The £1 million you didn’t make from the stock market

WHEN shares are gyrating market commentators like to say that things are “turbulent”.

This year we ran out of adjectives.

At the start of January the FTSE 100 was comfortably over 7,500. There was optimistic talk of when it might break 8000. In America, as Donald Trump liked to point out by way of taking credit, shares were going nuts.

By March 23, for reasons with which you are familiar, the market fell just below 5000, at a somehow pointed 4999.

And by mid-December it was back above 6500. So a supposedly low-risk index tracking fund lost money. But lots of folk did not.

We wondered if it were possible to have turned £1000 into £1 million by betting the very right way on January 1. The answer seems to be no, or not plausibly.

Hargreaves Lansdown has managed to get £1,000 to £297,212. So if you had invested £3,500 on January 1 2020 you would have £1.04 million today

The best performing stock in the FTSE 350 was AO World, the electronics retailer which returned 313%, and our investor with £1,000 would have ended up with £4,126 from just that share.

But just buying and holding stocks wouldn’t have done it this year.

Gallery: Jeff Bezos’ ex-wife and 2020’s other super-rich winners and losers (Lovemoney)

Here is the perfect trading plan, which involves buying the best performing stock each month and switching with immaculate timing. This hindsight investor would have turned £1000 into just under £300,000, if she had done this:  

 

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, says: “This would have been one savvy investor, with a lot of luck on their side to have actually made a succession of fortuitous deals. Switching and ditching stocks quickly isn’t a sound investment strategy and it’s best to hold a diverse portfolio of shares and funds.”

Sure, but where’s the fun in that?

Russ Mould at AJ Bell has a different hindsight strategy.

He says: “To get anywhere near £1m you have to look at AIM stocks. The simplest route was to invest in Novacyt.  If you’d invested £12,000 on 2 Jan and sold at the high point on 23 Oct your £12k would have been worth £1.023m. Or if you’d invested £16,500 on 2 Jan and sold yesterday, your £16.5k would have been worth £1.022m.”

 Novacyt, a Covid-19 stock, started the year at 14p. It reached a high of 1270p and is now around 900p.

Leaving improbable success stories aside, who suffered?

It is hard not to feel sorry for cinema stocks.

Streeter says: “The pandemic has been a horror story for Cineworld as delays to big releases and lockdowns forced the closure of movie theatres. Investors holding onto the stock have been cheered by vaccine breakthroughs which saw the share price more than double in November but it’s still languishing more than 70% lower than it was before the pandemic hit.’’

Here is a list of the most popular shares, according to HL, through all of 2020.

  • International Consolidated Airlines Group 
  • Unilever plc
  • Lloyds Banking Group plc
  • BP Plc
  • Salesforce.com Inc
  • Carnival plc
  • Hochschild Mining Plc
  • Ceres Power Holdings
  • Stagecoach Group plc
  • GlaxoSmithKline plc