How did Stockopedia subscribers perform in 2022?

We’re closing in fast on the end of January (a month that has seen the FTSE and AIM All Share markets rally 3.4% and 2.4% respectively) and we’re perhaps ready to put the pain of 2022 behind us. But our annual subscriber survey results are in and - as always - our community has provided us with some interesting insights which we can all learn from.

So let’s return for a moment to 2022 - a year which started with a hint of uncertainty for Britain’s (and the world’s) continued economic recovery post-Covid, flew through a crisis in the bond market and ended (as last week’s retail figures have now confirmed) with the worst month for consumer spending since ONS records began. ‘Energy crisis’, ‘inflation’ and ‘interest rate’ have become market buzzwords and they’ve had a far stronger impact than the buzzwords that they have replaced: ‘lockdown’, ‘deficit’ and ‘bubble’. The FTSE All Share started the year at 4100 points and fell to a low of 3712 in October. AIM fared rather worse, down almost a third from its January peak to its October trough.

How did you hold up?

Not too badly, all things considered, as the chart below shows.

The 903 subscribers who responded to our survey reported a median performance of -9% in 2022. Almost a third of you ended the year with your portfolio in positive territory, with eight respondents managing to more than double their money. The most common performance ‘bracket’ was -10% to -20% with almost all respondents falling somewhere in the region of -30% to +30%. And only 6% of you had to endure a portfolio which underperformed AIM.

When we compare that to some of the returns of renowned fund managers, that’s not a bad performance at all. And considering you’d have had to have been overweight in the energy sector at the start of the year to have outperformed the FTSE (more on that below), there is a lot of comfort to be taken in these numbers.

As with any survey, these insights are prone to some inherent selection bias - those who were badly burned in this year’s market may feel less inclined to talk about. And as a once-a-year, end-of-year occurrence there is likely to have been some survivorship bias as well.

It’s also worth noting the open-ended nature of the question, which will have impacted the responses. Some of you may have recorded your performance versus the benchmark, others might have taken the average performance of the stocks in your portfolio. Trading costs and dividends may have been accounted for differently, too. But still, we hope the relative success of your fellows provides a little reassurance for the ongoing value of stock picking.

Where were your winners?

As mentioned, exposure to the energy market was the only sure fire way of outperforming the FTSE 100 last year. For global investors, the performance imbalance of the different economic sectors was even more stark, demonstrated by the figures in the tables below.

It’s therefore perhaps unsurprising that Shell was the top performing stock for almost 10% of our subscribers last year. Not only did Shell owners benefit from the 20% share price appreciation over the course of the year, there were also bumper dividend payments and a massive share buyback scheme courtesy of the group’s record-beating profits. Rarely have we had so many subscribers pick the same stock as their top performing holding in a single year.

Slightly fewer (7.7%) of you counted defence giant BAE Systems - the top performing share in the FTSE 100 in 2022 - as your own top holding. That might be because a large proportion of the 44% annual share price growth happened in the week Russian troops marched into Ukraine. Between 22 February and 1 March, BAE shares climbed 26% to 746p and finished the year at 856p. I have a hunch that most of you holding BAE at the start of the year were hoping to continue benefiting from the reliable dividend (which has been hiked every year for more than a decade) rather than an escalation of Russian aggression in Eastern Europe, but apologies if that is doing anyone a disservice.

And it wasn’t just Shell and BAE among the large-cap winners for our subscribers in 2022. BP, BHP and Rio Tinto (which all posted share price growth of more than 20% last year) were popular holdings. Indeed, large-caps dominated the list of top performing investments, with only a handful of small-cap stocks managing to rise to the top. Again, our data needs to be interpreted with caution, but your responses do mirror a fact that we already knew: small-cap stock picking was tough in 2022.

How are you feeling?

Still, most of you are feeling optimistic about your portfolio in 2023 - decidedly more optimistic than you are about the outlook for the market as a whole.

Perhaps that is because many of you benefited from your stop losses or sell decisions in 2022 and you’re now sitting on a nice amount of cash. Indeed, cash almost made the top 20 list of best performing investments for our survey respondents last year. And as 2023 begins, cash certainly isn’t a bad place to be. With plenty of cash in your portfolio you’re less likely to make irrational decisions to any continued volatility and you’re well placed to benefit from new opportunities as they arise.

It is worth noting the difference between your feelings for the market in 2023 and your own portfolio’s performance in the context of an interesting psychological phenomenon: overconfidence bias. Hundreds of studies have shown that we are all susceptible to this (one of my favourites is the one where 80% of Swedish people believed that they had above average skills in driving) and it can be especially pervasive in investing, preventing us from seeking ideas which don’t match our own, or forcing us to hold onto poorly performing shares for too long.

So this begs the question: why are you more optimistic about your own portfolio’s outlook than that of the market? Is it because you have the investment skills to outperform the market (or perhaps know how to best use Stockopedia’s tools to help you do so)? Or is it because your contrarian mindset can see opportunities in 2023 and the outlook for the markets isn’t actually as bad as current commentary would have us all believe?

Untangling your feelings on this point is very tricky (I think there are opportunities to be exploited in 2023, but perhaps that is because I am suffering from overconfidence bias), but if we look at the facts there are indeed reasons to be optimistic. The FTSE All Share had its low point in October when inflation peaked and since then has climbed steadily. There are hints that supply-side trends might soon help stabilise inflation, in which case central banks could loosen their tight grip on money supply. The era of free money probably won’t come back this year, but that isn’t necessarily a bad thing. Markets are more likely to reward rational, disciplined investors than those looking for a quick win.

How do we help?

This leads us nicely onto the most self-indulgent parts of our questionnaire. Consistent with previous years, the overwhelming majority of survey respondents said that Stockopedia has given them more confidence in understanding the stock market. We hope that subscribers continue to use Stockopedia’s tools to help them make wise choices in the year ahead.

Speaking of the tools - the StockReports continue to rank very highly, with almost 70% of you finding them the most helpful tool in our armoury. We’re especially encouraged that the StockRanks proved just as helpful as they have done in previous years. As the Ranks approach their 10th birthday they are being tested by a bear market for the first time and we’re encouraged that they’re still helping so many of you with your investment decision making.

Editorial still comes in third place, but has dropped off slightly in terms of the proportion of you flagging it as helpful. As always we’re grateful for your feedback - let us know what you’d like to see more (or less) of in the comments. And we’ve got a newcomer in the league table following the launch of the improved Director Dealings tool towards the end of last year. We can learn a lot from directors’ interest in their companies and hope to keep providing useful insights with this data in 2023.

As 2023 begins I am sure I am not alone in pondering some difficult questions: should I sell the tech companies which have collapsed or will that just be crystallising a loss; is there any point in attempting to identify growth opportunities right now; share prices have fallen, but does that mean stocks are actually good value? The list could go on. And then there is the biggest concern that you have flagged to us as 2023 starts: how to invest during a recession? There is no one correct answer to any of these issues (investing part of everyone’s own personal financial planning), but keeping a steady head, sticking to your long-term objectives and not getting swept up in the story are the key themes which we hope we can help with.

Thank you to everyone who has responded to our survey this year and to all of our subscribers for your continued support.

As ever, safe investing.