If you’ve been using the free trial of Stockopedia, you might be wondering if now’s the time to convert to a full trial. After all, it seems worth the price.
Or is it?
Stockopedia is by far, the best tool I’ve found so far.
That’s not to say that I’ve not made mistakes with it. But here are some things you might want to take note of before you commit your money.
It’s a stock-screening tool first, not a decision-making tool
You might wonder why I make this differentiation.
After all, it doesn’t seem to be that important.
Stockopedia ranks stocks based on a list of factors, and presents them to you.
You make the decision.
In October 2018, when I first used Stockopedia, my mistake was taking the top-ranked by StockRanks, and then going ahead to buy them.
Whilst one worked out, the other one, Sino Grandness, crashed.
Looking back, the mistake was in overly trusting the software, and not leaning enough on my heartware. You know, the heart that’s needed to understand a business, read into the financial reports, and see if there’s anything untoward in the business.
|Timing||Stocks bought||Price bought||Eventual exit price|
|October 2018||The Hour Glass||$0.65||Price now at $1.90, still holding onto unrealised gains of $10,000|
|October 2018||Sino Grandness||$0.20||Exited at $0.02 (lost SG$3000)|
|January 2020||First Real Estate Investment Trust||$1||Exited at $0.25 (lost SG$3100)|
|January 2020||Valuetronics||$0.805||Price now at $0.51|
It helps you find undiscovered stocks
One of the biggest gains I’ve gotten through Stockopedia is through the emergence of undiscovered stocks.
For example, just filtering through the top StockRanks can show you those that are doing well within the industry.
If you look at the above, it will show you those that are scoring well across the three different factors of value, momentum and quality.
These tend to be small-cap companies that may not be as researched, and thus have a greater price-value disparity. This means that the market has yet to discover their exact value.
For example, when I bought PropNex in December 2020, it was already showing strong growth on different factors such as the quality of its earnings, and the relative strength of its share price (how steadily the share price was growing).
It gives you clear-eyed comparisons
Another thing I love is the fact that it allows you to compare within an industry you’re looking to buy into.
When I wanted to add more Real Estate Investment Trusts for greater income to my portfolio, this helped me to compare which stocks were doing better quantitatively.
Here you can see how Frasers Logistics and Commercial Trust was doing better compared to the rest, which eventually resulted in me taking a position.
See who’s been adding
Another beautiful feature is the ability to see who’s been buying.
As a seasoned investor once told me,
When company directors sell, it can be for many reasons. For example, they might need the money to finance a new home. Their child’s education.
But when they buy, it can only be to make money.
It makes a lot of sense.
Company directors know best about how the company is doing, especially when they have first hand access to the financials of the company. If they are buying bigger positions, it can only mean one thing.
They think they are going to make more money.
Some may say that they might be using these buys to inflate the stock price.
But that doesn’t make sense. Why would you want to spend hard-earned cash, on a stock, to inflate the price, even if your compensation might be tied to the stock price?
Because if the stock price crashes back down based on poor fundamentals, you would likely lose your compensation.
Using the same example of PropNex, I also saw a strong trend of the Executive Director Kelvin Fong, adding to his position.
For me, this was a strong signal to buy more.
Don’t make these mistakes
That said, there are some mistakes that may be more common because of Stockopedia, compared to what you might usually use.
Overweighing quantitative factors, and not looking at the quality of the business
The numbers presented on the StockReport in front of you may bias you towards thinking that you’re making the right decision.
And as my investment in First REIT showed, this was a really wrong move.
When I entered this stock in January 2020, before the COVID pandemic struck, the stock looked great quantitatively.
I made a quick decision to buy it, given that it was ranked most highly amongst the other REITs.
But I didn’t peer into its financial health.
Here, it also looked alright.
But it wasn’t until the COVID-19 pandemic hit when I saw that the quality of the earnings were actually poor.
Whilst we could ride on the Indonesian growth story, and say that the healthcare business should have soared during the pandemic, it didn’t.
Lippo, the parent company of Siloam, which was a major tenant under First REIT, ended up having to restructure the leases.
Just compare the story of First REIT falling 75% with the story of Parkway Life REIT, which saw its earnings being extremely resilient.
If you’re going to use Stockopedia for your profit, you have to ensure that you understand the business.
You also need to understand what will happen if the worst case scenario comes to pass. Will the company you invested in still survive?
Not being willing to let go
Perhaps the biggest mistake I made was not being willing to let it go.
I kept holding onto the belief that First REIT would recover.
Soompah! Double confirm!
Even when it dropped in December 2020, I still held on.
Until January 2023, when I realised that it wasn’t worth it anymore.
I could put my money to far better use elsewhere.
Overcoming your own psychological biases is not going to be easy, even with the help of a tool like Stockopedia.
What I find is necessary is for you to make a review of the stocks you hold every week, so that when there’s a material drop of 20 to 33%, which Lee Freeman Shor has ascertained to the point where the best investors adjust; you do something.
Don’t just wait.
The tool is only as good as the person that uses it.
Use Stockopedia well, and it will yield you riches.