MOST investors have been led to believe that making money on the stock market should involve huge amounts of research, either poring over company accounts or sifting through endless charts of share prices.

So when someone recommends you can do just as well, if not better, by logging on to the internet for an hour a week it seems too good to be true.

That is the claim of Mark Shipman, a former fund manager who has recently published a book explaining a system with just two rules – when to buy and when to sell. “You can put too many rules into investment systems and overcomplicate them,” he said, “but my long-term investment system (LTIS) takes the guesswork out of where the stock market is going.”

He claims the strategy would have been successful seven times out of ten over the past 56 years, with an average profit of 75% – although his proof is frustratingly based on America’s S&P 500. His system would have given a buy signal in January 1995 and a sell signal in January 2001, for example, during which time the US index soared 179%.

All you do to follow his strategy is log on to futuresource.com and order a chart with three lines on it. One shows the weekly progress of an index such as the FTSE 100. The second works out the average of that index over the previous 30 weeks, recalculated every week. The third does the same for the average of the past 50 weeks.

The first line is naturally more volatile than the second, which in turn moves up and down more than the third.

When the 30-week line goes above the 50-week line, you buy. And when the 30-week line falls below the 50-week line, you sell. That’s it.

As the 30-week line is more heavily influenced than the 50-week by the recent trend, the system is a way of pointing out changes in the overall direction of the market - in other words, when sentiment has turned decisively negative or positive. It is a system know in the City as “momentum”.

The system is not perfect. Because of the inherent delay built into the two trend lines, it can take a few months to decide whether it really is time to act. For that reason, it would have failed to tell investors to sell ahead of a sudden collapse such as the 1987 crash.

And, as the chart shows, the lines crossed to give a sell signal only in January this year, three months after last year’s high point and six months after the credit crisis began.

“It’s only a guide,” Shipman admitted. “Everyone is very worried and panicky at the moment, and you are never going to get it precisely right, but this system does take you out near the top and puts you back in again near the bottom.”

As the panel explains, there is a big difference between Shipman’s simple approach and the tremendous amount of work carried out by the likes of legendary fund manager Anthony Bolton at Fidelity or the world’s richest investor, Warren Buffett.

They examine companies, study products and balance sheets, then interview the directors, before deciding whether to buy, sell or do nothing.

Shipman conceded that his strategy will not generate the returns of a Bolton or a Buffett. “This is for the novice investor,” he said. “I am teaching people how to play the piano, not how to become a concert pianist.”

Going back 56 years, Shipman claims the system would have given 20 sell signals and 21 buys, of which 15 of the buys would have been profitable. The average loss on the other six periods would have been 5.5% against an average profit of 75%.

Shipman, 45, claims to be a self-made millionaire several times over. Born in Crayford, southeast London, he started out in City dealing rooms before quitting in 1990 to start his own investment fund for wealthy clients, which returned 20% a year from 1990 to 1996. But he found that too restrictive so he wound it up 12 years ago and went into buy-to-let investing and then back to the stock market on his own account.

More recently, he has moved into writing and lecturing for their own sake. “It’s not the money,” he said. “I enjoy educating people and I enjoy the positive feedback I receive.”

His idea of following the moving 30-week and 50-week averages is not new. What has changed is that the numbers are readily available on a computer. That means professional investors like Shipman have been able to test the theory, going back many years. And, having shown it works, anyone can tap into it.

Websites such as digitallook. com and advfn.com allow you to draw charts, although you normally have to register.

Not all experts are convinced. Justin Urquhart Stewart of Seven Investment Management said: “These systems are a good educational discipline, but they don’t work all the time because if they did we would all be using them. But there is no substitute for detailed research into a few stocks, as in Jim Slater’s Zulu Principle.”

Shipman uses his system himself, but only for about a fifth of his investment fund, and then only for indexes such as the FTSE, Wall Street’s Dow Jones or the Nikkei in Tokyo.

He warns that it does not work very well when markets are drifting in no clear direction, and it is not suitable for individual shares unless an investor knows a lot about a company or industry.

However, it can be a good guide to whether to buy shares. “If the system is in a ‘buy’ mode,” Shipman said, “the logic is that a rising tide lifts all boats, so a bull trend in the overall market is also good for individual shares and sectors.”

And, as he argued two years ago in his first book, The Next Big Investment Boom, any investment system imposes a discipline and takes the emotion out of the decision to buy or sell.

He said then: “You have no time for chopping or changing your investment approach, but must proceed in a disciplined and methodical manner. You must remain focused and ignore advice to the contrary. You must learn to evaluate everything completely, devoid of sentiment, and maintain confidence in the ability of the investment strategy you have chosen.”

Shipman points out that many investors would have shied away from selling in January, and even now would be unsure what to do. But if they had followed his LTIS they would have forced themselves to sell, and not buy again until the 30-week and 50-week averages crossed once more, somewhere near the bottom.

“It does steer you through the bad times, and stops you from buying into a really sustained bear market,” he said. “Protection from the downside is important.”

The coming investment boom referred to in that first volume was commodities, and Shipman correctly forecast the price rises in gold, oil, copper and wheat.

He believes his LTIS works just as well in that arena, but again advises sticking to index or exchange-traded funds rather than risking money in particular commodities. “I think the commodities bull market has further to go,” he said, “but there could be a slowdown if the global economy hits trouble.”

As far as the stock market is concerned, though, Shipman admits that the acid test will come when the FTSE 100 chart gives that crucial buy signal.

Until then, he will keep playing in a band, run his racehorses and surf when the weather permits. He doesn’t yet have a system for controlling that.

Big Money – Little Effort by Mark Shipman, Kogan Page, £14.99 It pays to keep to the plan

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