The Motley Fool

How did my stock picks for 2020 perform?

Image source: Getty Images.

In normal times, the New Year is a period to look back upon the year that’s just gone. It’s a time to appreciate what went well and learn from what didn’t go so well. This one’s a bit different. 2020 was a year that virtually all of us will want to forget. Even so, I’m going to use this time to look back at how my stock picks performed in the most unusual of periods.

Throughout 2020, I picked out 36 stocks that I thought would make good investments. The stock selections covered a range of industries and company sizes. They also had varying risk profiles, while the underlying companies where also at different stages of maturity. Some of the stocks were picked twice, so here I’ve only included the returns from the first time I chose a particular share.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

How did I do?

Assuming all investments were equally weighted and made on the day I wrote about them, the potential stock picks for my portfolio would have finished the year up 3% (without including dividends). Investing the same amounts, at the same time, in the FTSE 100 would have produced a return of 0%. Meanwhile, investing a lump sum in the FTSE 100 at the start of the year would have lost 14%.

Some 61% of the portfolio gained in value. Of note were the performances of Ferrexpo (+58%) and Goco (+42%), but there were another six stocks that returned over 20%. What this means is that the performance of the portfolio was significantly weakened by just a couple of stocks.

In this case, it was Costain (-64%) and IAG (-52%) that caused the damage. Taking just these two shares out of the portfolio increases the return to 7%. The portfolio’s returns also show a clear divide between before the pandemic began in March and thereafter. Stocks picked before mid-March lost 13%, compared to a gain of 14% from those picked after that point.

In fact, the biggest drags on the portfolio (IAG and Costain) were both picked at the beginning of March. Looking back to that point, it seems clear that I didn’t appreciate the true scale of the pandemic and the lasting effect it would have. But making mistakes is part of investing. Experiences like this allow us to make better decisions in the future.

Investment lessons from 2020

More than anything else, I think these results show how important it is to buy shares at low prices. This provides us with a serious opportunity to make outsized returns. And prices tend to be at their lowest during a stock market crash. That’s certainly what we saw this year. It may seem like a scary time to be investing, but in fact I think it’s a great time to buy.

Another thing to take away from the performance of my stock picks is the benefit of investing regularly over the course of a year, as opposed to investing in one lump sum. This way we buy at a range of prices. Although admittedly, the difference isn’t usually so marked as it was this year. Investing in a number of different stocks also reduces risk and improves our chances of achieving positive returns. After all, 39% of my portfolio lost value. Investing in one of these stocks on their own could have been disastrous.

Speaking of outsized returns...

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Thomas has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.