Forget the winners – ‘loser stocks’ are the best way to beat inflation

The DIY investment boom of 2020 drew hundreds of thousands of newcomers into the market who were eager to ride global stocks to new heights.

But the mood of the stock market has since changed as famous lockdown winners suffer an expensive fall from grace. Shares in Peloton, the exercise bike manufacturer, have dropped by more than 90pc from their peak last year. Zoom has fared slightly better but has still lost 72pc of its value in the past 12 months.

Investors seeking today’s best opportunities could do better by buying those that lost money during 2020 instead. On the London stock market, just one of 2020’s top 10 best performers has kept up gains this year, according to data compiled by the wealth manager Brewin Dolphin: the mining company Antofagasta, which has benefitted from the commodity boom.

The best performer in 2020, the technology-heavy investment trust Scottish Mortgage, has suffered a steep 40pc fall thanks to a wider move away from the expensive, speculative growth stocks that feature in its portfolio.

Meanwhile, of the FTSE 100’s worst performers during the pandemic, six have posted gains this year as previously out of favour “value” stocks have rebounded. The oil giants Shell and BP have gained the most: their shares have risen by 41pc and 22pc respectively so far this year.

Rob Burgeman of Brewin Dolphin said savers who started investing in 2020 needed to adapt their portfolios for a drastically different market environment. “The ‘growth’ stocks and trusts that led the way in 2020 have come back to earth with a crash two years later,” he said. “Shell and BP found themselves at the bottom of the FTSE 100 league table in 2020, when the oil price collapsed. But it has since rebounded to multi-year highs because of the war in Ukraine.”

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