Share tips: Don't trust the newspaper pundits

30 January 2017

I was fascinated to read in Private Eye that only one major newspaper – the Sunday Times – beat the FTSE  100 index with its share tips for 2016.

The FTSE 100, which represents the performance of the 100 largest companies listed on the London Stock Exchange, ended the year at an all-time high – Private Eye says this is 14.4%, which is actually wrong, the flagship index posted 19.1% for the year.  

By contrast, the Sunday Times’s portfolio of eight companies for 2016 showed an impressive average gain of 26% for the year. Private Eye also reported that the Telegraph managed an average gain of 5% on ten picks, the Daily Mail, a gain of 3.3% and the Times’ ten tips produced 2.4%. Meanwhile, only one of the Guardian’s ten tips beat the index, while four complete “dogs” showed losses of 25% to 53%.

I also looked at Investors Chronicle, where I previously worked, which specialises in company share tipping. Its journalists reported a “disappointing” year for their eight tips, stating:  “The 15.2% total return was not too shamefully far off the index return, but clearly we would have liked to have done much better.”

All of this goes to show that picking company shares is extremely difficult and best left to those who want to do it for a pleasant hobby, and with some of their money, not the bulk of their retirement fund. To find out if this is for you read Are you ready for company shares?

Most investors, particularly when starting out, are better off investing in a highly diversified managed investment fund. Whether it is passively or actively managed is a personal choice - read our active vs passive head to head debate to see which arguments convince you more.

The average performance of the entire Moneywise First 50 Funds range in 2016 was 14.6%. However, bear in mind that our list includes funds that invest across all major asset classes, including UK and global shares, government bonds, corporate bonds, commercial property and gold. 

Also, the list is not intended to be a 'tip list' of funds to buy this year. It's intended to be a list of good investments to buy and hold for the long term - at least five and preferably ten years.