You are previewing 7 Successful Stock Market Strategies: Using market valuation and momentum systems to generate high long-term returns.
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7 Successful Stock Market Strategies: Using market valuation and momentum systems to generate high long-term returns

Book Description

7 strategies with historic annual returns of up to 37% The long-term benefits of investing in the stock market are clear. For periods of ten years upwards, equities have delivered higher returns than any other non-physical UK asset class. Those investing for the long term should put their money to work in the stock market. In this easy-to-follow practical guide, Glenn Martin introduces seven strategies for index investment in the FTSE 100 and FTSE 250. These strategies can be followed by anyone willing to adopt a systematic approach and accept short-term risk in exchange for long-term rewards. Incredibly, even the most advanced strategy requires no more than an hour per week of your time. The seven strategies involve varying levels of risk. For those who want to commit the minimum time and take on less risk, there are two passive buy-and-hold strategies. Those wanting to commit a little more effort and take on higher risk - with the potential for higher rewards - can use a proven system to time when to invest in the stock market and when to hold funds as cash. The most advanced strategies, which carry higher short-term risk with the potential to achieve spectacular long-term returns, make use of the gearing offered by spread trading. Each strategy has a set of clear and simple instructions, plus there are historic performance tables and the expectations for future returns. Unique features of this innovative book include: -- How to construct a spreadsheet to produce a valuation of the FTSE 100 and the expected returns from a five-year investment in the index. These valuations constitute buy/sell signals which have delivered a profit for every historic period in the market. -- How to extend the spreadsheet to calculate post-tax returns tailored to your own tax circumstances. -- A Market Momentum System that uses simple moving averages to signal when you should exit the market to minimise the impact of major market crashes. -- 30-year track records for all the investment strategies. -- A system for creating a synthetic tax-free FTSE 100 tracker using FTSE 100 spread trades. -- A FTSE 100 spread trading simulator that enables you to test the historic returns you would have achieved according to your appetite for short-term risk. At the highest level of short-term risk, £1,000 would have grown to more than £12,300,000 over 30 years, with all of the gains being tax-free. Leaving your cash in a deposit account could see its real value whittled away by poor interest rates and inflation. If you are looking for a way to grow your money significantly over time by following a straightforward investment plan, then this book shows you how.

Table of Contents

  1. Contents
    1. About the author
    2. Risk and copyright warnings
    3. Acknowledgements
    4. Preface
      1. Why I wrote this book
      2. UK equities
        1. Why invest in UK equities?
        2. How to invest in UK equities
      3. What’s new
      4. Who this book is for
      5. Who this book is not for
      6. How this book is structured
      7. How to use this book
  2. PART A.BACKGROUND THEORY
    1. Chapter 1. Risks and Returns
      1. Why it is riskier to invest in cash than in the FTSE 100 or FTSE 250 over the long term
        1. The nature of long-term risk
        2. Inflation
        3. Why long-term returns from equities beat those of cash deposits
      2. Comparative risks and returns for different investment strategies
      3. Explaining the risks and returns of each strategy
        1. Cash
        2. Strategy 1a. Long-term investment in the FTSE 100
        3. Strategy 1b. Long-term investment in the FTSE 100, with freefall exits
        4. Strategy 2a. Long-term investment in the FTSE 250
        5. Strategy 2b. Long-term investment in the FTSE 250, with freefall exits
        6. Strategy 3. Long-term investment in the FTSE 100, with market timing
        7. Strategy 4. Long-term investment in the FTSE 250, with market timing
        8. Strategy 5. Long-term FTSE 100 spread trading strategy
        9. Strategy 6. Long-term FTSE 250 spread trading strategy
      4. Prospective future returns
    2. Chapter 2. UK Stock Market Valuation System
      1. The principles for valuing the FTSE 100
        1. The sources of value
        2. Measuring value effectively
        3. A five-year investment period
        4. Dividends at the heart of the process
      2. The detailed steps to determine current value
      3. Creating a spreadsheet to value the FTSE 100
        1. Setting up the spreadsheet template
        2. Inputting data into the template
        3. Inputting formulae into the template to get results
      4. Extending the spreadsheet to personalise investment growth
        1. Inputting data
        2. Inputting formulae into the template to get results
      5. The two main uses of FTSE 100 valuations
        1. 1. When to buy and sell
        2. 2. Comparing five-year investment returns with other investments
    3. Chapter 3. Adding Market Momentum To The Valuation System
      1. Using Digital Look to construct moving average charts for the FTSE 100
      2. Market Momentum System: Example 1
      3. Market Momentum System: Example 2
      4. Complete record of the Market Momentum System for the FTSE 100 and FTSE 250
  3. PART B.SEVEN STRATEGIES
    1. Chapter 4. Strategy 1 – Long-Term Investment In The FTSE 100
      1. How to maintain a long-term investment in the FTSE 100
        1. Disadvantages of unit trust and OEIC investments
        2. Maintaining an investment using an ETF
      2. Choosing the right FTSE 100 ETF
      3. Long-term historic returns of cost-effective investment in the FTSE 100
      4. Prospective future returns from this strategy
      5. Get a FTSE 100 valuation before you invest
      6. Summary of the strategy
      7. Strategy 1b. Boosting your returns and reducing your risk
    2. Chapter 5. Strategy 2 – Long-Term Investment In The FTSE 250
      1. How to maintain a long-term investment in the FTSE 250
      2. Choosing the right FTSE 250 ETF
      3. Long-term historic returns of cost-effective investment in the FTSE 250
      4. Prospective future returns from this strategy
      5. Get a FTSE 100 valuation before you invest
      6. Summary of the strategy
      7. Strategy 2b. Boosting your returns and reducing your risk
    3. Chapter 6. Strategy 3 – Boosting Long-Term Investment In The FTSE 100 With Market Timing
      1. Overlap between the Market Momentum System and the Stock Market Valuation System
      2. Summary of the strategy
      3. Track record of the strategy
        1. Assumptions
      4. Future performance prospects
    4. Chapter 7. Strategy 4 – Boosting Long-Term Investment In The FTSE 250 With Market Timing
      1. Overlap between the Market Momentum System and the Stock Market Valuation System
      2. Summary of the strategy
      3. Track record of the strategy
        1. Assumptions
      4. Future performance prospects
    5. Chapter 8. Strategy 5 – Long-Term FTSE 100 Financial Spread Trading Strategy
      1. What are financial spread trades?
        1. Financial spread trade example
        2. What is an equity future and how are the prices derived?
      2. The advantages of financial spread trading
      3. The potential disadvantages of financial spread trading
      4. The key decision elements of financial spread trading
      5. The FTSE 100 spread trading strategy
        1. Key success drivers for the strategy
        2. Summary of the strategy (gearing multiple of 7 and 27.5% stop-loss)
        3. Risk controls of this strategy
        4. Executing the strategy in detail (gearing multiple of 7 and 27.5% stop-loss)
        5. Track record of the strategy (gearing multiple of 7 and stop-loss of 27.5%)
      6. Optimising gearing multiples and stop-loss levels
      7. FTSE 100 spread trading strategy simulation tool
        1. Example of using the tool for gearing and stop-loss levels of 7 and 95% respectively
        2. Growth of the fund
        3. Using the simulator to test the impact of different gearing and stop-loss levels
        4. Preventing stop-losses at different gearing levels
        5. Trying other combinations of gearing and stop-loss levels
        6. Setting different gearing and stop-loss levels
    6. Chapter 9. Strategy 6 – Long-Term FTSE 250 Spread Trading Strategy
      1. Executing the strategy in detail (gearing multiple of 7 and 27.5% stop-loss)
      2. Trade entry and exit dates
      3. Track record of the strategy
      4. Using different gearing multiples and stop-loss levels
    7. Chapter 10. Strategy 7 – Running A Tax-Efficient FTSE 100 Tracker Through Spread Trading
      1. The basic steps to create the synthetic FTSE 100 tracker
      2. Financial comparison
        1. Assumptions
        2. Conclusions
        3. Notes on the calculations (in order of the fields)
  4. PART C.PRACTICAL CONSIDERATIONS
    1. Introduction
    2. Choosing the right investment vehicle for each strategy
      1. Strategies 1 and 2 – Long-term investment in the FTSE 100 and FTSE 250
      2. Strategies 3 and 4 – Boosting long-term investment in the FTSE 100 and FTSE 250 with market timing
      3. Strategies 5 and 6 – Long-term FTSE 100 and FTSE 250 spread trading strategies
      4. Strategy 7
    3. Recommended service providers
      1. ISAs
      2. SIPPs
      3. Online Share account (non ISA)
      4. Instant-access cash account(s)
      5. Spread trading firm
    4. Tax information
  5. Epilogue
    1. Appendix – Glossary Of Terms