Amateurs get a flying start in our Share Challenge

This year's Share Challenge competition is off to an explosive start, with the amateurs again proving they can beat the City professionals. After four weeks of trading, the Fairer Shares Investment Club, our novice stock-pickers from London, lead with profits of 4.4 per cent. James Bevan, chief investment officer of Abbey, trails in a distant second with a loss of 0.1 per cent, followed by the pupil team from Leicester, with a loss of 1.1 per cent.

Now in its third season, the contest pits a group of students and an amateur investment club against one of the City's top stock-market experts in a virtual share race to see who can rack up the most profits over 12 months. The winner will take home a cash prize of £2,000, sponsored by Abbey Sharedealers, the low-cost trading website.

In addition, this year we have expanded the contest so that readers can compete against the teams online for a chance to win monthly cash prizes (see below).

With sophisticated resources and decades of experience, the fund manager should breeze through the contest. But history has proved otherwise; two years ago, the student team won. Then there was a stunning victory last year from the Bucket & Spade Investment Club, which finished with profits of over 30 per cent.

This year, the Fairer Shares team is determined to continue the investment club winning streak. The members, who met in the IT department at the John Lewis department store in London's West End, formed the club three years ago to help them learn more about stocks and shares.

The club owes its success to a unique stock-screening system that helps scrounge out winning shares. Paul Dolman-Darrall, the club's chairman, says the system is based on "Garp", or growth at a reasonable price, the investment theory popularised by celebrated fund manager and stockpicking whiz Peter Lynch.

"It sounds complicated but it's actually quite simple," says Dolman-Darrall. "We look for companies that have sustainable earnings growth over recent history, meaning they have sold more this year than last year and the year before that," he says. "At the same time the share has to be at the right price, meaning it cannot be more expensive than the general market and must have a P/E [price-to-earnings] ratio that is less than the growth rate."

Carphone Warehouse is a good example of the Garp technique. The share, which has surged more than 13 per cent since the team bought it last month, fits all the screening criteria, including double-digit growth over the past two years (25 per cent a year) and a P/E-to-growth rate ratio of less than one (0.9 per cent).

Yet predicting market movements is never a precise science. Sometimes the most promising-looking companies can prove poor investments if they fail to win the confidence of other buyers. Plus Net, the Sheffield-based internet provider, was "the most exciting stock according to our screening system", says Dolman-Darrall, yet it plummeted 22 per cent a week after the club bought in.

Meanwhile, Abbey's James Bevan has yet to make his mark on the competition, finishing the first month with a small loss of 0.1 per cent.

His crop of blue-chip companies, including British Airways and BG Group, the gas company, have helped the expert avoid the volatile ride of the investment club, but also stifled his short-term gains.

Bevan, who has spent the last 18 years tracking the stock market and managing equity portfolios for some of Britain's largest asset managers, defends his cautious selection. "Right now the relative valuations of the large-cap stocks look more attractive against their smaller brethren than in recent years," he says. "Given the risks to global markets at present, it doesn't look prudent to bet big on small and mid-caps."

Despite a healthy stock market, Bevan believes the future looks more challenging and hopes his blue chips can weather tougher market conditions when they arise.

Finally, the student team from Moat Community College in Leicester. Apart from lessons in business studies, none of the 14 and 15-year-old pupils, has any experience with investing.

Claire Jackson, the team's teacher, says the students are adjusting to the ups and downs of the stock market and learning how to make solid trading decisions. "Like their predecessors, the students are wholly new to this. They don't have the experience of the other players," she says.

But Jackson is confident it won't take long before the students figure out how to find profits. "The one-year time-frame of this contest means all the teams need to be very dynamic," she says. "Like all new investors, the students need to do more research and come prepared to trade. I have no doubt they will soon catch on and start winning."

Digital Look, the investment portal, provides all the share data for the Share Challenge competition. For up-to-the-minute stock market information on all your favourite stocks and shares, visit www.digitallook.com

Join the Share Challenge and win cash prizes

* The Share Race teams may have started well - even the schoolgirls (pictured are getting to grips with stock picking) but they have nothing on John Barclay, this month's winner in Save & Spend's Reader Investment Challenge. Barclay's five shares gained 11 per cent profit in only four weeks.

* The retired naval warrant officer, 50, racked up the gains from the comfort of his home computer in Clapham. Clapham, Australia, that is. Originally from Scotland, Barclay is now an online reader of The Independent and an avid amateur investor. In the contest, Barclay bet big on mining shares, including Xtrada and Vedanda, which led to his windfall gains.

* You too can compete against the Share Challenge teams and other readers from around the globe with your own virtual share portfolio. Save & Spend has teamed up with Abbey Sharedealers, the virtual trading website Bullbearings, and online investment resource DigitalLook to offer nine more rounds of the Reader Challenge with £100 cash prizes to the readers who can rack up the most profits in four trading weeks.

* The contest is free and there's no risk because, unlike the real stock market, the game is played with "virtual" cash.

* Don't miss your chance to take part in round two of the contest. Log on to www.bullbearings.co.uk and register to play before 19 May. Choose the five shares you think will increase the most over the next few weeks.

We'll announce the winning player who scored the highest profits on Saturday 24 June, and launch round three with another £100 prize to win. Throughout the month, keep checking in to www.bullbearings.co.uk to see how your stock picks are doing.