I do it my way!

[littlebills]

First post .... so here goes my trading strategy:

I only trade FTSE100 stock. I dont listen to anyone's hot tips, dont care about penny shares, none FTSE100 stock.

Filter the 100 by Dividend Yield, select the highest of these.

Then check Earnings/Share, filter out the highest ones.

So I have the ones with High Dividend Yield and High Earnings per share.

Then weed out any companies I dont like due to what their business is and whether I understand the business or is it ethical or not. Tobacco firms get the boot to the curb straight away.

Now down to 5 stocks, stick £100 in each of these, each month, for 12 months. Costs of £2 for each trade. So £490 of my £500 is invested each month.

After 12 months, review the portfolio and make appropriate adjustments as per my rules above.

Sensible comments are much appreciated.

 

[Lancelot]

Hi Littlebills!

I'm a new member too, joined today.

Interesting that you write about your trading strategy.
My I make some comments, even if they are critical?

- General: you describe a way to select stocks, but you don't say what your strategy or desired outcome is. Apparently you are not trading, you are investing medium/long term.

- Restricting yourself to the FTSE 100 is a good start and may keep you going for some years, but sooner or later you will want to branch out. All reputable firms give details of their business and financial performance on their web sites. Why not have a look round now? You might miss something!

- The filter by dividend yield is an interesting one, although it does not interest me much, as in Switzerland dividends are taxed, but private capital gains are not.

- The filter by EPS is unusual. What does it matter if the EPS is £1 or £5? Surely you mean P/E (Price divided by EPS). This should not be more than 20, except for high growth stocks.

My holdings of UK companies are the following:

Barratt Homes
BT Group
C&W
Dixons
George Wimpey
ICI
Lloyds
MMO2
Persimmon Homes
Vodafone

What are yours?

Regards, Lancelot

 

[BBB]

The concept is similar to Warren Buffets 'Dogs of the Dow' theory.

BTW - why ditch tobacco companies? If you are investing, then surely a company who 'captivates' its customers so successfully is guaranteed strong sales year on year? Isn't this known as investing defensively?

A companies share price often has little to do with the health of that company. Don't get emotional about your selections/investment vehicles.

 

[littlebills]

Hi Lancelot

I will respond to each item in turn:

* Desired outcome - to make a large critical mass of stock over a 5-15 year peiod

* EPS Unusual - ok, just setting my own rules.

* Dividends - in UK are taxed too, but I am doing these under a Self Select ISA wrapper, no tax.

* Restricting to FTSE100 - sure you can find other companies information and achieve a better performance. I will branch out in Year 2 of this investment strategy.

* What are my holdings in this portfolio?
- Lloyds TSB
- Prudential
- United Utilities
- Scottish & Newcastle
- Severn Trent

BBB - why ditch tobacco companies? Because I needed another rule for filtering and as I absolutely hate smoking it made good sense to me to ditch Brit Am Tobacco.