Market's Top Picks

This is an interesting read from the Wall Street Journal.  Basically showing that the top 10 picks for 2010 as made in January 2010 gained 24%, while the S&P gained 13%.  But The top 10 sell/don't buy stocks, gained 32% (having invest $1000 in each pick, same with the top 10).

I recently read the article above about how the top 10 picks from last year performed worse than the bottom 10 stocks(the ‘must sells’, or don’t buy), as recommended by so called “experts.”  Not only did they under perform, they got destroyed by the bottom 10 stocks.   Essentially, they don’t have much better advice than anyone else.  

I’ve mentioned before that I like to read comments in on articles, just to get a feeling for what other people that read the article are saying.  I don’t remember if someone did it in this article, but in lots of stock articles there is someone that says something to the effect of “Stocks are just for the big guys, not for the little guy anymore.”  I just have to laugh at him.  In no other time in our history has the little guy had so much information, and such cheap trades.   It used to be that you would get recommendations from your broker and he would take a commission from your sale (1/2% or more).  So if you would invest $10,000, he would take .5% buying the stock and .5% when you sold.  Which equals $100 total in this case ($50 in and $50 out) and that’s if you didn’t make any money, if the stock doubled he would get .5% of that ($100 on $20000 for a total of $150).  Now you can find many sites online that let you trade for a flat rate of under $10 going in and less than $10 selling.  You save either $80 or $130.  More money for you, and less for the ‘big man.’

Now let’s talk about information.  It used to be that only brokers and firms had information on the day to day work of the stock and you would have to call them to get information about a certain stock.  Now, I can sit down and look up everything the Price/earning ratio, the 1m, 3m, 1y, 5y stock price graphs, almost everything is just a few clicks away.  The middle man has been cut out.  However, because the middle man has been cut out a lot of the times, there is no one to give personal recommendations for stocks.  So, I have had to go out and learn how to pick good ones. Sometimes I win, sometimes I don’t.  But on the whole I did a lot better last year in stocks than I did on interest in my savings account.  Today we live in the information age, too bad for some that they will miss out on it because they think that information is only for the ‘big guys.’