- Loser stocks have done well recently, but we shouldn't trust this to continue.
- There are two proven ways to beat the market – momentum and defensives – and you don't need stock-picking skill to profit from these.
Buying loser stocks pays off. That seems to be the message of the last few months – but it is a misleading one.
I say so because of the performance of my no-thought negative momentum portfolio, which comprises the 20 stocks which have done the worst in the last 12 months. This portfolio rose 4.8 per cent in the second quarter, meaning that it has gained over 66 per cent in the last 12 months. Only two funds of the 242 in Trustnet’s database of UK all companies’ unit trusts have done better.