At the beginning of January 2016, I recorded a selection of 52w high shares, and 52w low shares to see which would do better.
I’m not sure how I came up with the shares, I think I just pulled some figures from a website.
Here are the shares on 52w highs at 3 Jan 2016, together with their subsequent 1 year performance in percentage terms:
MONY -19.7, SMWH -12.6, BBY -0.1, BET 13.9, RCP 11.1, RMV -4.1, ISAT -35.1, LOOK -37.3, TCY 3.2
That averages out at -9.0% return for the year. There were supposed to be 10 shares in the selection, but I disqualified one because it looks like I made a transcription error. BET and TCY were taken over early in 2016, so I had made what amounted to an arb profit. In hindsight, I probably would have excluded them, which would have been to my detriment. In that case the return would have been -14.0%.
SMWH (WH Smith) had a fantastic run: in the last 5 years its shares were up 190%. Not bad for a boring old retailer. But trees do not grow to the sky, and it seems that the recovery theme had played itself out after such a good innings. Its Stockopedia value score is 47, so it appears to be only so-so value.
The 52w lows at 3 Jan 2016 were are follows:
NBLS 5.9, HICL 9.8, BHMG 5.1, SGC -26.1, SPD -52.3, MLC -1.0, P2P -18.2, TALK -23.1, ADN -6.2 MKS -23.6
That averages out at -13.0%.
The All-Share was up 13.3% over the year, thereby smashing both portfolios.
Lessons? Both strategies performed badly. They were about a tie in performance.
Bottom-fishing looks fraught with danger. It seems that investors did not spot how much worse things could get.
On the other hand, it all depends. If you had plumped for some resource stocks a year ago, which must have been close to their 52w lows, then you would have some big winners.
So basically, I learned nothing.
In the words of venerable entertainer Brucie Forsyth: “Oh, wasn’t that a shame”.