The UK stock markets have soared after a breakthrough in the search for a coronavirus vaccine was announced on Monday. Shares in companies in the travel and tourism industries, in particular, made remarkable gains. So which soaring UK shares did I buy this week? None. And I am okay with that.
That is not to say I have not benefited from the stock market surge. My holdings in Burberry and Wizz Air, for example, have both shot up in value. But I invested in these UK shares during the first nationwide lockdown because they fitted nicely with my investing style and plan. If this week’s events, and the stock market crash in March have taught me anything, it’s to have an investing plan I am comfortable with and stick to it.
Coronavirus vaccine in the news
I bought Wizz and Burberry in May 2020 because I believed they had strong enough balance sheets to see them through a protracted pandemic. And, once the pandemic was over, they looked likely to return to doing what they had done before the world had heard of the coronavirus. The stock market crash in March had decimated the share prices of these two companies, so all in all, they looked like bargain long-term buys.
I don’t trade short action price moves because I have tried and failed to do that profitably. And I am not alone as there is evidence that the overwhelming majority of day traders lose money. Within two hours of the coronavirus vaccine announcement, a lot of share prices had soared. Then they fell back as profits were taken. This pattern has repeated itself. Trading in and out of choppy price action like over such a short space of time is not for me.
Another UK share I decided to buy this year was National Express, which again had soared on the vaccine news as I thought it would when I wrote about it in August. However, as with Burberry and Wizz Air, I felt National Express was in a strong enough position to endure a protracted pandemic. I was not banking on a breakthrough being made this year for my investment to pay off.
UK share plan
These three stocks I have mentioned are not amongst the biggest winners this week. I felt a fleeting moment of regret when I realised I had previously decided not to buy some of the big UK share winners. But, I have had to remind myself why I made those choices. A lot of those companies are saddled with debt they needed to raise to survive. Without an earlier-than-expected resolution to the pandemic, they might have folded or had to raise even more debt. With enough debt, companies start being run for creditors and not shareholders.
I am not in the habit of buying shares that need something to happen quickly, or else I could lose everything. I won’t buy a stock just because its price is skyrocketing either. By the time I have read and considered why this has happened, most of the gains would have been gone. As such, I did not miss out this week on the biggest share price gains. The opportunity was never there because my investment style did not allow for it.
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James J. McCombie owns shares of Burberry, National Express Group, and Wizz Air Holdings. The Motley Fool UK has recommended Burberry and Wizz Air Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.