The COVID-19 pandemic caused tremendous volatility across world markets this year with the S&P experiencing an average daily swing of 5% in March.
The S&P 500 declined by over 30% between February and March this year – the fastest bear market from an all-time high in history.
The bounce-back was equally fast, with the Nasdaq composite and S&P 500 erasing their year-to-date losses in May and June respectively.
This rapid market recovery was mainly driven by big tech companies like Amazon, Apple, Microsoft, Facebook, and Google.
While tech companies quickly bounced back from the stock market decline in February and March, many other companies are still struggling to recover.
In hindsight, it is easy to pick shares to buy when the lockdown started in South Africa, but at the time the uncertainty and risk meant most investors preferred cash.
In April and May, it was not certain how long the lockdowns around the world would last and what the full impact of the COVID-19 pandemic would be. In fact, it is still not known.
Vestact CEO Paul Theron said in his daily newsletter he and his colleagues spent a lot of time to convince their clients not to sell their shares when the market fell.
These are the same clients “who were sure they would buy more stocks, but when the fall came, they actually wanted to sell everything”.
“We had to gently pull them away from the ledge. Buying more stocks was completely off the table,” he said.
Theron’s tale illustrates the fear and uncertainty in the market at the time.
Stock picks from analysts
Despite the uncertainly in the markets in April and May, many analysts and fund managers who were guests on Business Day’s Stock Watch trusted their instincts and picked shares during this period.
Stock Watch is South Africa’s premier stock pick show where markets experts share their views on which shares to buy, sell, or hold.
MyBroadband looked at the stock picks of Stock Watch guests in April and May, and the results were impressive.
On average, the shares picked by Stock Watch experts increased 26% over the last six months.
The best performing analyst was Sentio Capital’s Imtiaz Suliman, whose stock picks Alibaba and TFG increased by 76%.
Rand Swiss’ Gary Booysen and Sasfin Securities’ David Shapiro also performed particularly well, with increases of 47% and 38% respectively.
Here are the stock picks of Stock Watch experts in April and May, with the average performance of their picks.
The performance was calculated on the growth between the time to shares were picked and the closing price on 17 November.
Imtiaz Suliman from Sentio Capital – 76%
Imtiaz Suliman picked Alibaba and Foschini Group, which both performed very well over the last six months.
Gary Booysen from Rand Swiss – 47%
Gary Booysen picked Telkom and City Bank. Both shares performed well over the last six months, with Telkom increasing by close to 80%.
David Shapiro from Sasfin Securities – 38%
David Shapiro picked Ferrari, Nvidia, Prosus, and Berkshire Hathaway. All these shares increased over the last six months, with a particularly strong performance from Nvidia.
Mark du Toit from Oyster Catcher Investments – 36%
Mark du Toit picked African Rainbow Minerals, Afrimat, Anglo American, and British American Tobacco. British American Tobacco did not show an increase, but this loss was small in comparison with very strong growth by African Rainbow Minerals and Afrimat.
Mia Kruger from Kruger International – 36%
Mia Kruger picked Alphabet (Google) and Berkshire Hathaway. Both shares showed good growth over the last six months.
Nesan Nair from Sasfin Securities – 28%
Nesan Nair picked Prosus and Amazon. Prosus declined slightly since his pick, but Amazon increased so much that it easily made up for the small Prosus loss.
Chantal Marx from FNB Wealth & Investments – 25%
Chantal Marx picked BHP and Yum China Holdings, which both showed good growth.
Jean Pierre Verster from Protea Capital Management – 22%
Jean Pierre Verster picked Electronic Arts, Facebook, Progressive Corporation, and Metrofile. Facebook was the best performer of his stock picks.
Wayne McCurrie from FNB Wealth & Investments – 18%
Wayne McCurrie picked FirstRand and Shoprite and both companies showed steady growth since he made these picks.