This time last year, I remarked that it was impossible for us to know what would happen to stock markets once the Federal Reserve stopped buying Treasuries or the UK government's spending cuts started to bite more deeply.
Well, we know now. Once the crutch of quantitative easing was kicked away at the end of June, US markets lost momentum – and so did every other market. Throw in an Arab spring, a nuclear near-catastrophe, slowing growth and endless ructions in the eurozone and it's not hard to see why stocks in aggregate struggled to make much headway in 2011.
Our tips of the year did better, but not by much – you can read a full appraisal of their performance here.
We've stuck to the same approach this year. Although our weekly sell recommendations did conspicuously better than buys during 2011, we'll continue to recommend only buys for our tips of the year, since the vast majority of readers consider themselves buy-and-hold investors rather than short-term traders. And we've again divided tips into various categories that we hope will help you decide which best fits your investment objectives and world view. If you're cautious and income-focused, you might prefer our 'old reliable' or income stocks, whereas if you think markets will surprise on the upside, you may take a punt on our 'blue-sky' tip or play the recovery with a cyclical stock.
A lot of thought goes into choosing our tips of the year, and to give you an insight into the stocks we considered but rejected, we've included some other suggestions in each category. Many of them are already live tips, such as Croda and Bayer.
Finally, do bear in mind that at the end of the day these are just ideas that should serve as the starting point for further research. Only you can decide how to invest your money.
