I admit it — these are my 5 dumbest investment calls of 2020

But all Wall Street analysts think they’re pretty hot stuff, so I won’t bore you with supposed proof of my competence. Instead, let’s get right to the good stuff — my five dumbest pieces of advice from the last year.

Doubting the COVID (market) rebound: I was very reluctant to trust the quick snap-back for markets in March and April, particularly given early predictions that the pandemic could suck $1 trillion out of the global economy. But I made the mistake of thinking about the implications for regular folks and small businesses — not the stock market.

The hard reality is that poor people have been hit hardest by the pandemic, but poor people don’t own stocks. Similarly, megacap corporations are just fine even as small stores and restaurants have been forced to close. White-collar employees continued to get their 401(k) match, and structural factors that overweight well-off tech firms in indexes like the S&P 500 SPX, +0.18% added to momentum for stocks even as the economy suffered very real damage.

The bottom line is a brutal reality that I often have trouble acknowledging: Wall Street is fundamentally divorced from the real U.S. economy, and it’s perilous for investors to conflate the struggles of regular Americans with the performance of the S&P 500. As depressing as that is to admit, COVID-19 proved once again how true this is. 

Betting against bitcoin: In February, I warned that bitcoin was having a moment but could run out of gas and disappoint supporters yet again in 2020. But the cryptocurrency BTCUSD, +0.67% continued to outperform traditional financial assets in 2020, roughly doubling to $20,000 since my column.

That’s in part because of folks looking for alternative assets out of a fear that a pandemic-driven economic crisis would hit, but also because of continued institutional demand as bitcoin continues to mature and win legitimacy as a viable asset in the admittedly volatile world of crypto.

Giving up on oil stocks: After the stars aligned to briefly drive oil prices negative in early 2020, it seemed a terrible idea to go hunting for bargains in the oil patch. In addition to short-term problems including dropping demand thanks to coronavirus and surging supply thanks to OPEC’s reluctance to cut back production in March, there remains the long-term risks for fossil fuel stock amid global warming concerns.

But a historic 10-million-barrel-per-day cut a month later coupled with normalizing demand propped up oil prices, and oil is back in the high-$40 range — with analysts at Goldman Sachs predicting crude could hit $65 next year. I gave up on oil stocks, however, and among the picks I specifically warned against was Halliburton, which has surged 50% since I advised against the stock in June.

Not giving marijuana stocks room to run: It should not be news to anyone that American perceptions of marijuana have changed greatly in the last few years and that the trend of legalization is destined to continue nationwide. But by October, with all polls pointing to Biden winning and chances of Democratic gains in Congress, I was pretty convinced the market had priced in any 2021 actions to liberalize weed in the U.S.  and that it was time to stop buying the rumor and start selling the news.

Since Oct. 1, however, top stocks like Canopy Growth CGC, -1.42% and broad ETFs like the AdvisorShares Pure Cannabis ETF YOLO, +2.91% have found another gear and powered significantly higher. The ETF is up 50% since then and Canopy Growth is up 80%.

Abandoning bonds: I am in my 40s, so particularly in my tax-deferred accounts I make it a point to avoid bonds and go all-in on stocks. With almost two decades until I can get my cash back from 401(k) and IRA investments, it’s a near certainty the stock market will be much higher by then.

But if like me you’ve written off bonds as an old-school asset that is only good for folks at or near retirement and looking for capital preservation, consider that the iShares 20+ Year Treasury Bond ETF TLT, -0.27% has actually slightly outperformed the S&P 500 this year.

There is certainly room for bonds in any portfolio, presuming you pay attention to the market. I simply wasn’t in 2020, and missed out.

Jeff Reeves is a MarketWatch columnist. He doesn’t own any of the securities mentioned here.