Five bargain shares offer value opportunities for medium-term gains
The idea behind our annual Bargain Shares Portfolio is very simple. It’s to invest in companies where the true worth of the assets is not reflected in the share price, usually for some temporary reason, but where we can reasonably expect that it will be in due course.
Our portfolios are based on the investment ideas of Benjamin Graham (see box ‘Rules of Engagement’) and they have beaten the FTSE All-Share index in 13 out of the 16 years in which we have run them. During that time, they’ve generated an average return of 22.7 per cent in the first 12-month holding period compared with an average increase of 4 per cent for the FTSE All-Share.
My 2014 Bargain Shares portfolio ended the year down 16 per cent on an offer price-to-bid price basis using the opening market prices on 7 February 2014, rather than the lower magazine prices. Although this is better than the performance of the FTSE Aim index, it's miles adrift of the return on the FTSE All-Share index against which I have benchmarked all my portfolios over the years.
Simon Thompson presents his new Bargain Shares Portfolio, based on the stockpicking logic of guru Benjamin Graham
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