- your competitive edge| Achieve consistency… | |
| Strategies are the desire to achieve consistency in investment outcomes. They require a matching of the characteristics of shares to your investment mandate. Share by share selection may reap rewards, but without a defined mandate that applies selection characteristics to both buy and sell decisions, they are prone to under performing. |
Professional fund managers work to a mandate. The mandate defines their investment strategy. Mandates are characterised by the target population of shares that may be invested into (Profile), growth, dividend returns and and/or price bands (Value), and business characteristics (Risk). Professional managers apply their analysis while understanding the importance of timing (Momentum). A self directed investor is often typified by at best, a casually defined mandate. This in turn lacks cornerstones on which to make investment decisions. As a result, share selections can be arbitrary in nature, with limited quantitative analysis, either fundamental or technical. An approach which, over time can be prone to delivering 'hit and miss' outcomes. | |
What differentiates these approaches is focus. Focus equates to being able to analyse and select shares with characteristics that conform to the investment mandate. Market Shares enables definition of mandates to select shares and back test historical outcomes of the strategy. | |
| Buy Criteria | |
| Profile | Mandates provide a statement of your investment intent. They are a reference point to drive buy and sell decisions. Market Shares structures mandate definitions across factors of targeted shares (e.g. S&P ASX 200), investment horizon (e.g. short, long) and investment style (growth versus income etc). |
| Value | Investors can vary in the way they view value. Approaches include an assessment of a company’s financial fundamentals and a share's technical behaviour which analyse price patterns. Market Shares provides filters for both. Multiple filters may be set to combine the valuation approaches. |
| Risk | Risk is important if containment of losses is paramount but may be irrelevant if it is a penny dreadful strategy. Market Shares provides filters on fundamentals such as dividends, cash flow, business concentration and financial health. Technical coverage includes price volatility and market liquidity. |
| Momentum | Momentum indicators can be insightful in timing trades. Fundamental filters cover growth in earnings and dividends which are commonly sighted as price drivers. Technical filters include price strength and averages along with profiles of price behaviour in differing market cycles. |
| Sell Criteria | |
| Sell | Determining when to sell a share differentiates arbitrary from experienced investors. Taking losses may avoid further declines. But a price decline may simply be short lived. Market Shares provides filters to flag a review of shares that cease to match the mandate criteria. |