Shares for the future: addressing the oldest investment sin
In this annual review of 2025, analyst Richard Beddard looks at what went wrong and how things can be improved. There’s one question he’ll be asking again and again in 2026.
23rd December 2025 14:30
by Richard Beddard from interactive investor
Credit: Jeffrey Coolidge via Getty Images.
As this is my final article of 2025, I am taking stock.
It has been a year of doubt and recrimination. Regrettably, this is a negative and unseasonal start to an annual review, but it will end with renewal, I promise, and redemption may follow in the long term.
- Invest with ii: Top UK Shares | Share Tips & Ideas | Open a Trading Account
Doubt properly took hold in the spring, when a simmering trade war between China and the US came to a boil on “Liberation Day”, the day President Donald Trump dramatically increased tariffs on imports into the US from the rest of the World.
The recrimination started soon after. Liberation Day did not come out of the blue. It was the latest in a long list of disruptions we can trace back at least to the pandemic. But it took a brazen ratcheting up of trade barriers for me to accept that the new normal was not as benign as the old normal.
Trade barriers, war, energy costs, cash-strapped governments, and technological disruption are having a lasting and often negative impact on many of the shares I have championed.
As the performance of some of my favourite businesses continued to crumble, I woke up at night ruminating about them. I began to question whether I understood what was happening.
The low point was Churchill China (LSE:CHH). I knew of the challenges it faces, but the prospect of substantially lower profit this year, coming as it did after two years of contraction, still floored me. I felt emotions normally experienced through personal tragedy, emotions like grief, and guilt.
Emotions are complex, and I may not do them justice here. The loss I felt was for an idea, that Churchill China was so strong, it would prosper through thick and thin. I felt guilty because the idea was mine, and I had corrupted it.
Most of the things that made Churchill China, a manufacturer of tableware, special are still special, from the clay to the efficient manufacturing process, to the availability of stock. Each year when I scored the share, I would gain comfort from the fact that these advantages still existed.
But firing clay requires energy, which is more expensive than it was. So too is labour. Churchill’s customers, restaurants, were booming in the 2010s. Now they are not, particularly in Europe where Churchill China was growing strongly.
This is the new normal, but my conviction in the quality of the business caused me to underestimate the deterioration in its circumstances.
This article is not about Churchill China, which by the way is not dead. It will still profit this year, it is financially strong, and I expect it to adjust, perhaps slowly, to the new normal. But I was overconfident about the company, and other shares such as Focusrite (LSE:TUNE) and RWS Holdings (LSE:RWS). Overconfidence is the oldest investment sin.
This realisation triggered much introspection. I think the design of my scoring system, the Decision Engine, encouraged overconfidence by focusing too much on the past, the capabilities that got each business to where it is today. It did not give enough consideration to the risks that might undermine them in future.
As a result, I have spent much of the year re-scoring shares.
More significantly, I have recalibrated the Decision Engine to make it more sensitive to risks.
Most significantly, I have simplified the way I score, so that the Decision Engine can accommodate new information quickly and often.
I will document these changes next week.
2025 was also the year that I started using AI (Google Gemini) to automate my spreadsheets and extract information from annual reports. I checked all the information before I used it. Not a word of this article or any other was written by a computer programme. The hallucinations are all my own!
- AIM’s biggest companies and how they performed in 2025
- Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
In The Corporation in the 21st Century, a book I read early this year, the economist John Kay writes: “we live in a world of radical uncertainty, and every situation, every point of decision, is unique. And in that world, the question ‘What is going on here?’ needs to be posed again and again.”
I was not asking that question enough. Now I am asking it again and again. Maybe it sounds exhausting, but it brings me joy. When I learn something new, even if it is negative, it feels like another piece in the jigsaw of understanding.
Hopefully, you will see that come through in my articles next year. Maybe you already have, in articles like this one.
Time will tell if my investment performance improves. It has lulled since the 2010s, although investments in Games Workshop Group (LSE:GAW) and Goodwin (LSE:GDWN), businesses that have prospered through thick and thin, have saved me from more acute embarrassment.
Already I appreciate the process of investing more. That is important because to stay on board for the long term, we need to enjoy the journey.
Richard Beddard is a freelance contributor and not a direct employee of interactive investor.
Richard owns Churchill China shares.
For more on the Decision Engine, please see Richard’s explainer.
Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard
AIM stocks tend to be volatile high-risk/high-reward investments and are intended for people with an appropriate degree of equity trading knowledge and experience.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.