[This is a fairly long piece. If you do want to print and read offline I have prepared a PDF version that is linked to at the bottom of this piece]
Introduction
It's quite surprising that it's already been 5 years since the start of the NAPS Portfolio. I remember being in Australia at the time of its inception and, as ever, feeling really anxious that markets were a bit hairy and had already had a good run. Well now, 5 years later, they've continued to have a good run and I'm still feeling anxious. I guess anxiety is a good thing - bull markets are built on walls of worry after all.
Well I'm delighted to report that the NAPS Portfolio has doubled over this time period - a 102% return at the close, which is 15% annualised. To be fair, I haven't factored in transaction costs, but the average dividend yield over this period has been about 3.5% which more than covers stamp duty (<0.5%), bid-ask spreads (<2%) and platform & dealing fees.
It's been a bit of a bumpy ride over the last couple of years, and I'll go into this in a bit more detail shortly, but you can see the five year performance of the NAPS (in blue) versus the FTSE All Share Index (in grey) which managed only 20% over the same time period.
The NAPS have quintupled the return of the FTSE All Share in only an hour's work per year.
![](https://images.stockopedia.com/user/5e0df6632f5a0Image_2019-12-31_at_3.38.01_pm.png)
Explainer
What are the NAPS?
For anyone new to the site you may not be familiar with the NAPS. As I only have the time to write rarely these days, I feel a brief explainer is due.
The NAPS is a "No-Admin-Portfolio-System". It selects the top 2 highest StockRank stocks from each of 10 sectors in the stock market, holds them for a year, then rebalances and does it all over again.
That's the essence. It's pretty simple and takes only a short period of time to put together. Over the years I got a bit carried away and made the process more complicated, but these tweaks have been to no added gain. At its heart this is a systematic process that's designed to remove any personal bias around share selection, and thus help reduce emotional attachment.
The NAPS piggy-backs a non-obvious phenomenon in the stock…