We had some very interesting buys and sells among FTSE 100 shares in November.
Hindsight has limited value. But it can give us some idea of how sentiment might be turning. And in a key way, it looks to me like it is.
I’m going to pick out a few here, based on trading at investing services firm AJ Bell.
Dividends are back
All year, I’ve been banging in about how I rate investment manager M&G as a buy.
It’s the kind of firm that can suffer when folks are pulling their money from their investments to spend on food and mortgage payments. So, more than average risk, I’d say.
But share price weakness helped push the dividend yield up among the FTSE 100’s biggest.
Even now, after topping AJ Bell’s list of November buys, we’re still looking at a forecast 9.4%.
Taking profits?
Rolls-Royce Holdings is one of the most talked-about stocks in 2023. And having trebled so far this year, those smart enough to buy have done great. That’s not me, mind, I’m clearly not that smart.
Still, my main fear in recent months is that the price might have been pushed too high now.
New CEO Tufan Erginbilgiç has set high targets for the next few years. But I’m always wary of buying a stock on the back of a wave of optimism.
Interestingly, Rolls-Royce was the most-sold stock in November.
The return of value?
I take one key thing from these trading figures.
It looks like good old-fashioned value investing could be coming back into fashion again.
We see stocks like house builders Persimmon and Taylor Wimpey making a comeback.
I also see folks warming to British American Tobacco, after months of turning their backs on it. I know, it’s smoking and all that. So, yes, that’s the clear risk.
But British American is a leader in next-generation tobacco products. And the low share valuation and big dividend yield has been almost painful to see.
Never too late
I do think the market might be turning away from short-term sentiment-based investing, and towards a long-term value approach. It’s a regular cycle.
I just wonder why so many people left it so late?
To me, the best time to buy downtrodden value stocks is when they’re, well, trodden down the most. When pessimism dominates the outlook, and fills the financial headlines.
Still, a lot of us don’t like taking the risk in such dark days. And I can’t really fault that.
Make our own choices
Each of us has to work out our own approach to risk, and how much we’re happy to take when we put up our hard-earned money.
That’s why I didn’t buy Rolls-Royce shares when they were down so low. And I didn’t treble my money in 2023.
Oh well, at least the market is starting to agree with me on some of my favourite stocks for 2024.
Here’s to a prosperous and value-driven New Year!
