Frequently Asked Questions

Q - Is STAR 'paper' based, rather than being a computer software programme? 
A - The monthly bulletin is sent out early each month as an email attachment in pdf format. It is not made available to subscribers as a computer programme.

Q - Is the monthly update an email with documents attached?
A - Each STAR bulletin is usually emailed on the first Thursday of each month to subscribers as an email attachment. Each bulletin covers all the 300 shares and contains a sale list as well as the current BUY panels.

Q - As the update is every month, do you give tips as to when to sell the shares before the next update? 
A - The sale list is updated each month at the same time as the purchase lists and applies at the prices ruling at the publication date.

Q - How many shares per company do you suggest are purchased and in how many companies? 
A - There are purchase lists for 10 and 20 shares each month. The basic procedure assumes you divide the total amount to be invested equally between the 10 or 20 shares.

Q - On the income portfolio, is it assumed that dividends are reinvested immediately, taken out as cash or accumulated until they are of sufficient size to add another company to the portfolio?
A - As far as the STAR past performance records are concerned all dividend payments have been excluded from the annual results as have dealing costs. Turning to the live management of STAR income portfolios, some investors will no doubt wish to use dividend payments to supplement their income, while others may choose to build up income until the total is large enough to make an additional share purchase. What to do with dividend income is a personal decision for each investor. There will obviously be advantages in re-investing dividends in tax advantageous wrappers like SIPPs and ISAs once the total has built up to an amount that is, say, equal to the average unit holding already in the portfolio.

Q - The Market has recently fallen a lot. Should I sell now or wait?
A - Whitechurch Securities Limited, as producers of the STAR bulletins, does not give individual investment advice. However, we would repeat that the STAR growth and income selection methods are intended to be aids to long term investment and short term movements, however dramatic, shouldn't alter one's long term objectives.
Given a basic investment strategy it is probably sensible to defer creating a new portfolio, or making major changes to an existing one, when equity markets are volatile and unstable. When implementing an investment plan it is always important to distinguish between share trading and longer term investment.

Q - I see that share prices have changed a lot since the last bulletin was produced. Should I wait for the next one before buying or selling shares?
A - The ranking lists and purchase and sale tables relate to the prices given at the date they are produced. If share prices have changed significantly since the publication date (e.g. by more than 5%) it is probably better to defer action until the next bulletin and then act as soon as possible after receiving it.

Q. One of the shares in my existing portfolio does not appear in your full ranking list, even though it has a market cap. of over £700m. Has this company been filtered out for some reason other than size?
A - From time to time companies may slip out of the basic list either because a major share price fall has substantially reduced their market value, or there may be problems obtaining reliable consensus estimates.

Q - It appears that your performance calculations do not include dealing and related charges, as you reinvest the sale proceeds penny for penny into new purchases. Please explain, as at first sight if these charges are not included, your growth claims seem to be unachievable in real terms
A - Yes, you are quite correct that no charges are included as the exercise has been to compare the selection process per se with the FTSE ASI. However, with the STAR data it must be remembered that no account has been taken of any dividend income either.

Q - Do you recommend certain stop loss or limit levels?
A - As the STAR approach is designed to be one of long term investing with the signals provided by the fundamental purchase and sale lists we do not used stop loss or gain lock indicators. However there is no reason why an individual investor should not use them.

Q - What is the basis for your Rankings and how should this be used?
A - The ranking list represents the position of the relevant company in terms of future growth in earnings vis-a-vis its peers with the fastest growing companies at the top of the list.

Q - You say that it is in bear markets that the STAR system tends to underperform. However in your IC article you show that, in the 5 years since 1985 when the market fell, you outperformed significantly in 4 of them, and notably in the slump of 2000-2. Please comment.
 A - The under-performance was against a total return index. The STAR approach does less well when value investing is out of favour and when the analysts are slow to react to a bear market so that the sale signals tend to come too late.