Examining the relative performance of the UK and US stock markets during 2012 reveals similar results.
All of the key UK and US Market Indices rose in 2012 with the smaller midcap and smallcap stocks performing better than the larger blue chip stocks:
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Both UK and US stock markets continued their bull runs, which date back to 2009, and followed similar patterns.
Considering the largest companies first, the UK’s FTSE 100 rose 5.8% compared with a similar 7.3% rise for the Dow Jones Industrials.
The US NASDAQ 100 performed much better with a rise of 16.8% but, unlike 2011, this was beaten by the UK midcap and smallcap share markets.
The UK FTSE 250 bounced back from its 12.6% fall in 2011 with a 22.5% rise in 2012.
Similarly, the UK FTSE Smallcap index bounced back from its 14.9% fall in 2011 with an even better 24.4% rise in 2012.
Obviously, 2012 was a year for growth stocks and the FTSE 250, Smallcap and NASDAQ indices were the markets to find them in.
The AIM index was a disappointment again this year rising only 2% following its 25.8% fall in 2011. Perhaps 2013 will be its year?
If you are looking to invest in shares in 2013, you may be tempted to pick your stocks from the FTSE 250, Smallcap and NASDAQ markets again this year?
But regular readers of this How To Invest In Shares blog will know that we buy shares in companies, not markets!
Take a look at the following table and you will see why:
The first observation to make is that most of the indices had a majority of rising shares, with circa 70% to 80% of their company shares rising in price.
The exception was the UK AIM stock market within which circa 40% rose and 60% fell. Interesting!
AIM aside then, stock picking should have been a lot easier in 2012 than it was in 2011 – how did you get on?
Now let’s examine the last two columns.
After the first table, you would have been forgiven for reaching the conclusion that investing in the FTSE 100 or Dow Jones would have been boring and not made you much money during 2012.
Well, if you are buying company shares, rather than markets, you could have doubled your money if you had held the top performing share in the Dow Jones in 2012 – who says elephants can’t dance?
Whilst the top performer in the FTSE 100 did not double in price, it rose a whopping 85%!
Indeed, the top 5 shares in the FTSE 100 index rose more than 60%.
It seems that elephants can dance after all.
AIM Index Not A Total Disaster in 2012
The share price of the best performing AIM share in 2012 grew 987.5% during 2012!
If you held that share in your portfolio, you could have compensated for losing your money completely on 10 other shares and you would still have made money last year!
How did your share portfolio perform in 2012? Leave me a comment below.