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Why these experts suck so much at stockpicking...?

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December 13, 2010 – Comments (27) | RELATED TICKERS: BIG , EXP , EA

You know...these guys who share with us dozens of their picks every day, guys who have their own investing/trading web sites (some of them charge a small fee to let you in on their stockpicking secret), which, btw., are considered semi-spammers by many regular CAPS members.

There are many of them, but let's just take a look at the ones who blogged today.

SharePlanner, total of 60 picks, Score of 71 points, Accuracy of 33%, rating of 25.72.

JimVanMeerten, total of 147 picks, score of negative 79, accuracy of 28%, rating of below 20.

BttrStockEntries, total of 16 picks, score of 18, accuracy of 44%, rating of 30.32.

DividendsforLife, total of 33 picks, score of negative 278 points, accuracy of 30%, rating of below 20.

And I'm not sure if I should include MarginofSafety, as the guy has only total of 7 picks, but did manage to already have a pick down 30 points (What happened to the margin of safety, dude?) Btw., his accuracy on these 7 picks is 28%.

Really, why is it that these guys are such experts at what they do (that's what I get from their blogs), but can't pick a winning stock to save their life?

Have you ever wondered the same...?

27 Comments – Post Your Own

#1) On December 13, 2010 at 3:01 PM, chk999 (99.97) wrote:

Talking is easy, making CAPS picks is harder.

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#2) On December 13, 2010 at 3:25 PM, Gaugamela (95.20) wrote:

There are guys on Seeking Alpha who are in the same boat.  There is one in particular who said a few months ago that his pick of the year was to short CRM at around 90, and that BIDU would drop to 60 when it was around 80.  CRM is over 145 now, and BIDU is at 110.

I'm at a loss to explain how these folks make a living picking stocks too.

 

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#3) On December 13, 2010 at 3:29 PM, Dintaurran (< 20) wrote:

Seems like many of these guys are daytrading and are likely in and out of stocks within the seven day holding period caps calls for.  Nor do they seem to enter all their blog picks into their caps accounts.  Since they are posting on the fool website, however, you'd think they would try a little harder to play by the fool rules.

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#4) On December 13, 2010 at 3:35 PM, goalie37 (91.69) wrote:

We Fools have been taught over and over to do our own homework.  I have nothing against their making their prognostications since I won't be buying based upon it anyway.

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#5) On December 13, 2010 at 3:54 PM, lemoneater (78.89) wrote:

I read their blogs for potential ideas, but I think sometimes they depend too religiously on their screens for what they pick on CAPS.

(There is only one Anticitrade with screens that seem almost artificially intelligent!)

Sometimes they promote good companies, but not always at a good entry point. However to be fair saying that one has stocks on a watch list is not the same as saying it is a buy.

Also I think that DividendsforLife is more concerned with stable, generous dividends than share price appreciation both of which interest me.

Sometimes I think they mention picks to see what interest/mood is out there on MF. I think CAPS comes early in the decision making process for most of us.

I think it is wise to fully percolate any pick advice freely given. 

 

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#6) On December 13, 2010 at 3:59 PM, TMFBabo (100.00) wrote:

I believe Dividends4Life (and dividend investors in general) will outperform on the way down, underperform on the way up, and slightly outperform in general, with much less volatility.  Not a bad deal if you ask me. 

I have no comment, good or bad, on the others.

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#7) On December 13, 2010 at 4:10 PM, dragonLZ (99.45) wrote:

I apologize to DividendsForLife as all of his picks have positive returns - they are losing to S&P500, but in Real Life they would all have positive returns (their current price is higher than the price at which they were picked at - including the 3 picks closed at negative points).

I think that's a great accomplishment so I apologize. I failed to check his/her portfolio before posting.

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#8) On December 13, 2010 at 4:18 PM, lemoneater (78.89) wrote:

I find it interesting to read the very different investing philosophies they represent. Some have been on MF for much longer than others.

JimVanMeerten watches much trends more than I do, but I think that mutual fund managers try to keep aware of the market's moods more than an individual investor might. I've found him to be friendly when I make comments on his blogs.

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#9) On December 13, 2010 at 4:27 PM, dragonLZ (99.45) wrote:

lemoneater, I don't have anything against Jim (I happen to like some of his market analysis), but the guy has made 147 picks on CAPS so far. His score: -80 points.

Wouldn't you expect a little bit more of a guy who does nothing but pick stocks all day long?

I do understand he doesn't devote much time to CAPS game, but I would at least expect an "expert" to have one or two one-baggers out of 147 picks, wouldn't you?

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#10) On December 13, 2010 at 4:35 PM, lemoneater (78.89) wrote:

Wow, quick reply, Dragon, I think that both you and I are more contrarian in style than he is. I cannot remember where I read it but there was an article on Motley Fool about the constraints mutual fund managers are under by nature of clients needs and expectations. 

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#11) On December 13, 2010 at 4:44 PM, lemoneater (78.89) wrote:

Does he have the flexibility we enjoy as non-professionals who embrace volatile, underfollowed,  and unloved stocks. I only have two multibaggers. I imagine you have even more than I do.

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#12) On December 13, 2010 at 4:58 PM, dragonLZ (99.45) wrote:

Does he have the flexibility we enjoy as non-professionals who embrace volatile, underfollowed,  and unloved stocks.

He's not managing a mutual fund, he just runs a web site, so I'd say his picks are not much different in nature than yours and mine.

I don't know, maybe I'm too critical of these people, but I just thought it was weird how low their ratings (and accuracy) is.

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#13) On December 13, 2010 at 5:16 PM, Donnernv (< 20) wrote:

Dragon:

Of interest would be how many picks these guys have ever had total.  They guys with more than 200 and low scores/ratings are just crappy stock pickers.

The guys with 7-10-20-50 ever aren't trying.  It's just advertising for them.

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#14) On December 13, 2010 at 5:42 PM, Momentum21 (94.64) wrote:

A great positive example is/was Anticitrade...I thought he had a great thing going with that site and others seemed to appreciate what he brought to the table. 

If SharePlanner wanted some legit cred he would play the game with his system. The guy barely gets a rec here so I doubt anyone is paying him for advice. 

If he had it all figured out he would go "all in" on those 18 stocks that only go up. : )  

Dragon: Why don't you make videos of yourself "eyeballing charts" and throw up a pay wall? : )   

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#15) On December 13, 2010 at 6:13 PM, tekennedy (66.60) wrote:

To argue a little on their side (I've got Dividends4life and MagicDiligence, not mentioned and with a positive score, as favorites). 

Dividends4life often does good research, most of his stockpicks were made during the market crash and understandably dividend stocks underperformed during the upturn.  I'd give him a good chance of getting to even over the next 6 months to a year (especially if he picks more companies now).

I'd like to add MagicDiligence to the respectable pay sites.  It seems to be a good methos and they've averaged +10% per pick. 

Overall I agree with you.  CAPS is a nice way to filter the good from the bad.  If a person is trying to advertise a pay site you can see their performance, the good, the bad and the ugly.  The institutional investors picks are interesting too as it gives you a nice way of rating them as well. 

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#16) On December 13, 2010 at 7:01 PM, tekennedy (66.60) wrote:

Also half of Shareplanners points and +150 of JimVanMeerten's are shorting 3x type stocks, so their scores are even infllated.

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#17) On December 13, 2010 at 7:22 PM, familyfund2 (21.34) wrote:

I think some of them are not playing caps very hard. I also think some of them are banking on 'the five year plan', etc.

Ironically, i follow shareplanner and do well doing so. His 'stocks that go up series really just keeps bangin' along (though TTM did recently dive. Perhaps a time to enter?).

Other than that, yeah, it seems like each one of them has a reason he's not really doin' well right now, but sometimes i can't figure out what that reason is.. . 

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#18) On December 13, 2010 at 8:52 PM, dragonLZ (99.45) wrote:

tekennedy, I didn't include MagicDiligence as he has decent picks and a good rating. It's not like I have something against all people who have their websites and are posting here on CAPS. I just think if one is trying to convince someone that he's got a "winning system", then I think that person/team should at least try to back it up with some decent picks.

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#19) On December 13, 2010 at 9:01 PM, dragonLZ (99.45) wrote:

Donnernv, you are making a good point, and I do see that many of them are not even trying. And that's exactly what I don't understand.

If you are trying to sell me something, wouldn't you try to convince me you know what you are talking about?

Posting dozens of posts without having picks I think is the main reason why they are considered spammers around here. 

They might be great at what they do, I just don't believe them (show me the money, kinda).

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#20) On December 13, 2010 at 9:21 PM, dragonLZ (99.45) wrote:

Momentum21, I never considered anticitrade one of these guys. To me, he is a great CAPS player / stockpicker who happened to have a website.

p.s.

Very interesting idea about chart-eyeballing website. Let me think about it a little more... :) 

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#21) On December 13, 2010 at 10:26 PM, Bays (30.27) wrote:

AAOI is probably the only "expert" on here that I follow regularly.  His website has a wealth of information and a ton of informative, in-depth blogs about individual stocks.  Furthermore, he is an expert regarding event-driven investing, which has historically provided massive returns (see Joel Greenblatt).

 

 

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#22) On December 14, 2010 at 1:22 PM, dragonLZ (99.45) wrote:

Bays, AAOI is another example of a person who runs a website, but has proven here on CAPS that he knows what he's talking about.

p.s. I'll make sure to check out his website. If you find it valuable, I'm sure it's woth my time too...

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#23) On December 14, 2010 at 7:30 PM, HarryCarysGhost (99.70) wrote:

I'd have to say that the only analyst I ever followed, was Money Mcbags. But the foul language and the jokes may have played a part...:)

( When Anticitrade was around, I always read his blogs too)

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#24) On December 17, 2010 at 10:56 PM, devilzadvocate (48.89) wrote:

It's so true the other way round too. There are many experts who picked up stocks in late 2009 when stocks were beaten down to death.. and subsequently have stopped picking stocks in the last 6-9 months to keep themselves @ "90+" percentile.

A true expert is one who can spot good stocks in thick and thin.

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#25) On December 17, 2010 at 11:17 PM, Mstinterestinman (< 20) wrote:

I am constantly practicing my stock picking skills my goal is to be able to consistantly beat the market by 5 points a year on average. I want to let my performance be the reason to invest when I start my fund :)

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#26) On December 19, 2010 at 10:11 PM, OutperformOrDie (73.69) wrote:

It's also worth noting that some investing strategies, such as value investing, are designed to perform well over long time horizons. Buffett underperformed the overall market during the tech bubble, but in retrospect his avoidance of tech stocks was a very good call. Dividend reinvesting strategies compound significantly over time and have the ability to outperform in the long run. Therefore, just because an investor is underperforming the market in the short run does not mean their overall strategy is not sound. It's possible the strategy may work well on a long time horizon. 

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#27) On December 20, 2010 at 11:13 PM, dragonLZ (99.45) wrote:

devilzadvocate, I agree there is a lot of "gaming of the system" going on, but I still think one can tell who are good stockpickers (regardless of CAPS rating).

Mstinterestinman, Good Luck :)

OutperformOrDie, you are making a very valid point: What's working short term doesn't mean will work long term.

Still, some of these guys who tell us they are experts, don't seem to be good stockpickers.

Take JimVanMeerten for example. He's already closed quite a few picks meaning he's focused on short term results. So far, he hasn't picked too many winners.

 

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