecard etc will become available.

Come on MF, change back to the subject format you used to be, that made you once famous.

It may have made us famous, but it did not make us any money. The 'shameless plugging' does bring in money and keeps the main site and boards free. We could drop CS and the plugs, but you'd then have to pay for the articles and boards.

Foolish Best

Mayn

HenryScottTuke 24 Apr 2009 , 9:09am

Would you have liked a 15%/10% gain for 2008 instead ? The article should have given us a third comparison - staying out of the market altogether. You would have then:
i)not made a loss of (12.5%-FTSE)(6.1%-champion shares)
ii)received some income from the money on deposit ( rates dropped, but were 3/4/5% gross at the start of 2008).
iii)money saved by not paying for Champion Shares (£99 pa).
I admit my comment is of little use for us now, as we can all be experts in hindsight. I did actually stay out for 2008, but that also meant I missed out on the subsequent rise in March, so none of us can be right all the time. CS is supposed to beat the FTSE over time and from the evidence so far it has. So for 2008 the best option would have been to stay out, but for 2009 ? CS maybe, who knows !

LordEssex 24 Apr 2009 , 12:13pm

I don't understand the maths of the comparisons made. There have been multiple recommendations that were presumably made at different times. Yet the comparison with FTAS is from one date only.
We need more explanation.
Well done on beating the market. However, we all know that can only be done by increasing risk. So we need to see the tracking error for the portfolio.
Giving data on returns without the risk incurred is like giving speed and acceleration data for a car without detailing fuel consumption and insurance group.

We need the whole story, not selected data. And it would help to get all the data since launch, not just since the last revamp.

George Orwell could re-write history, but real life portfolios cannot.

TMFMayn 24 Apr 2009 , 2:44pm

Hello LordEssex,

I don't understand the maths of the comparisons made. There have been multiple recommendations that were presumably made at different times. Yet the comparison with FTAS is from one date only.We need more explanation.

A FTAS comparison is taken at the same time as every recommendaton. The FTAS figures in the tables are the average of those performances. So the tables are comparing like for like here.

Well done on beating the market. However, we all know that can only be done by increasing risk. So we need to see the tracking error for the portfolio.
Giving data on returns without the risk incurred is like giving speed and acceleration data for a car without detailing fuel consumption and insurance group.

Well, all this depends on how you define risk. My definition is a lot different to yours. Anyway, I tend to leave all that beta stuff to underperforming fund managers. If you want to discover the 'tracking error' for Champion Shares, I'd suggest you take advantage of the free 30-day trial and assess the scorecard yourself. You may find some good share ideas.

We need the whole story, not selected data. And it would help to get all the data since launch, not just since the last revamp. George Orwell could re-write history, but real life portfolios cannot.

The final table in the article outlines all the recommendationss since the service launched in September 2005.

Foolish Best

Mayn

TMFMayn 24 Apr 2009 , 2:49pm

Hello HenryScottTuke,

Would you have liked a 15%/10% gain for 2008 instead ? The article should have given us a third comparison - staying out of the market altogether...

Yep, but members had subscribed expecting recommendations throughout the year and that is what I was obliged to provide them. So I did my best in the circumstances.

Foolish Best

Mayn

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