Some surprising facts for you to wonder about over Christmas:

  • Who would have thought that the best performer in the FTSE 100 would be Lloyds in the past year. Up 80%.
  • You would have known Aberdeen Asset Management would be up there if you followed my newsletter and blog – it is up 65% this year.
  • Would you have bet RBS would be up 50% or that Barclays would double in size? Well Barclays is a bad example. They are still at 1996 price levels. Buying Barclays shares is like being in a time machine.
  • With High St bankruptcies would you have bet on Next – now at £37 and up 35% this year. I remember as a student buying some at 22p!
  • Again if you looked at my blog during the year you would not be surprised I have liked Babcock and Wolseley this year – both up 32% so far.
  • Diageo and advertising agency WPP I continue to like into next year – also up 30%.
  • Who stinks? BG Group is down 25%. Morrison’s down 20%. And Anglo American and Tesco all down over 15% this year. If they return next year to regain the ground they lost this year you will make 20% return. If they regain half that ground you are still up 10%. I could live with that.
  • Vodafone annoys me. Charge me a fortune and still stagger at 1998 levels. But I bet you any money over the next two years it will at some point be up 20% from today’s value. And when it is – sell it!

And so here is a strategy. Find the companies which have been in the FTSE 100 for the past 10 years – so we know they are survivors. Then see which have lost more than 15% this year. Look to see if they have been about 20% higher than today’s price at some point in the past two years. Then work on the basis they will recover that at some point in the next two year – else you end up with a load of survivors anyway, but potentially make 20% on your money.

You know why people like property over shares. Property is leveraged so makes returns quicker – except at the start of a credit crunch. The same thing in shares is to ask your broker for a margin account – so if the above shares do that you make 40% say instead.

But beware – you could end up with holding sometime, like with property, in negative equity. But at least Vodafone pays a dividend.

Alpesh Patel