The Motley Fool

15 shares you should have avoided in 2016

Despite enjoying a nice ‘Trump’ and ‘Santa’ rally for most of December, 2016 has nonetheless been an extremely volatile year for share market investors.

Unsurprisingly, a number of very popular shares have been hit pretty hard over the course of the year as they failed to live up to market expectations.

Since I highlighted some of the best performing shares yesterday, I thought it would only be fair to highlight some of 2016’s biggest losers today.

Here they are:

Company Market Capitalisation 2016 Return P/E Ratio Dividend Yield
Wellard Ltd (ASX: WLD)
$90 million -83.8%
iCar Asia Ltd (ASX: ICQ)
$80.2 million -74%
Slater & Gordon Limited (ASX: SGH)
$82.8 million -71.5%
Paladin Energy Ltd (ASX: PDN)
$132 million -67.9%
Rhipe Ltd (ASX: RHP)
$68.6 million -66.5% 81.4
Sirtex Medical Limited (ASX: SRX)
$825 million -64% 15.7 2.0%
Martin Aircraft Company Ltd (ASX: MJP)
$88.9 million -62.7%
Shine Corporate Ltd (ASX: SHJ)
$129 million -61.6% 6.1 3.9%
MG Unit Trust (ASX: MGC)
$190 million -60.8% 4.8 8.0%
Mobile Embrace Ltd (ASX: MBE)
$66.4 million -60.5% 12.7
Estia Health Ltd (ASX: EHE)
$587 million -60.4% 10.1 9.4%
Touchcorp Ltd (ASX: TCH)
$137 million -58.5% 12.4
CSG Limited (ASX: CSV)
$236 million -56% 7.3 12.2%
Capitol Health Ltd (ASX: CAJ)
$67.9 million -53.6% 11.9
Mcgrath Ltd (ASX: MEA)
$117 million -50.5% 9.2 5.2%

While this is a pretty sorry looking list of shares, it does highlight the importance of diversification when it comes to investing in the share market.

Although it is nearly impossible to avoid owning one or two losers each year, a well diversified portfolio will ultimately help you to limit your downside risk should a particular share lose 30%, 40% or 50% — sometimes in a single day.

In any case, shareholders who own any of those shares today must ask themselves if the shares are likely to make a meaningful recovery or are there better options elsewhere?

Personally, I wouldn’t be rushing out to buy any of those shares right now as there does not appear to be an easy path to recovery for any of them.

With that said, Sirtex Medical, Mobile Embrace and Touchcorp remain good candidates as ‘turnaround plays’ and I would happily keep them on my list of shares to watch in 2017.

If you want to give yourself the best chance of avoiding disappointment in 2017, then you have to read this!

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Motley Fool contributor Christopher Georges owns shares of SHINE CORP FPO. The Motley Fool Australia owns shares of TOUCHCORP FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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