A year of celebration as equity markets soar
A year ago this column offered some reassurance to readers that it is normal for markets to both rise and fall and not to give up when markets are going through a difficult patch. At the time the FTSE 100 was nursing a 12% loss for the year.
Twelve months later the mood has switched from commiseration to celebration. The FTSE 100 is now on track for a 12% gain this year and UK equities look like they are back in demand following a long period in the doldrums.
Staying invested in a difficult market (2018) has enabled investors to not miss out from a rebound in equities (2019) and so hopefully all of Shares’ readers will have made decent money this year.
Our annual stock picking portfolio has certainly delivered market-beating returns and we’ve also seen decent gains from many of our other investment ideas throughout the year.
Against this backdrop, it is important to stress that we don’t always get it right and we continue to learn from our mistakes.
For example, we got it wrong with retailer Ted Baker (TED) by suggesting that its shares looked cheap after a few problems. Unfortunately they are now even cheaper as the negatives continue to mount up. Fund managers also regularly get it wrong and their strategy is to make sure the portfolio winners exceed the losers.
The key message is that one investment failure does not make you a bad investor. Equally a year of success doesn’t mean you will always achieve strong returns going forward. After all, equities have historically delivered an average of 6% to 7% a year and you’ve just had considerably greater returns in 2019.
The outlook for investing in 2020 is encouraging with risks around Brexit and trade wars seemingly receding. However, with US markets now hitting yet another record high and UK markets on a comeback mission, don’t let overconfidence cloud your investment decisions. Remember to do thorough investment research and don’t simply buy anything because it’s going up.
Anyone looking for their latest dose of investment news should visit Shares’ website over the Christmas and New Year period to get information on market movements.
The weekly digital magazine is now going to take a break over the festive period and will be back on Thursday 9 January 2020. Until then, why not browse through our rich archive of online magazines and catch up on the Shares / AJ Bell Money & Markets podcast.
Have a great Christmas and I wish everyone a fantastic 2020.