Tuesday, 1 April 2014

Mechanical Bull Portfolio - March Review


The Mechanical Bull (MB) portfolio was down by 1.4 per cent in March compared with a 3.1 per cent drop for the FTSE 100. So not a stellar month by any means. The biggest gain (by far) was Fyffes (FFY) with a 48 per cent rise. Cohort (CHRT) was the worst performing dropping by 18 per cent. Keller (KLR) was dropped from the portfolio (booking a small profit) to be replaced by Lookers (LOOK).

Comparison with Stockopedia's Screen of Screens

While pondering this month's rather lacklustre performance, it crossed my mind to check up on how Stockopedia's "Screen of Screens" (SoS) was faring. After all, the MB is a hybrid between this screen and their Stockranks index. As it turns out, the SoS performed even worse, down by 3.5 per cent in March.

So this got me thinking  about the relative performance of the MB portfolio and the SoS since the beginning of this experiment. It is perhaps surprising that I haven't thought to do this earlier since to the basic challenge I've set myself is to see whether I can improve upon Stockopedia's SoS.

As I have argued before there is a simple and powerful logic to the premise that if there is any predicative power at all with screening, then the SoS should tend out perform others. However, combining this screen with the Stockranks index should provide additional value, by highlighting stocks with even better allround strengths.

Preparing the Analysis

Before I show the results of this comparison, I just want to talk briefly about how put this analysis together. It took me a while to figure out exactly how to do it, but I eventually worked out how to scrape both the Stockopedia website for the SoS data and Google to scrape the equivalent data for the MB portfolio. Stockopedia is mostly very good, but I find the charting functions for custom portfolios don't quite cut it and so I keep a replica of my MB portfolio in Google Finance for these purposes. Anyway, after a bit of fiddling about, here are the results:

Mechanical Bull vs Stockpedia's Screen of Screens (May 2013 to March 2014)

The results seem quite persuasive. The MB portfolio held a narrow lead for the first five months or so but then started to pull ahead towards the end of the year and into 2014. To illustrate this more clearly, I have added another data series, namely the the extent to which the MB has outperformed the SoS.

Everything is relative.

After a rather disappointing month, it is good to be see things in perspective. The MB portfolio has clearly held up rather better over the past few months than the SoS. As I try to keep reminding myself, everything is relative. As long as I can stay ahead of my benchmarks, then the long-term returns should take care of themselves.

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