We should have been buying like crazy in Spring 2009. Did you have the cash?
Hallin Marine Subsea (LSE: HMS) up 101% in December. Quintain Estates (LSE: QED) up 149% in August. And Imagination Technologies (LSE: IMG) up 75% in June. These are just three of the shares to have featured in my Foolish colleague Bruce Jackson's various monthly round-ups of the shares you should have bought during 2009. And over the year, of course, these stellar monthly performances have been trounced again.
Did you buy any of them? No, me neither. Even when a few of these sparkling performances were featured in advance in articles and discussion board posts here on the Fool.
Err, yes. And I'm thinking with particular regret of banks' preference shares, here, and of Hallin Marine Subsea, and of Barclays (LSE: BARC) in the early spring of last year. I took the plunge with precisely none of these wonderfully performing shares. That's right: not one.
The year wasn't a total write-off, of course. I've already detailed how I took all of my money out of Equitable Life, and placed it in a Self-Invested Personal Pension (SIPP). And while Equitable continued to slash its investors' policy values, the funds and index trackers I chose for the SIPP did rather well.
But otherwise, new money invested during 2009 was limited to a few select shares, in some cases topping-up existing holdings.
What held me back?
Natural caution, for one thing: I felt brave enough investing a huge chunk of my pension in the weeks between January and March. Psychology, for another: was every snippet of good news, genuinely good news -- or just a bear trap set by confirmation bias?
And finally, strategy also held me back. I plunge into AIM shares very rarely, these days, and many of the best gains were there. But not all the gains: a number of FTSE 100 and FTSE 250 shares had their moment of glory, and yes -- I missed the boat.
Take Barclays, for instance. Was I wise to avoid increasing my exposure to the banking sector, as I was already a holder of Lloyds Banking Group (LSE: LLOY), when banks were collapsing like nine pins? Or just daft, stupidly ignoring an obvious no-brainer? Comments in the box below, please!
The cupboard was bare
So what did hold me back? Ready cash, in large part. While it didn't help that I chose to subscribe twice to Lloyds rights issues (and the cash call in December was sizeable), I was unwilling to sell existing investments which were mostly performing well, and the inflow of spare cash wasn't enough to do much more than dabble.
That's a recession for you, of course. My best investing years -- in terms of cash parked in long-term investments -- are always in 'boom' years. 2006 and 2007 were great from that point of view. Ditto the mid-1990s. Even 2008, at least the early part, saw me take advantage of some juicy bargains.
Will he ever learn?
Hang on, though. I've been here before. I remember saying much the same thing in 2002. I actually have a strategy for times like these: don't over-invest in the good years, but keep some back as a 'war chest'.
So where was this war chest, when war came, shares were bleeding red ink, and it could have helped take advantage of stock market bargains aplenty?
Well, for one thing, I'd failed to follow my own advice to the extent that I should have. The war chest existed, but it was relatively small. Which was silly, because having seen the bargains on offer in March 2003 -- when the FTSE 100 hit 3,287 -- I'd every incentive to put aside a decent-sized sum.
It was also blown too soon. I hadn't expected things to get as bad as they did -- I certainly never foresaw the FTSE hitting 3,512 in March 2009 -- and so I was picking up bargains on the way down, rather than at the bottom.
So some of the way chest got invested in 2007 and 2008, rather than 2009. Silly, again. No, let me rephrase that: downright stupid. Always leave something back -- at least, that's what I'd intended.
Must do better
So here we are, with the FTSE at 5,500, a level it last touched (heading upwards) in early 2008, and before that, early 2006. In short, the train has left the station -- and not enough of my money is on it.
I'll pick up bargains in the months ahead, doubtless. But I'm already thinking ahead to the next meltdown, which at some point will occur. What's needed is a war chest. So by the time it comes, let's hope I've finally heeded my own advice.
More from Malcolm Wheatley:
Malcolm holds shares in Lloyds Banking Group.
