eToro awards membership of The Legacy Club to those Popular Investors who made a profit for 3 consecutive years. Thank you eToro for the certificate.
Reflecting back on the last 3 years, 2021 was an easy year for all and it would have been difficult not to make money.
2022, by contrast, will probably serve as an indicator of who will outperform this decade. 2022 saw higher interest rates and geopolitical instability. I believe these features will be typical of the decade as a whole.
In 2022 most areas of the market – stocks, bonds, cryptos – did badly. The pockets of the market that outperformed were the Energy and Defence sectors (due to the Ukraine war) and Value in general (due to higher interest rates).
Moving to last year, 2023 was again an easy year for most, especially those investing in Tech. The people who did well in 2020-21 but whose portfolios plunged in 2022 could recover simply by investing in the large tech names. I would view 2023 as an aberration, not a year setting any new trends for this decade.
In the last 20 years of investing, I have made money in 17 years and lost money in three.
In 2008, the Global Financial Crisis caused a 16% fall in the value of my portfolio.
In 2014, my previous strategy of investing in microcap companies stopped working and I had to develop something new – the strategy I run today.
In 2018, I misjudged how much the slowing economy would affect cyclical stocks and had my worst year by far.
Each time, the losing years were followed by some of my best years.
It would have been a terrible mistake to stop investing just because of losing money over 12 months.
In the future, I expect more losing years will occur. Three-year winning stretches will occur frequently too.
The focus of the long-term investor should not be on the next year, but the next decade; or even better, the next 30 years.
It is over such timeframes that serious, life-changing amounts of money can be made.
Anyone can make 100% in a year, two or three by speculating in the right stuff at the right time.
But making 1000s of %s, as my portfolio has done over the past 20 years, requires patience and time in the market.
I hope that the Legacy Club Membership is one milestone on that journey.