The last two years saw decades of accepted financial truths crumble before our eyes: That high street banks don't go bust. That nationalisation is gone forever. That oil prices would never again fall below $50. Many very popular and long-trusted investing themes took a hammering too. Investors who rode the mining supercycle took a tumble with some stocks falling by 80 per cent or more.
There was a brick on the head too for those who thought that housebuilders had learned enough from the last recession to avoid problems this time around. The idea that commercial property returns were not correlated with that of the stock market hit a wall too, as both markets dived in tandem. Allegedly defensive sectors didn't do too well either. While big pharma has done okay, those who thought biotechnology had defensive appeal didn't reckon on the true ferocity of the credit crunch and its intimidation of venture capitalists. Likewise, food companies may have outperformed the wider market, but there has been plenty of anguish and pain among key players like Premier Foods and Uniq.
Many investors will be rethinking their portfolios in the first month or two of 2009, and tossing out old and discredited investment ideas, as well as the stocks that embodied them. This is a useful exercise of course, one that all investors would be advised to regularly undertake. The trouble is that sometimes you can go just a bit too far. The recession, banking crisis and the stock market falls that heralded it may tempt us to throw out a few useful babies with that old bathwater. So if having sold out of the worst performing shares you are tempted to start deleting online watch-lists of your favourite stocks of 2007 and before, you might be wise not to prune too harshly. Here are just a few of the investing themes which seem to have been discredited in the last year - but which may well be profitable again within a year or two.
