Whenever we start a new year, it’s always useful to look back at the previous year for some insight. Of course, past performance doesn’t dictate future results, but there are definitely lessons we can learn and apply to the present. This is certainly true for stocks and shares!
So, I’m going to break down some of the best- and worst-performing US stocks of 2021 and provide you with some investing tips to carry with you over the next 12 months.
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What were the five best-performing US stocks of 2021?
According to research from Investopedia, using data from the Russell 1000 index, these were the five US stocks with the best-performing share prices in 2021:
|2||Upstart Holdings (UPST)||321.1%|
|4||Devon Energy (DVN)||175.3%|
|5||Continental Resources (CLR)||167.1%|
And the 5 worst-performing US stocks of 2021?
Here are the stocks that had a particularly bad 2021 and will be hoping for a better 2022:
|5||Peloton Interactive (PTON)||-71.3%|
Are there trends in the best-performing stocks?
Not much more can be said about the whole GameStop (GME) saga, and I don’t want to give the stock any more airtime. Although it posted the highest returns, it was one of the weirdest things to ever happen in the stock market. The only lesson you can take from its success is to expect the unexpected!
Overall, Moderna (MRNA) had another great year as vaccines played a big part in 2021. I expect vaccines to still play a role in 2022 but not on the same scale, which could mean lower returns. But who knows what the coronavirus pandemic will throw at us next?
Devon Energy (DVN) and Continental Resources (CLR) are both in the oil and natural gas sector. It’s an area that has seen huge price explosions for customers in the US and the UK in the past year. These issues don’t seem to be resolved, meaning low supply and high demand could lead to another good year for stocks like these.
What about the worst stocks?
It’s interesting to see that four out of the five worst stocks are all tech-related, albeit within different sectors. Tech did pretty well across the board in 2020. Then 2021 saw investors start to shy away from the highly valued, speculative picks.
The only non-tech stock, Peloton (PTON), suffered from a consumer trend reversal. Home gym equipment was highly popular during worldwide lockdowns. But, as normal life has resumed, and people are spending more time outside, Peloton (PTON) investors have been hit with a reality check.
So during 2021, it’s a good idea to stay alert and be cautious with anything that could be considered a ‘trendy’ investment. But still keep an eye on wider macro trends and large economic patterns around industries such as energy, finance and consumer goods.
How can you invest to make the most of stock gains?
For every great stock pick, there’s an equivalent stinker. It’s extremely difficult to predict how companies will fare throughout the year because the best and worst performances can be due to unexpected events.
However, one way you can make sure you’re exposed to the best performers is by using a top-rated share dealing account to invest in an index fund. For example, if you had invested in a broad US index fund like the S&P 500 or Russell 1000 in 2021, you would have seen returns of 26.9% and 20.5% respectively.
Granted, that’s a lot less than the 800+% returns posted by GameStop, but it’s really important to understand how much of an anomaly that event was.
There are also risks to passive investing like this. An index fund exposes you to the top performers, but it also exposes you to the worst stocks in the index. This is why the overall performance of an index can pale in comparison to the best shares it holds.
Make sure you have realistic expectations for 2022 and remember that you may get out less than you put into the market. So try and keep a long-term mindset and do plenty of research before jumping into an investment.