Buying shares can be a tricky business

A tip gone bad reminds John Stepek that buying shares in troubled companies in the hope that they can turn themselves around doesn't always pay off.

M&S: failing to cheer up its shareholders

Buying individual shares is a hazardous business. That’s why we have diversified portfolios and that’s why the majority of investors hold the lion’s share of their equities in funds of some sort, rather than holding individual companies. It’s also why I try to avoid tipping individual stocks – however convinced you are of a stock’s merits, you can never be sure that something won’t go wrong.

And so it has proved with my pre-Christmas share tip. In our 20 December issue, I suggested buying high-street stalwart Marks & Spencer (M&S), perhaps bolstered by the success of my 2018 tip, Next. I shouldn’t have got cocky – last Thursday, M&S promptly issued a Christmas trading update that sent its share price down by more than 10%. The group managed to grow like-for-like sales, but a poor performance from its clothing business saw disappointed investors sell out.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.