Just over a year ago, I bought Aston Martin (LSE: AML) shares. Given what they’ve put me through, it feels like I’ve been holding them for a lifetime.
The luxury car maker is by far the worst performer in my Self-Invested Personal Pension (SIPP), crashing 50% to just 60p in the last year. I shouldn’t complain. That makes me one of the lucky ones. Investors who bought when the company floated in October 2018 at £19 are down almost 97%.
FTSE 250 blowout
Still, hope springs eternal. The Aston Martin share price may recover one day. Canadian billionaire owner Lawrence Stroll seems hopeful, as he keeps emptying his pockets into the business to keep it on the road.
Investing is a long-term game, and patience is required. Holders will need plenty of that, so here are seven things investors can do while they wait for the shares to mount a comeback.
1. Stop kicking themselves. We all make mistakes. The key is to learn from them. I bought the stock as a bit of fun, but there’s nothing funny about losing money. So I won’t do that again.
2. Find someone else to blame. It’s not all the investors’ fault. They weren’t to know the Chinese economy would slow or that the US would slap import tariffs on foreign cars, and all the other shocks that have battered Aston Martin. Buying any stock exposes investors to shocks like these. Happily, there are lots of positive surprises too. Just not in this case.
3. Remember the joys diversification. Every investor should build a balanced portfolio of shares, to spread the risks. It also allows me to ease my personal pain by focusing on my winners and doing my best to ignore the smaller band of losers, headed by Aston Martin.
Watch and learn
4. Keep reading the company reports. One day some good news might arrive. Sadly it didn’t on 29 October, when Aston Martin posted a third-quarter loss of £112m, far worse than the £12.2m it lost a year earlier. Revenue for the first nine months dropped 26% to £740m. In its defence, these are tough times. Aston Martin is a strong brand and its models often get rave reviews. Brokers haven’t succumbed to despair. Consensus forecasts suggest the shares could hit 69.65p in 12 months, up 16% on today if correct. Two out of 11 analysts rate it a Buy. Although I do wonder what they’ve been drinking.
5. Learn from history. It often repeats itself. Aston Martin has gone bust seven times in its 110-year life. This is a volatile operation. New investors should only consider buying if they think the potential rewards will make it worthwhile.
6. See what else to do with the money. Anyone who put money into Aston Martin won’t have much of it left. Yet they should still ask themselves whether it could work harder elsewhere. Yet I won’t sell. I leave it sitting in my SIPP, to remind me of all the valuable lessons I’ve learned from this stock. And who knows, one day it may hit the road.
7. Go see a movie. Investing requires patience. Beaten-down stocks can recover, but they need time. Sometimes, it’s best to think about something else. Take a break. Go to the flicks. Just don’t see a James Bond movie. It’ll open old wounds.
