Analysts’ recommendations have undershot the FTSE 100 for a seventh year out of eight according to the latest scorecard from wealth platform AJ Bell.
“The bad news is the analysts’ top picks failed to beat the FTSE 100 index in 2015, 2016, 2017, 2018, 2020, 2021 and now 2022, despite all of their diligence,” said Russ Mould, AJ Bell’s investment director.
So what to do in the current year given that record?
“Momentum players may feel inclined to go with the positive flow, especially as the FTSE 100 and FTSE 250 are off to a good start this year," says Mould.
“Contrarians may take the opposite view as they bear in mind legendary investor Sir John Templeton’s maxim that ‘bull markets are founded on pessimism, grow on scepticism, mature on optimism and die on euphoria.’
Mould adds that while euphoria is not evident (yet) 63% of FTSE 350 recommendations entering into 2023 were buys and just 8% sells,
The top five buys ranked by the consensus view were CRH (100%), Shell (95%), Endeavour Mining (93%), JD Sports (93%) and Smurfit Kappa (91%).
But if you are a contrarian the bottom of the list might be more useful
Propping up the field is abrdn (60% sell recommendations), followed by Kingfisher (31% sells) Rolls-Royce (37%), Sainsbury (31%) and Bunzl (28%).