Further to the last post about the major upgrade to the Scores. Just wanted to mention the way in which the sign up process works now affords the opportunity for a storming free trial. The founder member fixed annual pricing is available by signing up for an annual direct debit. If you wanted to sign up now this will be set up to be taken on or around 21st March 2022 and annually thereafter.
Thus you could try the Scores & get access to the Portfolio for two or three weeks before you buy and cancel your direct debit mandate a week or so before the 21st March if you decided they were not for you. If you did decide to pay you'd be able to lock in the super low pricing that works out at just £1 a week. Not sure where else you can find such priceless information for that price, but then I'm biased.
Any way mind how you go on this stormy day in the UK and safe investing however you decide to do it.
This post is to inform subscribers & potential subscribers of a major upgrade to the Scores.
Firstly to emphasise there will be no changes to the existing Compound Income Scores which will still seek to quickly help investors identify for further research good quality dividend paying stocks in the UK market with the potential to grow their income over time.
What is being added?
There are three new Scores being added which will cover a broader range of names in the UK market including those that do not pay dividends. This will take the number of stocks covered up from just over 500 to just under 1500. The new Scores are as follows:
Quality, Value & Momentum Scores (VQM).
These are based on work from a while back by the late Robert Haugen which found dramatic, consistent, and negative payoffs to measures of risk, positive payoffs to measures of current profitability, positive payoffs to measures of cheapness, positive payoffs to momentum in stock return, and negative payoffs to recent stock performance. The full details of the research can be found here. The metrics used in this research are reflected in the VQM Scores with one tweak where they are using 12 month total return rather than pure price momentum as I have always felt that ignoring dividends biases this measure against dividend paying stocks. although overall it will make little difference except where dividend payments are significant compared to price changes.
Shareholder Yield Score (SHY).
Going one step further than the Haugen Scores is the Shareholder yield (SHY), which takes into account share buy backs when calculating a share holder yield. This has generally been suggested as a more effective way of selecting stocks for purer yield based strategies. While some suggest that debt pay back should also be taken into account, so a separate Debt Pay Back Yield is also presented for consideration, but not included in the actual SHY calculated and ranked. While others suggest also looking at quality and momentum factors along with this. Research from the guys at Alpha Architect can be found here. While the practical application of this in a fund from one of the early researchers / adopters, Mebane Faber, can be found here. In this case you could look at the Haugen VQM Scores alongside the SHY as well as the CI Score all on the one sheet.
Conservative Formula / Low Volatility (CFLV)
Finally we have added the Conservative Formula which is based on research by Pim van Vliet and David Blitz which found that low volatility stocks tended to do better over time. The research which is sub titled Quantitative Investing made easy, uses a volatility measure along with Shareholder yield and 12 month - 1 month price momentum. So it dovetails in quite nicely with the SHY Scores and adds extra information on volatility and pure price momentum. Volatility is also presented separately and ranked too with lower volatility stocks given a higher score, given that the research found that they do on average give better returns, so lower volatility is better and like all the other Scores 100 is best and 0 worst. This tendency for low volatility / low risk out performance also ties in with the findings of the Robert Haugen research.
All Scores (New Sheet)
These new Scores together with the extra data on Debt pay down and volatility are all presented in the new All Scores sheet which summarises the Scores for all the stocks covered. The Compound Income Scores, where available, are also shown on this sheet too, although they are more limited in number given the yield requirement for them to qualify for the original Scores. All in all this will expand the universe of stocks covered from just over 500 for the existing Compound Income Scores to nearly 1500 in the All Scores.
Summary of Changes
So to summarise, subscribers will continue to get access to:
New features available on the new All Scores sheet:
Hopefully existing subscribers will find the new Scores a useful addition to their research tools. It should give you the ability to search for, sort or filter stocks and sectors etc. and see at a glance how they rank quantitatively in terms of value, quality, momentum, volatility and different combinations of those as detailed above. While of course still being able to see how those that qualify on yield grounds score in terms of their Compound Income potential as well as the newly introduced Shareholder Yield.
The Scores have been held at their current price level since launch some years ago, despite increased costs along the way and to come. I do however wish to reward initial founder members / subscribers for their loyalty & support by maintaining their pricing despite the cost pressures and the major upgrade to the coverage and Scores now on offer. So if you are a current subscriber, rest assured that you will be able to continue to benefit from that low price for as long as you remain a subscriber.
Pricing & New Subscriber offer.
If you are new to the site and would like to benefit from the same value pricing as founder members, I can offer new annual subscribers the same fixed price offer if you sign up by 14th March 2022. After that date the price will be going up by 25%. If that is something that interests you then please click here to subscribe for an annual subscription via direct debit.
Alternatively if you would prefer to pay monthly but at the newly introduced monthly rate you can do so by clicking here to set up a monthly direct debit instead.
Either way you will get access to the Scores and the Portfolio etc. via google sheets or directly via the subscriber link under the Scores heading on the site menu.
Thanks for reading & subscribing if you are a subscriber - good luck with your investing.
As I feared in the year end update last month, it seems that returns this year may well not be as good. This may be especially so if the old axiom that so goes January, so goes the year does have any substance to it, although I've seen research in this interesting post that it is not that predictive. This also looks at the thorny issue of market timing & seems to conclude that it is hard to find evidence of it being done successfully.
For what it is worth the market timing indicators that I maintain are still in above trend bullish territory for the larger headline UK indices like FTSE 100, FTSE 350 & FTSE All Share. Interestingly Mid 250 & Smaller Company Indices in the UK have fallen below trend and therefore into sell / beware territory after they were hit hard in January. However, the economic indicators that I use along side those are still positive - so in the absence of a recession, hopefully this will just turn into a normal correction at this stage (10 to 20% or so) rather than a horrible -50% bear market. Of course there are plenty of other things to worry about like cost of living, supply chains, Russian aggression etc. but as the other axiom says - the market climbs a wall of worry.
Given that Mid & Smaller companies led the way down while the larger FTSE 100 held up better, it was probably no surprise that the Compound Income portfolio gave back some out performance as it is more exposed to Mid & Small cap names than the FTSE All Share that I use as a benchmark. Please see the graphs at the top of this post for full details of that and other time periods including the 15% per annum achieved since inception in April 2015.
Update on this months Screening & to the Scores.
No update here on this months screening due to time pressures (more on that in a moment). Subscribers will however have been able to see details of this months trades in the transactions sheet & discussion of those stocks considered in the journal sheet.
Aside from that I have been spending some time working on an update to the Scores to bring a broader set of data and greater stock coverage for those who are interested in shares that do not meet the income requirements to be in the Compound Income Scores investment universe. Rest assured the Compound Income Scores will remain in their current form, just that subscribers will have access to a broader information set & rankings which should give some useful insights into all of the stocks covered including those currently in the Compound Scores universe.
Watch this space for a further post with details about the enlarged and enhanced scores when they become available. Any way mind how you go out there in these tricky markets, hopefully with all the focus on inflation & a cost of living crisis doesn't mean we are flying back to a 1970's style stagflation environment. With that in mind I'll leave you with an appropriately naff song from that period.