Now that we’re closing in on the end of the year, and the redoubtable Lynn Clark (Queen of all detailed things that I forget to do) has managed to get our tracking spreadsheets much improved and up to date, with relative performance included for the first time this year, I thought I’d check in on how the teasermeisters are doing so far in 2014. After all, we’ve got the unveiling of our “Turkey of the Year” to come in a few weeks, so we’ve got to start thinking a bit about the candidates.
So let’s look and see what had happened if you had bought a bunch of those teased stocks on or near the day they were teased… would you in fact have turned your $5,000 into $13,000 or $112,000 or $1 million, as so many of them hint at?
Now, to be fair, we knew that already. And some of these stock ideas that were pitched by newsletters were clearly shorter-term trades, while some were long-term investments that they expect to play out over years, not months. And the market was hit badly in recent months, as I think everyone realizes (though thanks to that quick bounceback rally, the broad market is now back to near 52-week highs, up 9% on the year so far).
But going by the teasers that we’ve tracked all year, which includes every one that I’ve written about that pitched a specific stock or fund as an investment, 147 in all so far this year as of the first week of October, we’ve seen 32 stocks that did better than the S&P (and none that have hit a “double” on the year), and 115 that have done worse than the S&P (so far, none have gone bankrupt or gone to zero this year, but plenty are down by 50% or more).
And you know what, even though the market has taken a hit recently, if you had bought a small slug of the S&P 500 (using the SPY ETF as a benchmark for this) on each day when a teaser stock was uncovered, every single one of those slugs of money would be in the green as of today.
It won’t surprise you to hear that most of the “most winning” stocks are in biotech or tech, nor that the bottom of the pile is littered with energy and mining stocks (and a few failed biotechs and techs, too). Biotech has been the most consistent growth stock and “story stock” sector this year, with big spurts from strong news, and some areas of tech have been pretty strong… and, as many of us are all-too-aware, basic materials have been crushed.
There’s only one mining or energy stock that has outdone the S&P this year out of our teaser solutions, and that’s the decidedly atypical Canadian diamond miner Dominion Diamond (DDC). When it comes to profiting from falling commodity prices, only one teased pick has made a big surge and that’s Louis Navellier’s tout of Spirit Airlines (SAVE) about six months ago.
Has one teaser-spinner outperformed the others? Not dramatically, at least according to my browsing of the data — some are less likely to have 70% losses given their focus on larger stocks, and the letters that focus less on energy or materials stocks, like the Motley Fool or Navellier often do, have perhaps tended to do a bit better this year… but pretty much everyone has some big stinkers (like POWR from Navellier, or TCS from the Fool, for example).
And, of course, I also own more stocks that are in the bottom of this list than are in the top personally, so I’m not claiming to be fantastically more prescient than the newsletter pundits — and, to be fair, these are the picks and stories that newsletters are using to get your attention and urge you to subscribe, they are not likely to be all that representative of the performance of any of these newsletters overall (especially given our limited sample size — we rarely look at teasers from the same letter more than a half-dozen times in a year, so these are the ones they might think will be their best stocks, or just their best “stories” to get your attention, but most of them recommend one or two new picks each month).
But I do find it useful to look at these spreadsheets every now and then as a reminder that it’s worth being patient, being a cynic, and taking the time to look carefully at the companies that are sold to us as fantastic growth stories (or, indeed, at any company that’s being “sold” to you). And if this year is any guide, every time you think you’ve found the next hot stock you should slow down, count to ten, then, if you’ve convinced yourself that this is one of the 32 out of 147 that’s a real winner in the near future, still put at least half that money into a broad index fund and do your wagering with smaller amounts.
If you want to be a real contrarian, maybe looking at the bottom half of the spreadsheets to see if any gems have been thrown out with the slurry. Let us know if you find anything surprising or fantastic in perusing the lists — you can see the whole sheet from our tracking page (which also has links to the spreadsheets from past years), but here are the top and bottom ten at the moment:
Bottom Ten vs. the S&P 500 so far in 2014:
(For live prices, and much more detail, go to the tracking page or the public version of the 2014 spreadsheet — these are just screen shots taken midday on Monday, November 3).
So what do you think? Anything interesting hiding in the rubble of this year’s teaser tracking spreadsheets, or any winners who you think will continue to thrive? Any other trends or insights you’d like to share? Let us know with a comment below.
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