Direct Investing – US, UK & Irish Markets
Direct stock picking is problematic for many private investors who don’t have access to company management and may not be expert enough to scour through annual reports to do their own analysis. Stockbrokers tend to lack consistency and accountability for their recommendations. In addition, many private investors do not diversify sufficiently and often end up with too narrow a base of stocks.
We believe GillenMarkets’s services in the area of stock picking address many of these shortcomings. We provide members with the ability to select a portfolio of stocks in three markets;
- the US DOW Index (US maket)
- the FT 100 Index (UK market)
- the ISEQ Index (Irish market)
The approach to each of the above markets is different but each approach has an underlying consistency;
- The approach must make business sense
- It must have worked well in the past
- It must be easy to follow
- The 'What to Buy' & 'When to Sell' decisions must be obvious
The Record of Returns
The table below records the returns from each approach to direct stock picking that a member of GillenMarkets can choose from. Over the 15-year period from 1995 to 2009, each approach has delivered substantially better returns than its respective market or index. The 15-year period in question includes both the tech-led bear market of 2000-02 and the credit crunch-led bear market of 2007-09. The returns quoted in the following table include dividend income but exclude transaction costs.
As the table shows, both the UK Low price-to-earnings and UK Low price-to-cashflow approaches delivered returns well ahead of the index returns over the 15-year period. The DOW Value approach added almost 4% per annum to the DOW Index returns and the ISEQ Value approach added over 8% per annum to the ISEQ Index returns over the 15-year period in question.
A Concrete Example - The UK High Dividend Yield Approach
The following chart graphs the progress of a £10,000 investment in the UK FT 100 High Dividend Yield Approach that we teach and which is available for members to follow on the web site. There are two ways to execute the approach and we call these the 'Top 15' approach and the 'Sector 15' Approach. Each has out-performed the UK FT 100 Index over the 15-year period from 1995 to 2009. The approaches have been test
ed in both of the severe bear markets of 2000-02 and 2007-09 and, on both occasions, recovered strongly from the downturns. Many private investors get 'scared' out of the market during severe declines and don't get back in when it is recovering. Having a reliable framework for selecting a portfolio of stocks is a critical component to any stock market investment plan.
As Warren Buffett so ably put in all the way back in 1969 -
'What is needed for successful investing is a reliable framework for making decisions and an ability to keep your emotions from corroding that framework'.
GillenMarkets' Services in This Area
And that is it in a nutshell. Anyone can follow the approaches we outline and the buy & sell decisions are obvious. What an investor needs is confidence in an approach he/she is likely to adopt. The best way to get that confidence is to see how the approach has worked in the past. GillenMarkets provides the past records of each approach year by year back to 1995 at least.
We teach these approaches to stock picking at our 1-day investment seminar. In addition, the stocks that match the approaches are listed in the member’s section of the website and are updated weekly. And we provide ongoing commentary on each approach through our weekly investment bulletin to members.
In addition, each of the above three approaches to direct stock picking is described in more detail in our series of investment notes and e-books (PDF documents) which are available to members through the web site. Non-members can buy any of our ebooks with a credit card by clicking on the link provided or at the home page.
Subscribe