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My Approach to Investing

Summary

I focus my efforts on small and mid-sized companies searching for those where the growth prospects are not reflected in the share price. I am disciplined about the valuation I am prepared to pay; I don’t like to pay over 20x forecast earnings and favour companies that are paying a growing dividend and have a prospective dividend yield of at least 2.0%. I search for companies generating strong cash flow and if not having net cash, then debt levels that is low to moderate. Where possible I like to meet management and understand what makes them tick and if they have a decent stake in the business so much the better; our interests are aligned! I like companies that are beating expectations and earnings forecasts are being upgraded. Ultimately I am looking for the “double whammy” that comes from a re-rating and from faster than expected earnings growth. Having found a potential investment I look at the share price chart as it can help with timing; so often resistance and support levels work. I size a position based on my assessment of the potential Risk and Reward of the stock. I hold between 20 and 30 holdings, making use of investment trusts for overseas or thematic exposure.

The most important number to me is the return of the Portfolio! I try not to get too emotionally involved with individual companies; if I cut a holding and it immediately bounces, so be it. All that matters is the return of the Portfolio, each month, each year, each decade!

I invest principally in the UK

I invest mainly in UK stocks as that is where I have gained my experience. There are clearly opportunities to invest in overseas companies, and it is fair to say that it is now much easier to get the information you need. I think that for a private investor, such as myself, with limited time resources, it is better not to spread my net too wide. For me, it makes sense to focus my efforts on a market where I have experience and familiarity.

I focus on mid and small-sized companies

I focus on mid and small-sized companies but not exclusively.

The FTSE 100 Index comprises the largest 100 companies and by value accounts for around 70% of the UK market, The FTSE 250, (the next 250 companies) accounts for about 25% of the market by value, and the FTSE Small Cap, FTSE Fledgling and FTSE AIM, the remainder.

The table below shows the percentage returns over 1, 3, 5, and 10 years to 31st December 2020

My Approach to Investing

Summary

I focus my efforts on small and mid-sized companies searching for those where the growth prospects are not reflected in the share price. I am disciplined about the valuation I am prepared to pay; I don’t like to pay over 20x forecast earnings and favour companies that are paying a growing dividend and have a prospective dividend yield of at least 2.0%. I search for companies generating strong cash flow and if not having net cash, then debt levels that is low to moderate. Where possible I like to meet management and understand what makes them tick and if they have a decent stake in the business so much the better; our interests are aligned! I like companies that are beating expectations and earnings forecasts are being upgraded. Ultimately I am looking for the “double whammy” that comes from a re-rating and from faster than expected earnings growth. Having found a potential investment I look at the share price chart as it can help with timing; so often resistance and support levels work. I size a position based on my assessment of the potential Risk and Reward of the stock. I hold between 20 and 30 holdings, making use of investment trusts for overseas or thematic exposure.

The most important number to me is the return of the Portfolio! I try not to get too emotionally involved with individual companies; if I cut a holding and it immediately bounces, so be it. All that matters is the return of the Portfolio, each month, each year, each decade!

I invest principally in the UK

I invest mainly in UK stocks as that is where I have gained my experience. There are clearly opportunities to invest in overseas companies, and it is fair to say that it is now much easier to get the information you need. I think that for a private investor, such as myself, with limited time resources, it is better not to spread my net too wide. For me, it makes sense to focus my efforts on a market where I have experience and familiarity.

I focus on mid and small-sized companies

I focus on mid and small-sized companies but not exclusively.

The FTSE 100 Index comprises the largest 100 companies and by value accounts for around 70% of the UK market, The FTSE 250, (the next 250 companies) accounts for about 25% of the market by value, and the FTSE Small Cap, FTSE Fledgling and FTSE AIM, the remainder.

The table below shows the percentage returns over 1, 3, 5, and 10 years to 31st December 2020

ABOUT ME

I launched this website in January 2012 so that I could share with other investors how I manage my investment portfolio; the JIC Portfolio.

There is complete transparency with the current portfolio and all transactions shown. I explain all trades through my blog and hope the site provides food for thought to more experienced investors as well as helping those who are new to managing their own portfolios. I believe JohnsInvestmentChronicle is unique: There are plenty of “tipsters” who will remind you of the “good ones” and quietly forget the disasters; I do not have that luxury as the Portfolio is there for all to see, backed with real money; mine! I have to confront my mistakes and deal with them; there is no hiding place! Above all, this is a true expose of the trials and tribulations of a private investor!

#jicportfoliotrade

#portfoliothoughts

#fundsportfoliotrade

#fundsportfoliocomment

I recommend downloading the Substack App and following JIC. As well as on this page, I post all my diary entries on Substack

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Stock Market Maestros: My takeaways from Lee Freeman-Shor's and Clare Flynn Levy's new book

Stock Market Maestros: My takeaways from Lee Freeman-Shor's and Clare Flynn Levy's new book

Stock Market Maestros: My takeaways from Lee Freeman-Shor's and Clare Flynn Levy's new book

#books The book follows eleven managers whom the authors rate as Maestros. They have achieved Maestro status because they have a high Behavioural Alpha Score and a high Payoff Ratio . They also measured Hit Rate . This is the percentage of stock picks that actually make money. As readers of The Art of Execution know, this has little bearing on investment success. The average investor in The Art of Execution has a hit rate of 49%. What distinguishes a winning investor from a l

Mar 233 min read

Seven Mistakes Every Investor Makes (and How to avoid them) By Joachim Klement

Seven Mistakes Every Investor Makes (and How to avoid them) By Joachim Klement

Seven Mistakes Every Investor Makes (and How to avoid them) By Joachim Klement

#books I thoroughly enjoyed reading this book, which, published in 2020, focuses on seven common mistakes made by investors. It offered a...

May 22, 20232 min read

"The Intelligent Fund Investor" - Practical steps to better results - by Joe Wiggins

"The Intelligent Fund Investor" - Practical steps to better results - by Joe Wiggins

"The Intelligent Fund Investor" - Practical steps to better results - by Joe Wiggins

#books

Feb 17, 20232 min read

“The Art of Execution; How the world’s best investors get it wrong and still make millions”

“The Art of Execution; How the world’s best investors get it wrong and still make millions”

“The Art of Execution; How the world’s best investors get it wrong and still make millions”

#books I've written a short review of "The Art of Execution: How the world's best investors get it wrong and still make millions" by Lee Freeman-Shor. You can read it below: First published on my website in July 2016 I have just finished one of the best investment books I have read in a long time; it contains some great little gems, which I hope will improve my returns. One never stops learning; I continually strive to become a better investor, and what better way than by lea

Sep 23, 20222 min read

Three Ex-dividends this morning and #books

Three Ex-dividends this morning and #books

Three Ex-dividends this morning and #books

Two ex-dividends in the JIC Portfolio: Gulf Keystone - 10.14p, although the company will confirm the exact sterling amount in the next...

Sep 22, 20221 min read

Thinking out loud, again!

Thinking out loud, again!

Thinking out loud, again!

#portfoliothoughts #books

Feb 12, 20224 min read

Commodities - Why do I have so much commodity exposure II - Metals

Commodities - Why do I have so much commodity exposure II - Metals

Commodities - Why do I have so much commodity exposure II - Metals

#portfoliothoughts #books #commodities

Oct 15, 20214 min read

"Richer, Wiser, Happier" by William Green and tweaks to my approach

"Richer, Wiser, Happier" by William Green and tweaks to my approach

"Richer, Wiser, Happier" by William Green and tweaks to my approach

#books #portfoliothoughts

Sep 24, 20214 min read

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