![\"The](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/08\/110836361-16060977-image-a-1_1787653898444.jpg\")
<\/p>\nIn May 2023, I made the worst investment decision of my life to date.<\/p>\n
At the time I had a handful of investments smattered around a few companies including Lloyds Bank, HSBC, BAE Systems, Rolls-Royce, Aviva and Persimmon.<\/p>\n
I was aware that my portfolio wasn’t diversified and was heavily dependent on the fortunes of a few specific FTSE companies.<\/p>\n
I decided to be sensible and sold all my shares in Rolls-Royce, Aviva and Lloyds Bank and instead invested in one global index fund.\u00a0<\/p>\n
I sold Rolls-Royce at 148p but the share price is now over 1,500p. My stake was worth \u00a35,000 at the time. It would be worth over \u00a350,000 today. Conversely my world index fund is up just over 40 per cent.<\/p>\n
So I’ve decided index fund investing isn’t for me. So I’d be interested to know what This is Money or fund managers you speak to would recommend in terms of a few companies that could conceivably do another Rolls-Royce.\u00a0<\/p>\n
I’m aware of the risk and that I could lose everything but I’ve decided life’s too short and I’d prefer to invest for the thrills.<\/p>\n
<\/p>\n
The benefit of hindsight: Our reader sold Rolls-Royce shares in 2023 and bought an index fund<\/p>\n
Ed Magnus of This is Money replies:\u00a0You might regret selling your Rolls-Royce shares given how much it cost you over the long term, but it was arguably a perfectly reasonable decision to make at the time.\u00a0<\/p>\n
In May 2023, nobody could have predicted that the aerospace specialist Rolls-Royce would become one of the best-performing stocks globally \u2013 even surpassing the likes of Nvidia over the last five years.<\/p>\n
In fact, many investors who bought and sold shares in Rolls-Royce between 2013 and 2022 will have likely done so at a loss.\u00a0<\/p>\n
During that time, the share price was trending downwards from a high of\u00a0437p in 2013 to a low of 65p in 2022, albeit with the usual ups and downs along the way.<\/p>\n
Trying to time the market, and particularly the rise and fall of individual companies, requires knowledge, research and bucketloads of luck.<\/p>\n
So unless you are the type of person who enjoys reading everything there is about a certain company, including trading statements and annual reports \u2013 plus having to understand the wider context around its sector and competitors\u00a0\u2013 sticking to classic index funds will likely serve you better in the long run.<\/p>\n
Even the great investor Warren Buffett thinks most people are better off sticking with broad, low-cost index funds.<\/p>\n
But given you seem to prefer the thrill of stock picking – and are fully aware of the risks that entails – we\u00a0decided to speak to Tom Matthews, fund manager at the JOHCM UK Dynamic fund, to see what he might suggest.<\/p>\n
Is there another Rolls-Royce out there for this investor?<\/p>\n
Tom Matthews replies: What was wrong was the specific stock you sold. Hindsight shows many investors appear to have underestimated the scale of Rolls-Royce’s operational recovery and earnings potential.\u00a0<\/p>\n
Successfully executed corporate turnarounds can create significant shareholder value by unlocking new growth opportunities, and they almost always occur after a period of sustained underperformance \u2013 precisely when markets are most fearful.<\/p>\n
Falling share prices create significant behavioural biases. Even when businesses are being successfully transformed, the market often ignores these changes due to loss aversion.\u00a0<\/p>\n
The good news is the UK market still contains a number of globally leading businesses executing a transformation, which some investors believe are not fully reflected in current valuations.\u00a0<\/p>\n
Examples of such companies include WPP, the world’s leading advertising agency, Johnson Matthey, a world leader in platinum group metals and the drinks giant Diageo.<\/p>\n
There is also IG Group, the world leader in spread betting, and Pearson, the world-leading education provider.\u00a0<\/p>\n
All of these businesses are undergoing significant change which could unlock improved future cash generation and potentially support valuations if executed successfully.\u00a0<\/p>\n
![\"Tom](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/08\/110756343-16060977-image-a-15_1787654016676.jpg\")
<\/p>\n
Tom Matthews, fund manager on the JOHCM UK Dynamic fund has a few suggestions for our reader<\/p>\n
Did this investor make the correct\u00a0decision at the time?\u00a0<\/p>\n
Beware ‘seller’s remorse’ and ‘resulting’ – a term for judging the quality of a decision based solely on its outcome.\u00a0<\/p>\n
The anguish of watching a stock rise tenfold after selling it is enough to challenge the judgment of even the best investors.\u00a0<\/p>\n
However, we cannot change the past; we must focus on improving the future.\u00a0<\/p>\n
Successful investors continually learn by objectively identifying what was right or wrong with their investment process, avoiding the behavioural biases associated with focusing solely on the end result.<\/p>\n
Diversifying your portfolio was actually the right decision. The UK only accounts for a sliver of total global equities and has close to zero technology exposure, so this allocation added vital balance to your portfolio.\u00a0<\/p>\n
This is demonstrated by your 40 per cent return, which ranks well above historic norms for a balanced global equity portfolio.<\/p>\n
Why has the Rolls-Royce share price done so well?\u00a0<\/p>\n
In May 2023, Rolls-Royce’s share price had collapsed for a decade; it had undertaken a highly dilutive rights issue, and there were severe post-Covid concerns over global air travel. Fear levels were exceptionally high.<\/p>\n
What the market missed was that under a new chief executive, the operational turnaround was accelerating, commercial terms had been renegotiated, and, with a repaired balance sheet, this globally leading engineering business was re-allocating capital to exciting new growth areas such as Power Generation (used by data centres), Defence, and Small Modular Reactors (SMRs) for nuclear power.\u00a0<\/p>\n
It appears that the market placed too limited a value on these opportunities at the time.\u00a0<\/p>\n
These new growth areas have been among the factors supporting the company’s recovery and share-price performance, alongside a significant inflection in the business’s cash-generating profile and a subsequent re-rating of the stock.<\/p>\n
![\"Free](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/04\/HL-Logo_122x84.jpg\"){kind=logo}
<\/p>\n![\"Flat-fee](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/04\/ii_thisismoney_122x84.png\")
<\/p>\n![\"Investing](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/04\/Freetrade.jpg\")
<\/p>\n![\"Free](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/08\/1787893639_665_T212Logo_Icon_130x90.png\n\"){kind=icon}
<\/p>\n