Slow Trader

Tag: ISA

  • More on the long-term investment model

    My recent blog(s) were in regard to long-term investing. By long-term I’m thinking 15 to 30 years. Nick has given us, from each companies past ten years of annual reports, where available, his estimation of a company’s future value (MOS) and measure of consistency as a percentage of growth.

    From the FTSE 350 companies, Nick found that only ten companies met his criteria. Of these top ten companies, meant for long-term ISA or SIPP investment, we need to understand the principles of the company and be satisfied that a company has a product, method or brand that will be around after the next ten years.

    Nick has provided us with an old 3rd, mid 3rd and latest 3rd consistency to help us determine this. For example, Blackberry would have scored highly all the way to its end on this system; however, the clue would have been in Blackberry’s old, mid and latest consistency which would have shown a big down slope.

    Nick will refresh these calculations every few months. Primarily to capture the most recent annual report – three of which, on our current calculation, were from the end of 2015. To help, or possibly confuse, I’ve provided a brief chart synopsis of each of the top ten companies. I will continue to do this at the release of an updated calculation from Nick.

    New readers to this blog please note that my full-time business is short-term trading. Most of my blogs therefore will be focused on the short-term stuff. My detailed ‘how I trade’ page is only associated with short-term trading.

    Personally, I’m only in favour of short-term and the very long-term trading/investing model. I’m not in favour of the mid-term trading timeframe which constitutes the majority of the trading/investing world – pension funds and the like. This is a timeframe from the near term out to 15 years. I also feel that many pay too much for the services of providing mid-term investing. ‘Tony Robbins, Money Master the Game’ shows how every 1% in charges results in providing the investing company 20% of the final fund. Possibly a reason why a finance company made our top ten!

    If we are to invest in the mid-term, Robbins advocates a cash, share, commodity and bond mix. There are a few investment companies that provide such a fund – an independent financial advisor could help. Such funds are not exciting when the share market is going up rapidly; but such a fund usually provides a profit  – even when the share market heads south.

  • Top ten companies that are selling at a discount – FTSE 350

    On the previous blog, also dated 25th February 2017, Nick has provided the list of companies from the FTSE 350 that made the grade for our long-term investment.

    The spreadsheet was the cumulation of focused effort by Nick and me over a 9-month period a few years back. Nick, spent, subsequently, a considerable amount of time improving the calculation.

    Here’s an example of the back sheet of information that is taken for up to 10 years of figures for each company in the FTSE 350 – and this does not show the mind numbing calculations that are used within each of these boxes.

    screenshot-2017-02-24-11-15-36

    We must emphasise that this is meant for longer term investment. The principles of which use many ideas from the great investors, but primarily that of Benjamin Graham and Warren Buffett – and, if you know these investors, we are talking longer term.

    Nick has only provided FTSE 350 as the information is aimed at UK ISA or SIPP investors.

    Here is a synopsis of the filters of the principal figures used: “and, we have to say, principal figures that cannot be found anywhere else” 

    Margin of Safety: price is less than 60% of value

    Age: more than 4-years trading with less than 2-years of negative earnings

    Growth: a growth rate greater than 10% to ensure a reasonable rate of return

    Consistency: 10% growth rate in all variables – consistency score greater than 60%

    (Blackberry conundrum: consistency of growth improves over time)

    You will notice, in the more detailed sheets below, that annual report dates can be over 12 months old. That is because of the release time of annual report information. Although we are long-term investors with this information, Nick will run the calculations every few months to capture annual result information reasonably early.

    Here is the more detailed, and most up to date annual report information, on each of our companies that made the cut:

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    snip20170225_5

    Finally, anyone using this information to invest we must, of course, point you to our disclaimer page. Also, it is important that individuals do their own due diligence. It is important that, as investors, we understand the company we are investing into. The information above is detailed but we must determine for ourselves if we think a company has legs for the longer term.