|
Home | Help | Feedback | Bookshop |
| |
| |
| | Investment philosophy | Recommended reading | Frequently asked questions | Putting it all together | | |
| |
| |
[NOTE: the following is reproduced with permission from TipTracker, which ceased publication in March 1998]
This issue features more buys than either of our previous ones. It's not that we're more optimistic than before, rather that we're leaning towards publications that take some account of value and have the track record to prove it.
Pride of place goes to Jim Slater. We've now checked his record in the Mail on Sunday. Reassuringly, he not only matches the success of the portfolio we've been tracking based on Company REFS, he actually beats it. In fact, he beats every other tipster we've tracked. But his column is frustrating to follow, as it only appears at irregular intervals. Let's hope he decides to produce a newsletter of his own at some point.
Fifty:Fifty
The 50 best and worst tips, January 96 - June 97
The "Fifty:Fifty" tables started out as a bit of fun. By definition, extremes of performance tell you little about the past and are much less likely to be repeated in the future. Averages tell you plenty about the past. While they're no guarantee of the future, you have to take them into account to have any hope of an accurate forecast.
That's the reason we started TipTracker in the first place - to get away from the highly selective claims that regularly appear in tipsters' advertising and show you how much you'd really have made if you'd built your portfolio from all the advice they had to offer. When three figure publicity claims dissolve into single figure reality, you get a slightly more sober perspective on your chances of becoming the next George Soros.
But averages also include extremes. You need to be reminded from time to time of the massive impact individual shares can have on your portfolio, for better or worse. Because sooner or later, they will. If you're taking advice from tipsters - and we assume you are! - it's helpful to know which ones have been through this. And how they handled it. That's what our "Fifty:Fifty" tables are all about. They show the best and worst 50 tips of the last 18 months, whether already sold or still held. They've turned out to be educational as well as entertaining, revealing:
The clear winner is Techinvest. Over the past 18 months, this has scored twice as many Top 50 gains as any other single publication or newspaper column:
| Publication | No. of Top 50 Gains |
| Techinvest | 8 |
| Jim Slater, Mail On Sunday | 4 |
| Sharewatch | 4 |
| Company REFS * | 4 |
| Independent on Sunday | 3 |
| Penny Share Focus | 3 |
| Quantum Leap | 3 |
| * Not a tipsheet as such, but a statistical aid to stockpicking | |
You could do the sums a little differently and say, for example, that Quentin Lumsden has a total of 6 Top 50 winners, scattered over three publications. But why complicate matters?
Techinvest would still be tops, and 5 of it's 8 big hitters would still come in our Top 10 Tips. This is fine speculative stuff from editor Conor McCarthy. He trebled his readers' money in just 8 months on AIM winner Polydoc. Two US stocks have brought him success on the other side of the pond as well.
Second-place Jim Slater deserves rather more than the runner-up prize. His 4 big winners came from a total of just 28 tips, a 1 in 7 ratio that puts him way ahead of any rival. The average Investors Chronicle reader owns 23 shares, so many small investors could quite feasibly have taken every Slater tip and actually scored these outstanding returns for themselves.
Sharewatch matched Slater with its tally of Top 50 tips, and more than quadrupled readers' money on one recommendation: Blacks Leisure. The Inside Track topped our chart with the same stock, catching it a little earlier after five of the directors had bought in and notching up a gain of 569%.
The league table of losers tells an interesting story or two:
| Publication | No.of Bottom 50 Losses |
| Sunday Telegraph | 10 |
| Independent on Sunday | 10 |
| Investors Chronicle | 7 |
| Mail on Sunday | 5 |
| Techinvest | 3 |
The common factor is obviously that the two biggest losers are major Sunday newspapers. We expect the position of the Indie on Sunday to improve, since most of the damage was done by it's "City Talk" column, which has given far fewer tips since it was revamped in February. But the Sunday Telegraph has been slipping towards this position for a long time, and is currently last in our league averages as well.
Some individual share disasters were hard to foresee. Cedardata halved suddenly on a profit warning and Wickes on reports of accounting irregularities. But most of these losses are the unsurprising outcome of speculation in high-risk areas like multi media, mining or hi-tech innovation.
So are you likely to be on safer ground with specialist tipsters than press pundits? Maybe. But the real lesson here is older than the press itself: cut losses, run profits. Techinvest has partly rescued its average by selling 2 of its 3 losers. But most tipsters have forgotten or kept mum about them, hurting their bottom line as a result. Of 47 losers that could still be sold, only 4 have been.
Contrast this with the Top 50, where no less than 12 winners have been topsliced or sold voluntarily (and 4 others taken over). In most cases, this has reduced ultimate gains, which tends to confirm the second part of the rule is as important as the first. But tipsters being human and human nature being what is, it seems many of them simply can't resist the lure of a bird in the hand.
Company REFS & Beyond The Zulu Principle
Jim Slater, Mail On Sunday
Frankly, the success of REFS has become embarrassing.
Just to recap, this is a portfolio compiled not from tips, but from the criteria in Jim Slater's second Zulu book (Z2) and the monthly statistics in Company REFS without the benefit of his or anyone else's subjective judgement. We simply assume that every company that fitted the relevant criteria was a buy (or sell, as the case may be). The REFS/Z2 system was included by popular demand, and meant to be an academic exercise to show how this theory might have worked in '96-7, in the absence of any newsletter by Jim Slater himself.
Yet this exercise has produced the only portfolio we've been tracking that has managed to outperform the FTSE-A All-Share over the last 18 months. And that's on the basis of simply averaging the gain or loss for each purchase, as we standardly do. If we'd actually reinvested the proceeds of sales back into current holdings as we went along, the gain would be far higher. Here are the details:
The most striking facts of all are that REFS/Z2
Recommendation: Jim Slater's track record in MoS demonstrates his theory has worked in practice, enabling him to outperform any tipster we've tracked so far. Our research into the REFS/Z2 also seems to confirm that the system's built-in safeguards really do help to prevent you from overpaying for growth stocks. Taking all this into account, we're upgrading REFS/Z2 and Slater's column to BEST BUYS.
Back to: Company REFS
| Investment philosophy | Recommended reading | Frequently asked questions | Putting it all together |