There have been a lot of investment tips in the press during the first few weeks of 2013. With such a variety of opinions, which, if any should I believe? MARKET COMMENTARY.
Byline: Barry O'Neill Investment Director Carbon Financial
Looking back at last years predictions helps demonstrate why following them is bad for your wealth. Experts on both sides of the Atlantic warned at the start of 2012 that it would be a lean year for equities. Acting on that sentiment would have been very costly.
One high profile "Head of Equities" tipped 3 things to out-perform in 2012; the US stock market, the UK pharmaceuticals sector, and at stock level, Vodafone.
Ultimately, large US companies delivered broadly the same return as their UK counterparts, so you wouldn't be dining out on that tip. If you had simply invested in the entire developed world's stock market as represented by the FTSE World index you would have enjoyed a healthier gain of nearly 12%.
Pharmaceuticals fell by 1.82%. Ironically, telecoms were up 30.38%, and the much unloved banking sector was up by 39.64%. Again, if you'd just bought the whole UK market, i.e. the FTSE All Share index you'd have enjoyed a 12.3% gain.
Finally, Vodafone, the top tip, actually lost money. The shares fell by 8.5% meaning that they underperformed the FTSE All Share index by nearly 21% in a single year. So much for experts being able to predict the future!
You can waste a lot of time and money predicting markets and making decisions about your future wealth based on what the expert forecasters think will happen. The truth is that they get it wrong more often than they get it right.
E: firstname.lastname@example.org Investment Adviser of the Year PROFESSIONAL AdvisEr AWARDS 2013 www.carbonfinancial.co.uk
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|Title Annotation:||Business; Opinion, Columns|
|Date:||Feb 22, 2013|
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