What is a successful year of investing without some regrets? After all, even the top performers could have owned a little more of something good or a little less of something that didn't work out so well. Considering that 2010 was a good year for the stock markets, but a lumpy one as well, there is no shortage of "woulda, coulda, shoulda" for this year. It is not all about self-torture, though. Sometimes an investor can learn valuable lessons by looking back at what they should have owned and should have avoided. (For related reading, also check out Finding The Right Stocks And Sectors.)
Should Have Owned: Materials
With the global economy rebounding out of the depths of the recession, commodity prices snapped back strongly this year. A wide range of industrial metals saw double-digit price increases in 2010, with iron, copper, aluminum, nickel and tin all substantially higher than a year ago. Not surprisingly, then, miners like Freeport McMoRan (NYSE:FCX) and Vale (Nasdaq:VALE) did quite well. In fact, "industrial materials" was the best-performing sector of the year and number two and three were not actually that close.
Should Have Avoided: Healthcare
2010 saw the multi-year malaise in healthcare continue. Angst and anger over the federal government's healthcare reform efforts cast a pall over the sector early in the year, but there was plenty of reality to back up the bad mood. As workers have lost jobs they have lost health insurance. Likewise, workers who still have jobs are feeling less comfortable about taking time off or opening their wallets for co-payments and deductibles. As a result, patient visits to doctors are down, as are procedure counts. Making matters worse, hospitals are still struggling to recover from the credit crunch, the recession and the losses in their capital funds - meaning there is less money to go around for capital equipment.
All in all, while there were winners like Illumina (Nasdaq:ILMN), Edwards Lifesciences (NYSE:EW) and Novo Nordisk (NYSE:NVO) that did well indeed, but malaise was the order of the day across drugs, devices and diagnostics.
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