The Independent's Share Challenge is back

The Independent's Share Challenge competition is back with three new teams ready to prove they have what it takes to play the markets and beat the pros.

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).

Now in its third season, the contest this year pits a group of young students and an amateur investment club against one of the City's top stock market experts in a 12-month race to see who can rack up the most profits.

In theory, our investment professional, with his expertise and inside knowledge of how markets work, should find the race a doddle. But history shows the professionals have found the Share Challenge tough.

Last year, the Bucket & Spade Investment Club clinched the cash prize with a 30 per cent profit, edging out a team of students, who gained 27 per cent. The fund manager finished last with a mere 8 per cent gain.

It was a similar story in year one, when the student team trounced all-comers to take the Share Challenge title with ease.

This year, we asked Claire Jackson, a teacher at the Moat Community College, in Leicester, to select a team of her students to challenge for the top title.

They'll take on the Fairer Shares investment club, a group of amateur stock pickers with an impressive track record, and James Bevan, the chief investment officer of Abbey, one of the City's largest fund management firms.

The Fairer Shares Investment Club already knows that teaming up can produce big wins in the stock market. The club, which began investing together just three years ago, has already turned a 75 per cent profit on its own investments.

The 13 members met at John Lewis, in London's West End, where they all work in the retailer's IT department. Last year was the best yet for the club, adding 34 per cent to their portfolio value over the 12 months. Yet winning has not always come easily. When the club started in 2002, it was a bear market and most investors were losing cash. The difficult environment meant the amateurs learned early on how to invest defensively and choose companies with real investment potential.

In this contest, Paul Dolman-Darrall, the club's treasurer, says the team's strategy will hinge on a technical screening programme they have developed that sifts through stocks and finds those that meet certain criteria.

The method, which they now employ with their real portfolio, has in the past helped them dig out golden gems such as Paddy Power, the Irish bookmaker share that has shot up 200 per cent in just three months.

The students from Moat Community College are also putting the finishing touches to their investment strategy. Teacher Claire Jackson has assembled a group of eight students for the challenge. The four boys and four girls are aged 14 to 15 and belong to the school's "gifted and talented" programme.

Like last year's team, none of the students has any prior investment experience and all will have to work hard to catch up with their more experienced challengers.

"They are all very enthusiastic and believe they can do better than last year's competitors," says Jackson. "I'm pleased with their confidence but I don't think they actually know how difficult it is to pick shares and manage a portfolio for an entire year. They're in for a shock."

Meanwhile, with more than 18 years' experience working with stocks and shares, James Bevan could find this share contest is his most challenging investment yet.

With only five shares permitted in his portfolio at any one time, the share contest is at odds with Bevan's professional management style which emphasises diversification and asset allocation.

"When you hold such a limited number of shares, it means that stock levels will dominate, whereas in highly diversified portfolios there is more opportunity to develop an investment theme or technique," he explains.

Bevan believes these differences explain why none of the previous City experts has won the Share Challenge. In this year's contest, he hopes to break the pattern and finally score one for the City suits.

The rules

* The rules of play are straightforward. Each team will start with a fantasy cash pile of £5,000 to invest in the five shares they think are likely to produce the best possible gains.

* Any company listed on the London Stock Exchange, including securities listed on the Alternative Investment Market (AIM shares are excluded from the competition for readers, see above right) is eligible for the contestants' portfolios.

* However, any company chosen by the teams must have a minimum market capitalisation of £75m and a share price above 20p when the stock is initially selected.

* Each team can buy and sell up to five shares each month, enabling them to change their portfolios as and when market conditions require.

* Trading fees and stockbrokers' commissions are excluded from performance calculations for the purposes of the competition.

* The winner - the team that produces the biggest profit on their starting stake - takes all. At the end of the 12 months, the winning team will take home a £2,000 cash prize, sponsored by Abbey Sharedealers, the discount trading website.

* The race begins on Monday when the markets open and all three teams will choose their first five shares.

* You can stay on top of all the action in The Independent's Share Challenge this year by logging on to www.bullbearings.co.uk/independent.

Prove your stock-picking skills and win cash prizes

This year's Share Challenge is bigger and better than ever. In addition to our three teams of intrepid investors, the readers of The Independent can pit their wits against the professionals, too.

Save & Spend has teamed up with Abbey Sharedealers and the virtual-trading specialists Bullbearings to offer 10 £100 prizes over the next year to the readers whose stock market selections perform the best.

The contest is completely free to enter and unlike the real world of stock-market investment, you don't have to risk your money in the pursuit of quick profits.

We'll be running a separate competition every six weeks or so. To enter, just log on to the Share Challenge website ( www.bullbearings.co.uk/independent).

In each round of the contest, you need to pick the five shares that you think will produce the best gains over the following weeks, whether you're expecting takeover action, a bumper set of annual results or an opportunity that you think other investors have missed. The reader whose portfolio performs the best gets a £100 cash prize, which will be provided by Abbey.

The rules are simple. The shares you pick must be listed on the main market of the London Stock Exchange (Alternative Investment Market-listed stocks and overseas shares are excluded from the contest). Only performance during the contest dates counts, and the editor's decision is final.

The first round of the contest begins today and you have until Friday 7 April to make your selections using our website.

Once the deadline has passed, Save & Spend will then monitor the performance of everyone's share picks between Monday 10 April and Friday 5 May.

We'll announce the winner of the first contest in Save & Spend on Saturday 13 May and launch round two, with another £100 prize to pick up if you missed out this time.