It’s the last day of 2019, a good time to reflect over the investing lessons learned during the year and prepare for 2020! Here are my key takeaways from the year:
1. When in doubt, go defensive
It was a year of uncertainty, driven by Brexit woes, the US-China trade war, and the Hong Kong unrest. But not all shares were impacted. Defensives or those whose demand doesn’t vary much with macroeconomic conditions unsurprisingly proved to be investing safe-harbours during the year.
A case in point is the FTSE 100 pharmaceutical giant AstraZeneca, whose share price has shown a slow and steady upward climb over the year, rising by over 25% from over a year ago as I write this.
AstraZeneca has a high price-to-earnings ratio (P/E) of 48 times, which is even higher than it was the last time I wrote about it being a good investment. There are plenty of other examples of defensives doing well, like the pest control provider Rentokil Initial and medical devices’ manufacturer Smith & Nephew.
2. Keep an eye out for the outliers
In a year where cyclical stocks, like those of consumer-discretionary companies, faced indifferent times, there were some that completely contradicted the broader trend by showing sustained share price increases.
JD Sports Fashion is one such, whose share price has more than doubled over the past year. Similarly, FTSE 100 luxury fashion label and retailer Burberry has not just managed to keep its head above water, its share price has increased by 30% over the year. I like that it’s looking forward to a good 2020 as well.
3. Brace for the unexpected
Not all retailers have had it easy. Quite the contrary, in fact. Things started to turn awry for fashion label Ted Baker at the end of last year, but that was only the beginning of a perfect storm for the company.
Investor favourite Sirius Minerals also had a tough year after two failed attempts at fund-raising, and the stock is now trading near all-time lows. Neither company is out of the running though, urging the investors to wait and watch how the situation plays out for them.
4. There are low-key money-makers around
Even if they rarely make headlines, some FTSE 100 companies are quietly making money for investors. These include Irish construction materials’ manufacturer CRH, whose share price is up by over 40% from the same time last year. Packaging provider Smurfit Kappa is another company whose share price increase has been quite good.
Going into 2020, I believe we are looking at a changed economic scenario and greater certainty, though the challenges will persist. But with the lessons learned in 2019, I think we can look forward to 2020 with greater confidence.
Happy New Year!
