2023: an annus horribilis
This year has been pretty brutal for the average UK stockpicker. Apart from a brief period of optimism in January, the FTSE AIM All Share Index has declined almost continuously since then:
The Investment Association shows that, apart from a brief positive month in March, retail fund flows have been consistently out of equity funds for the last year. Most of those flows appear to have gone into fixed-income funds, which are now paying higher interest rates (although still below inflation.)
Focussing on proven factor styles hasn’t helped investors this year, either. Despite an excellent track record over many years, the Value Rank has underperformed the FTSE All Share this year:
As has the Quality Rank:
And the Momentum Rank performed even worse:
It seems any strategy that uses equal weight and hence is biased towards smaller stocks has underperformed.
Stocks swimming naked
While the returns of the AIM index and factor styles have been poor, the performance of some individual stocks has been abysmal. As Warren Buffett famously said:
“Only when the tide goes out do you learn who has been swimming naked.”
The real lessons in investing are learnt during the periods when companies struggle, and the access to easy capital is reduced. In this article, I will look at some of the worst-performing stocks this year and what investors can learn from this underperformance. I will see if investors could have got an inkling that these were swimming naked prior to the receding tide revealing all.
A quick screen reveals that three UK stocks with a market cap currently greater than £10m have lost more than 80% of their value in the last six months:
In addition to these big losers, I will take a look at what might be learnt from three well-known UK companies that have called in the administrators this year: Cineworld, Trackwise Designs, and Ince.
tinyBuild (LON:TBLD)
The tinyBuild share price started the year at over 100p:
However, things quickly started…
