Investment Strategies
How ShareMaestro helps you beat the market.
18.6 % annual return in the decade ending 30 June 2010. You would have achieved this market-beating return by using ShareMaestro's FTSE 100 timing signals to buy and sell FTSE 100 covered warrants at the right times. Details of this strategy are available, on request, to ShareMaestro subscribers.
ShareMaestro is the only product which tells you :
- the real value of UK shares
- what to trade
- when to trade
ShareMaestro has two separate modules : one to value the UK market (FTSE100) and one to value individual UK shares.
You can use these modules both to time your entry into and exit from the market and to select individual shares for investment. ShareMaestro can help you avoid a common and pernicious destroyer of investment value - remaining invested during market crashes when the market or share prices no longer justify the investment. Even the prices of good shares can fall heavily during market crashes, as fear or panic takes over from greed. See Crash Protection.
You can use the ShareMaestro modules for many investment strategies. Some of these are described in the User Manual, which is free to download.
FTSE 100
A simple strategy is to switch between cash and FTSE100 investment according to ShareMaestro's FTSE100 buy/sell signals. Over the decade to end December 2010, this strategy produced 18 times more growth than a FTSE100 tracker fund (7.5 % p.a. v 0.4% p.a.). See Fund Management. Investment in the FTSE 100 can be via a low-cost FTSE 100 ETF, such as I-Shares. A higher risk strategy of investing via FTSE100 covered warrants has produced an even higher return (see above).
Share Portfolio
The strategy described below is for prudent investors who wish to limit their risk and seek to outperform the market over the medium to long term. The required data sources are available over the internet. The User Manual fully details these sources and gives crystal-clear instructions on how to perform each valuation.
1. Time your entry to the market
You should use ShareMaestro to get a weekly valuation for the FTSE100, using the FTSE100 module. This takes a couple of minutes. You should consider investing when the FTSE100 valuation is over 105% of market price.
2. Draw up a shortlist of shares
If your market valuation suggests investment, draw up a shortlist of potential shares. The Bulk Share Valuation facility, using the exclusive ShareScope data file, is an ideal way to draw up a shortlist. See ShareMaestro Features.
3. Select shares for investment
Whittle down the shortlist by reviewing the valuation for each share to exclude anomalies. This process is covered in the "Reviewing and fine-tuning share valuations" section of the User Manual. Eliminate shares which do not meet the ShareMaestro valuation criteria which are specified in the ShareMaestro Terms and Conditions. Consider investing in shares which have the highest ShareMaestro % valuations to market price. Avoid shares which have a ShareMaestro valuation to price % of less than 110%.
Build an investment portfolio of at least 10 shares, spread over several industrial sectors, allocating a roughly equal investment sum to each share. You will probably need to repeat this step on a number of days to find enough suitable candidates for investment.
4. Limit Risk
For each share purchased, place a trailing stop sale order at, say, 25%, of the initial purchase price for the maximum number of days available. This means that the share will automatically be sold if the price falls from the peak price achieved since your purchase by at least the amount of the trailing value specified. So, if you buy a share for 100p, the trailing value would be 25p. If the share price rises to 130p but then falls to 105p or below, it will be automatically sold . This service minimizes any loss on the share and also ensures that you lock in profit on the share rather than see it all evaporate with a sharp reversal in the share price. The service is available from brokers such as Barclays Stockbrokers (www.stockbrokers.barclays.co.uk), who will provide details on how this service works.
5. Review Progress.
You should review the progress of your portfolio at least weekly.
- Consider selling the whole portfolio if the weekly ShareMaestro FTSE100 valuation (see step 1) falls to 95% of the FTSE100
market price or lower. Reinvest the cash in a high-interest instant access account. Consider repeating the share investment
cycle when the conditions of step 1 above are met.
- Revalue your individual shares with the ShareMaestro bulk share valuation module at least every week and
immediately for a particular share in the event of major news about the company (e.g. a takeover bid). Consider selling any
shares whose valuation has fallen to 95% or lower of the market price. Replace the share by repeating steps 2, 3
and 4.
- Renew any trailing stop sale orders before they expire.
- You do not have to follow this strategy robotically. For example, by using ShareMaestro's powerful what-if functionality (see
User Manual), you may decide to take early action on an individual share. You may also take your own view about the
impact of major news affecting a company. E.g., if you believe that a takeover bid is going to be successful and the bid price
is higher than the market price, you may decide to hold the share until the bid price is received.
Potential advantages of this strategy
- you are more likely to avoid capital loss during market crashes
- you re-enter the market only when it appears to be good value again
- you earn interest on cash when you are out of the market
- you invest in individual shares which you have assessed as good value
- the upside potential on an individual share is unlimited, providing both the market and the share do not become overvalued
- you should lock in much of the profit on a star performer in your portfolio, even if the share falls significantly from its peak
- You should minimize the loss on an individual share to around 25% of the purchase price (excluding dealing costs)
- You minimize the risk on the overall portfolio by diversifying the investment over 10 -15 shares in different industrial sectors
This example strategy cannot take into account your individual circumstances. The valuations which you produce using ShareMaestro, including your choice of input values where applicable, do not constitute investment advice from ShareMaestro Limited, who take no responsibility for the direct or indirect consequences of any investment decisions which you may make on the basis of the valuations. You are strongly recommended to take advice from an authorised, professional investment advisor before making any investment decisions.
See ShareMaestro Terms & Conditions.
