My local paper, the Chicago Tribune holds a quarterly stock picking contest where they have four prominently local money managers pick three stocks to recommend and three to avoid during the next quarter. They also report on the prior quarter’s pick. This continues the one of the most useless waste of newsprint I have seen. This contest continues to focus on short-term performance and speculation vs. long-term results. I’m sure the managers they select do not focus on short-term performance in the mutual funds they manage, at least I hope not.
Now for the most recent results from the last quarter of 2006:
Of the 12 recommended stocks 10 went up. The median increase was 5.4%. Of the 12 stocks to avoid 10 went up. The median increase of the stocks to avoid was 14.4%! This is not the first time the median for the avoid stocks was better than the median performance for the recommended stocks.
In summary:
- Very smart people
- Short term stock picking a losers game
I’ll keep track of this periodically and keep you posted on how the expert stock pickers are doing.