Investment Strategy +30% Annual Return Over Last Three Years

[ViljamiR]

Inspired by William O’Neil, I experimented with different figures, mainly earnings per share growth and changes in ROE. But then I found an interesting combination…!

So, the stocks seen above would have met the set criteria in recent years. It would have generated quite good returns!

Here are the criteria I used for my search:

Can someone tell me why this might be, as I am just a high school student at the beginning of my investing journey
Or is it just a coincidence? I know, as Sauli said, “the stock market has been having a particularly good party for the last 9 years,” ← correct me if I got it wrong, because I don’t remember exactly what he said

By removing the earnings per share criterion, I would have included a few more stocks per year that would have met the criteria, but they would have eaten into the returns somewhat (5-10%), so I decided to leave them out. They only yielded about -5-20% per year. (Scanfil, Taaleri, and some others)

Here is a “concrete” example of what the portfolio development would look like if, for example, stocks were selected based on 2016 results at the end of last year. Purchases are timed for October 30, 2017, and the closing prices of that day were chosen as the purchase prices.

P.S.
-The site does not offer all stocks listed on the Helsinki Stock Exchange, such as Nokia, Sampo, etc…
I would have gladly researched years prior to 2014 as well, but the service’s data did not extend that far back.
<-(2014 was not visible in Excel, but back then Scanfil, UPM, and Etteplan met the criteria)

[g3235286]

@ViljamiR

Can someone tell me what could be causing this?

All the criteria you’ve chosen reflect growth in results. The market situation has remained favorable, so it’s quite natural that stocks selected with those criteria have also performed well. It’s also important to remember that the Helsinki Stock Exchange has risen significantly this year as well, so you can find stocks with good return percentages using other criteria too.

These selected criteria are quite good for examining stocks, but one should not be blinded by them. If the market situation turns, the stocks that have received the most growth expectations will likely also fall the steepest. This, of course, is not automatic either; one must look at things more broadly.

[Verneri_Pulkkinen]

That’s a very good point, it’s worth thinking ahead to the next curve in stocks. And at the same time, it’s good to consider whether the growth and profitability of those companies are on a sustainable basis?

[Masse]

It’s good that a new young generation, with their Viljame, is getting involved again and believes in the salvation of stock picking. However, there’s nothing new under the market sun, so go ahead and try your own strategy. It’s funny how those return percentages dilute when you put real money into play – especially if you dare to put the hateful Mr. Index growing alongside it. This Mr. Index is so incredibly difficult to beat. That’s why, over time, peace of mind can only be found with Uncle Masse’s philosophy: “investing is entertainment, which is sometimes worth paying for.”