The financial advisory business has long been obsessed with stock picking. In big growth markets like we saw in the late 90s, the worst dart throwers become the best stock pickers. Even in tougher markets, you will never find a shortage of "analysts" claiming to have a hot stock pick. The worst culprit of them all is the financial media. "Investment Pornography" as we call it. Sadly, magazine covers featuring the headline, "Continue to Buy and Hold Low Cost, Tax Efficient, Passively Managed Funds Like We Told You Last Year And The Year Before That" doesn't sell a lot of copies. "8 Hottest Stocks to Own in 2008" for better or worse is a guaranteed seller.
Do some analysts pick winners? Of course. And some people leave Vegas with more money than they brought. Is it a learned and masterable skill? Well, let me put it this way. If I played a game of one-on-one against Kobe Bryant, first to 11, I would lose. 100% guaranteed. Probably 11-0. Unless he went easy on me and stood back as I launched a lucky 33 footer. If I had three at bats against Roger Clements, I'm going to strike out three times. Juiced or not juiced, he'll probably notch three strikeouts in nine pitches. I could go on here (a round with Mike Tyson, a set with Roger Federer), but you get the idea.
But how would I fare against the world's "best" stockpickers? I pick three, Warren Buffett picks three, Peter Lynch picks three, George Soros picks three... You know the gurus versus me. I'll tell you what, I would have a much better chance than lining up opposite Tom Brady's offensive line.
I'm not picking any stocks, because it's not what I do. What I will do is track the stock picks of those who purport to be good at it. Below I have the picks from several of the most popular financial magazines and websites. We'll follow them throughout the year, and at the end of the year, see how they fared. If they do well, we'll give them a kudos, but we're going to subtract trading costs and taxes from the final result.
SmartMoney, "Where to Invest in 2008"
Bunge (BG) $116.41, Central Europe Media Enterprises (CETV) $115.98, Genworth Financial (GNW) $25.45
Kiplinger's Personal Finance, "A Great Stock Picks List"
Allstate (ALL) $52.23, Apache (APA) $107.54, Best Buy (BBY) $52.65, Con-Way (CNW) $41.54, CVS/Caremark (CVS) $39.75, Diamond Offshore (DO) $142.00, Embarq (EQ) $49.53, Home Depot (HD) $26.94, Nvidia (NVDA) $34.02, Pfizer (PFE) $22.73, Polaris Industries (PII) $47.77, Reinsurance Group of America (RGA) $52.48, RyanAir Holdings (RYAAY) $39.44, Whirlpool Corp. (WHR) $81.63.
MSN Money, "Activision and 9 other stocks to buy now"
Ingersoll-Rand (IR) $46.47, Citizens Communications (CZN) $12.73, General Electric (GE) $37.07, AT&T (T) $41.56, Apple (AAPL) $198.08, Activision (ATVI) $29.70, Celgene (CELG) $46.21, Cisco Systems (CSCO) $27.07, Intel Corp. (INTC) $26.66, Juniper Networks (JNPR) $33.20
Fortune, "The Ten Best Stocks for 2008"
Analy Capital Management (NLY) $18.18, Berkshire Hathaway (BRK.B) $4,736, Dicks Sporting Goods (DKS) $27.76, Electronic Arts (ERTS) $58.41, Genentech (DNA) $67.07, General Electric (GE) $37.07, Jacobs Electric (JEC) $95.61, Merrill Lynch (MER) $53.68, Petrobras (PBR) $115.24, St Joe Co (JOE) $35.51
All prices are as of the close of the market on December 31, 2007. We'll check back periodically. Maybe monthly, maybe quarterly. We'll see. But definitely at the end of the year.
Here's a question. If these guys are all so good at picking stocks, and these are the best stocks to own for 2008, why don't they agree? At all? Four analysts. 37 stock picks. The only one that is repeated is G.E.
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