This is a fortuitous time to be looking back at 2018’s best and worst stocks. As I write this the Dow Jones has dropped over 4000 points since it’s high in October. You’re wondering, “How could this possibly be a good time to talk about stocks?”

It’s because one of the most valuable lessons of being an investor is being taught right now. That lesson is:

Don’t let emotions govern your investment decisions.

Pessimism about the future for companies to generate earnings has set in. What are the reasons? Interest rates are going up. Trade tensions between nations throughout the world have increased. A yield curve inversion has occurred (a forecast of recession)… the list is long.

As a result, fear has kicked in.

Fear now governs the decisions of investors. As a result, a stock market sell off. When this happens I think of Warren Buffet’s response, “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.”

I know I’ll be getting greedy soon. Probably with many of the companies I have listed on my Best and Worst of 2018.

Best of 2018

Adobe (ADBE)

Up 28% on the year. Adobe has been great at improving its earnings quarter-after-quarter. The subscription-based graphics software is a fundamental component of the modern businesses. Without much in the way of competition and the expansion of the internet, Adobe will be a core holding for some time.

Twitter (TWTR)

Up 25% on the year. In late 2017, Twitter began to make some changes in management and in its platform. I began to get interested as a result. Limits in the amount of characters were increased, clearing out of dead accounts and the most important (but not often cited) factor was the ability to deliver thought-provoking, culturally-relevant content.

Stamps.com (STMP)

Up 60%. I sold my shares in Stamps.com after President Trump continued to make statements reforming the US Postal Service. Since Stamps.com business model depended on its ability to give customers a discount on USPS service, the risk of continuing to hold the highly profitable company became too great.

Worst of 2018

Amazon (AMZN)

Down 27%. After years of watching this company transform itself into a retail giant, I gave in and decided to buy. My timing was impeccable because I purchased shortly before it reached its 52-week high.

Activision (ATVI)

Down 45%. I’ve been a long-time buyer of Activision. I began buying over 5 years ago when it’s share price was hovering around $15 and Wall Street was claiming its best days were behind it. It’s again feeling the weight of Wall Street’s negative sentiment. Its PE ratio is still higher than when I first started buying but if you like to invest for the long-term this is a good time to buy.

Weibo (WB)

Down 53%. Like most Chinese stocks this year, Weibo’s stock price has succumbed to the US-China trade war as well as Wall Street’s negative view of the Chinese economy. If you’re a younger investor with time on your side (like me), it’s easier to stomach the ups-n-downs of investing in China. I’m looking at China long-term so I’m holding and buying shares of many Chinese companies, like Weibo.

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