Here's a five-point plan to recoup this year's losses.
Here are three awful facts about the stock market in 2008:
* It plunged 35%;
* It hit levels first seen in 1996, and;
* About 95% of shares lost money.
It seems this year will be the market's worst since 1974 and I'm sure your shares suffered in the meltdown. Certainly the Champion Shares portfolio did not escape the carnage. During 2008, I published 31 'buy' recommendations for the Fool's share-tipping service. They covered 18 different companies of which 13 were recommended twice. At 22nd December 2008, the average loss from those 31 tips was 14.8%* and only seven showed a profit*. The comparable loss from the FTSE All-Share index was 17.2%*.
So what now for 2009 and Champion Shares? Here's my five-point plan to recoup those losses during next year and beyond:
1. First, I'll keep on ignoring the market: At the start of 2008, I never foresaw the FTSE losing 35% by December, crashing 20% one week in October and gyrating up to 10% either way on particular days. So I'm not going to waste time guessing how the index will perform next year... or any other!
2. Instead, I'm just going to look for good, cheap shares: I'm pretty confident sticking with a simple, fundamental-based approach is likely to pay off for Champion Shares over the next few years. In my view, backing shares that boast cash-strong balance sheets, employ owner-orientated managers and sport modest valuations remains the mostly likely route to long-term investment success.
3: I'll use my watch list, too: I have my sights on a number of time-tested businesses for Champion Shares in 2009, including supermarket Tesco (LSE: TSCO), engineering group Renishaw (LSE: RSW) and inkjet specialist Domino Printing Sciences (LSE: DNO). When I think their share prices become too cheap, the Champion Shares community will be the first to know.
4 And of course I'll refer to my existing 'buy' list: There is no shortage of well-run, cash-rich contenders I could 'top up' on during 2009. Current possibilities in the Champion Shares portfolio include lighting firm FW Thorpe, (LSE: TFW), spread-bet dealer IG Group (LSE: IGG) and software titan Microsoft (Nasdaq: MSFT). I could happily re-tip those three shares next year.
5 Finally, I'll try to avoid trouble: I didn't tip any banks, builders and miners during 2008 and I feel the total collapse of those sectors is likely to reverberate throughout 2009. Falling knives, such as debt-heavy pubs, retailers, car dealers and media firms, is another area that is likely to waste time and money next year. Most I fear will muddle along with a rights issue -- or go under.
What now?
As I say, the Champion Shares portfolio did not escape this year's carnage. But I'm confident my five-step plan should help the Champion Shares community recoup their losses during 2009 and beyond. I feel the Champion Shares mix of solid balance sheets, proven leaders and modest valuations should lead to index-beating returns -- regardless of when the credit crunch is resolved and the market in general picks up.
Of course there are no guarantees with my recommendations. Any of them could lose you money over time.
If you feel my five-point plan is a sensible course of action, I'd encourage you to take advantage of this free 30-day no-obligation trial to the Champion Shares service. The trial provides full access to every recommendation plus details of numerous other share ideas as well. I hope you can take up the offer.
Merry Christmas, happy investing... and the best of luck for 2009!
* Champion Shares returns are based on mid prices taken at the time of recommendation and include due dividends but exclude costs. FTSE All-Share returns are based on the FTSE All-Share total return index, which includes re-invested dividends and excludes costs, taken at the time of recommendation.
Risk Warning
You run the risk of losing money when investing in shares. Prices may change quickly, they may go down as well as up and you may not get back the full amount invested. You should not invest using money you cannot afford to lose. We have taken all reasonable care to ensure that all statements of fact and opinion contained in this publication are fair and accurate in all material aspects. Investors should seek appropriate professional advice from their stockbroker or other adviser if any points are unclear. Champion Shares gives general advice only, and the investments mentioned may not necessarily be suitable for any individual.
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