My worst stock tips of 2019, and how to avoid them

Here are three of the stocks I got seriously wrong in 2019, and what mistakes I made.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Close-up Of Wooden Blocks With Risk Word In Front Of Businessperson's Hand Holding Magnifying Glass

Image source: Getty Images

At this time of year it’s nice to look back on the best investing picks we made during the year, but I like to keep myself humble and focus on my worst too.

Big hole

That’s all I’ve got to show for my investment in Sirius Minerals (LSE: SXX) – part ownership of a big hole, which might turn out to be worth precisely nothing. As things are, it’s worth very little, and though I bought my shares at a significantly lower price than many, I’m still looking at an 80% loss. Thankfully, I knew it was risky and I only invested a small amount of money. 

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

With its vast potash deposits, I saw the company sitting on a hugely valuable asset, but the value of something like that when it’s still down in the earth is very different from its value when dug up and loaded into shipping containers.

I thought the difference in value would be plenty to get big investors ready to stump up the development cash needed, but sadly it hasn’t turned out that way.

How could you have avoided my mistake? Other than just never listening to me (which itself might be wise), the obvious answer is don’t buy jam-tomorrow companies that aren’t making money today.

Online shopping

In January, looking at the tie-up between Marks & Spencer and Ocado (LSE: OCDO), I saw no justification for the latter’s soaring share price, going as far as to suggest we could even see an Ocado share price crash in 2019.

That prediction was perhaps not quite as accurate as it might have been, as the Ocado share price is up 50% so far in 2019. What did I get wrong?

For one thing, at the start of the year I was still seeing Ocado as essentially just an online supermarket, while many investors had seen beyond that to the provider of automated warehousing and stock picking technology that is the Ocado Solutions division. And that shines a whole new light on the firm.

Being such an early mover, Ocado has become a one-stop shop for retailers wanting to set up or expand, and the latest deal with Japan’s Aeon is a great example.

I still think Ocado shares are too expensive, mind.

Fallen hero

I cringe when I read what I wrote in June about Neil Woodford. I suggested that if you’re considering investing in Woodford Patient Capital Trust (LSE: WPCT), which was on a discount of 33% at the time, it should be based your trust in Woodford’s stock picking ability. And I said “I still think he’s very good at the job.” Ouch.

Since then, the Woodford Equity Income Fund has been closed, and Woodford has been sacked as the manager of Woodford Patient Capital. And the trust’s share price has fallen a further 43%.

The discount to net asset value (NAV) is up to 70% now, though NAV has been downgraded several times since then, and investors fear there will be more to come when the fund’s new managers take over and unwind the bulk of Woodford’s unquoted and illiquid positions.

The lesson? Don’t invest in falling stocks until their troubles are over and you see clear signs of recovery.

More on Investing Articles

Mixed-race female couple enjoying themselves on a walk
Investing Articles

How I’d invest £1,000 a year to get passive income for life!

I’m looking to double my money by investing in a dividend stock that will give me a reliable passive income…

Read more »

Preparing a budget during a pandemic
Investing Articles

2 high-potential FTSE 250 stocks to buy and hold for 5 years!

The FTSE 250 is a good place to search for the next big British stocks. So, here are two companies…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Could my Stocks and Shares ISA generate £30,000 a year?

Over 2m UK citizens make some use of a Stocks and Shares ISA every year. Our writer considers if it’s…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

4 dividend stocks that can help me fight inflation!

I'm looking at dividend stocks to help my portfolio grow and overcome the impact of high inflation. Here are the…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

2 bargain UK shares trading at less than book value

Book value is a great way to value a stock. These UK shares are trading at a price-to-book ratio of…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

A FTSE AIM stock I’d add to my Stocks & Shares ISA in July

Henry Adefope highlights a FTSE AIM stock he believes could generate significant upside for his portfolio if he buys this…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’m following Warren Buffett and buying cheap dividend shares to build my wealth

I think this cheap dividend stock exhibits similar qualities to the companies Warren Buffett has in his investment portfolio.

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

2 cheap FTSE 100 shares I’m buying during the dip!

Andrew Woods explains that low P/E ratios and profitable businesses attract him to these two FTSE 100 shares.

Read more »