Be your own New Year tipster

Happy New Year!

As we enter 2024, investors start to look forward to what the next year has in store for the markets. This means that one thing is particularly prevalent at this time of year: tips, where market commentators try to predict which stocks will perform best in the coming year. The problem is that the average tipster is terrible at it. When Stockopedia researched the topic in 2020, they found that:

…the annual share tips from a selection of the most popular UK newspapers and specialist investor magazines tend to be inconsistent and underperform the market (the FTSE All-Share).

Journalist Tips

The Stockopedia research focussed on newspapers and investor magazines, where tips are written by journalists. Following the "City Slickers" scandal in 2005, where journalists were buying shares ahead of tips they wrote, the restrictions on journalists owning shares they write about are strict. In many cases, they are prevented from owning any individual shares. For this reason, the writers of share-tipping columns tend to be relatively inexperienced market participants who are paid for the quality of their story-telling rather than the correctness of their analysis. It is little wonder that these tips tend to underperform the market.

As well...