Tips of the Week Review 2013

The good news is that the key headline figure for 2013 is an impressive one. On average our 2013 buy tips - measured on a mid-to-mid basis not accounting for dealing costs - have done almost three times better than the market, rising 14.1 per cent on average. The sells have not done so well, as they have also outperformed. The sells are ahead of the FTSE All-Share by an average of 4 per cent and rose 9.1 per cent on average.

MAKING SENSE OF THE STATS

But what do these numbers actually mean? As our weekly tips are published throughout the year, the performance is measured from the date of publication to the end of 2013 or when the tip was closed out (this means moving to a sell recommendation in the case of a buy tip or to a hold or a buy in the case of a sell). For each share tip, the FTSE All-Share is tracked over a corresponding period to work out a relative performance. This means the contribution to the overall 2013 performance figures for some of the shares we tipped last year is as short as a week, while for other shares it spans a full year.

The average reported performance of our buys and sells is not only heavily impacted by the timing of tips, it is also heavily influenced by the extremes of tip performance. While the average share-price rise experienced by our buy tips was 14.1 per cent compared with 4.9 per cent from the index over all the aggregated tipping periods, this was skewed by a cluster of very strong performing shares. The median (middle) performance of our buy tips was actually a 10.2 per cent rise compared with 4 per cent from the FTSE All-Share.

While looking at the median performance dampens down the gains posted by our buy tips, it actually improves the performance stats for our sells. Looking at the median performance, the sells actually underperformed the market with a 3.1 per cent rise compared to 5 per cent from the index.

Perhaps one of the most relevant statistics for readers is how often our buy tips outperformed the market and how often the sell tips underperformed. In the case of our buy tips - all 163 of them - the shares outperformed the FTSE All-Share 64 per cent of the time. That's not a bad hit rate in our opinion. However, we would certainly have hoped to have done better with our sells which only underperformed the market exactly half the time - and remember that's before taking account of spreads and dealing costs so our stats do flatter themselves a bit.

STYLE INTO SUBSTANCE

In terms of investment style, it was our growth tips that were the major success story in 2013. Out of the 58 buy recommendations we classified as "growth", 72 per cent outperformed the market. This was where many of our really big winners were to be found and the average growth share-price performance came in at 21 per cent compared with 5.1 per cent from the FTSE All-Share. As with the buy tips in general, the result was skewed by some really big winners among our growth tips (see table), but the median average performance of these shares was nevertheless an impressive 13.9 per cent.

After our growth tips, it was our "value" tips that were next most successful. Two thirds of the 59 tips classified as value outperformed and the average share-price gain was 14.3 per cent compared with 4.6 per cent form the FTSE, while the median performance came in at 12.4 per cent compared with 3.9 per cent from the index. These tips include our income tips, so the overall reported performance is likely to have suffered due to dividends not being included as a factor in our performance calculations. However, focusing solely on share price will probably have benefited the relative performance reported by both our growth and "speculative" tips.

Unfortunately, our speculative buy tips needed all the help they could muster. Only a little over half the 46 speculative tips outperformed the market and the average performance of 5.1 per cent was only just above the 4.9 per cent from the FTSE All-Share. On a median basis the performance was 4.6 per cent compared with 3.9 per cent from the index. Our overseas share tips, which are spread across the various investment styles, were also less than convincing in 2013 with only half of the 20 outperforming the market. That said, the average performance of these tips was reasonably good with an average share price rise (measured in the shares' home currencies) of 10.2 per cent or 8.1 per cent taken at the median.

By their nature, it is never going to be easy to form a very clear narrative around the performance of our weekly tips due to their sheer volume and the variety of time periods they cover. However, our rough and ready assessment seems to indicate that on the whole we have done pretty well buying shares in 2013. Unfortunately we can't be so proud of the less-prolific portion of our output - the sells. Hopefully we can do better in 2014 and build on the buying success.

ALL THE BUYS

ALL THE SELLS

source: S&P CapitalIQ