DIY Investor Magazine
/
September 2016
38
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8
High relative strength of the shares compared
with the market Relative share price strength in the
previous month must be positive and relative
strength in the previous twelve months must be
both positive and greater than the one-month figure.
The only compromise Slater recommended was on
the relative strength of the previous month, which
may sometimes be mildly negative while a great
growth share pauses for breath. In this event he
would check the relative strength for the previous
three months. If that too is negative, it is
recommended to skip that share and look elsewhere.
9
A dividend yield Preference should be given to
companies that are paying dividends. Most of t
them do, and those that do not should be treated
with caution.
10
A reasonable asset position This is a low priority
for growth shares and is only of any real significance
if the company’s gearing is high. When gearing
exceeds 50%, caution is needed. In practice, Jim
Slater would increase this to about 75%, provided
cash flow was strong.
11
Management should have a significant shareholding
Slater recommends keeping an eye on Director
Dealings - if the directors are ditching large
shareholdings in their own company, this is likely to
be a significant indicator of troubled times ahead.
