The Bell Direct Strategy Builder allows you to sift through a series of pre-created share portfolios, all with different goals and parameters. It can help you build your share portfolio – or stress test the one you’ve got.Read Transcript
Hello I’m Jessica Amir, a market analyst with Bell Direct. Scores of academic studies have found that there’s great power in combining fundamental and technical analysis. Research also suggests earnings momentum stocks, i.e companies with growing earnings, generally see share price growth and outperform the market over time. Now it’s these very stocks at Bell Direct’s Strategy builder, powered by Trading Central allows you to find.
Once you’re logged into Bell Direct, you can access the Strategy builder under the tab ‘Research & tools’, then go down to ‘Strategy builder’. Here you’ll see a number of pre-built strategies in the ‘Featured Screens’ tab as well as ‘Community Screens’, which are strategies created by other Bell Direct users.
Now all the strategies have been back-tested taking the grunt work out of finding investments. Here’s an example of a ready-made featured strategy, ‘Earnings up, price cross’. This strategy has identified companies that have grown their earnings and their share prices have crossed their moving average price.
So, we can see over 100 stocks met that criteria and generated a 20% return year-on-year. Other ready-made strategies that I like are ‘Quality Stocks at a Reasonable Price’ and ‘Profitable and undervalued companies with manageable debt’. But today, we’re going to build a brand new strategy from scratch. So let’s click ‘New’.
Firstly I’m going to look for stocks that have got a market cap or market capitalization size of greater than $100 million. So click ‘Company Basics’ then ‘Market Cap’. Now this is simply filtering out some of the smaller less liquid stocks on the market.
Secondly we mentioned that academic studies have found that companies with earnings momentum and stocks with earnings momentum as well, generally outperform the market over time. So let’s look for companies that have earnings per share growth, meaning the last period’s earnings per share was greater than the previous period. So make that zero.
And finally let’s add a technical indicator. Even if you’re not very familiar with some of the individual chart patterns in technical analysis like oscillators and other indicators, that’s okay, you’ll still find this really useful. So let’s add a technical indicator that will show us a bullish signal. So click ‘Technical’, ‘Bullish indicators and oscillators’, click ‘Add’. Now we can see that we can pick a range between 0-5, the higher the range the better and stronger the bullish indicator. So I’m going to set my range from 4-5 of the top rated signals.
Now the exciting part, the result summary is below showing the top 10 and the detailed results summary here shows all the companies that met that criteria.
Once an investor has developed a model, you can back test the historical performance of the strategy using our back testing feature. Let’s do that by clicking ‘Performance’ then ‘Calculate Performance’. I’m going to back test this strategy we built on a buy and hold basis for three months.
So let’s click ‘Calculate the Performance’. Now this has compared our strategy against five years worth of historical market data, you can see here you can compare it to different indices, but we’re going to just compare it to the All Ordinaries. You can see the annualized return for our strategy produced a return of 7.1%, outperforming the All Ordinary’s index return of just 2.8%. Over five years, our strategy would have generated a return of 40.7%, again outperforming the All Ordinaries which gained 14.6%.
And lastly once you’ve built your own strategy or adjusted a featured screen, you can save that strategy for your use next time and even share it with the trading community. To do that, just click ‘Save Screen’, give it a name and tick if you’d like to share your created screen with others. You can also select to have any changes in the top 10 matches emailed to you on a weekly basis.
And lastly a very handy tip, if you’re stuck check out the help button here, it’s located in each section of Strategy Builder. It features user guides and more video tutorials. And that’s it!
Creating a strategy to help you pick out performing stocks is as simple as that. For more information check out our other demo videos on BDTV or on YouTube or chat to us online. Happy trading.Close Transcript