Barron’s Posts past year’s “Winning Record” (stock picks)

hank

Umm … beauty is in the eyes of the beholder.

Here’s their 2022 recommendations and (2022 return to date) one-year return as reported in this week’s edition:

AMZN -46.1%
AT&T +12.3%
BRK.A +5.6%
GM -30.1%
HTZ -23.5%
IBM +23.5%
JNJ +9.7%
JWN -10%
SHEL +39.7%
V +1.5%

According to Barron’s, their picks averaged -1.7% while the S&P returned -12.1% (Figures as of 12/17/22)

Not disputing that on average their picks did better. But woe is he who loaded up on AMZ or GM based on their recommendation. ISTM those averages are not weighted by market cap.

FWIW - Here’s their 2023 picks:

AA
GOOG
AMZN
BAC
BRK.A
CMCSA
DAL
MSGS
MDT
TOL

Source: Barron’s (print edition) December 19, 2022

Crash

Thanks, @hank. Maybe I'm shooting myself in the foot, but when it comes to single stocks, i look for ones that don't get much press, publicity. With low P/E numbers. And @catch22 lately introduced me to RSI. I'm learning about what Morningstar labels as "key statistics" with regard to value and profitability. Very helpful. Anyhow, it seems to me that by definition, the big, known names are already a crowded trade, all built-in. I don't necessarily seek out penny stocks, but I own some of those. I've got a lot of catching-up to do when it comes to the size of my brokerage account pie vs. my T-IRA pie. But when the funds in the IRA are throwing money at me, it's a nice problem to have.

PRESSmUP

Crash said:

I don't necessarily seek out penny stocks, but I own some of those.

Penny stocks are fine if kept to a small percentage of the portfolio...it's a flyer. All you need to make the process worthwhile over time is for one to hit.

Crash

+1. PRESSmUP.

JRSH. NHYDY

PRESSmUP

I'll keep an eye on NHYDY. Mine was CLDX....now my largest holding by a wide margin.

MikeM

@Crash, @hank, I like to play with individual stocks too, but I don't think the average Joe, or Mike, makes money at it versus say a plain old index fund. I like Barrons's predictions for 2023 since I started picking up AMZN and GOOGL over the past couple weeks. BLDR is another stock I started in the summer and plan to add to. On the downside, I got caught up late in 2021 in the discussion for ASML. All made sense at the time - there was a chip shortage. I'm still down about -16% on that one, but it has come back well the past month or so.

To my belief, individual stocks should be play money. The odds are stacked against individual investors.

hank

Agree with @MikeM that stocks are tough for small investors. Long term, personally, I’ll take good low-cost actively managed funds over anything else. I presently have only 4 stocks. A couple very small holds in metals / mining. Need to trade a lot (add or reduce exposure) in those volatile sectors and mutual funds wouldn’t allow it - although etfs would. In mining a little bit of exposure provides plenty of action. The other 2 are in the food distribution sectors - one large cap and one mid cap. I figure people will need to eat come hell or high water.

Over past couple years about 3 out of every 4 Barron’s stock picks have served me very well. But one or two have badly misfired. Goes to show there’s no free rides.

rforno

Crash said:

Thanks, @hank. Maybe I'm shooting myself in the foot, but when it comes to single stocks, i look for ones that don't get much press, publicity. With low P/E numbers. And @catch22 lately introduced me to RSI. I'm learning about what Morningstar labels as "key statistics" with regard to value and profitability. Very helpful. Anyhow, it seems to me that by definition, the big, known names are already a crowded trade, all built-in. I don't necessarily seek out penny stocks, but I own some of those. I've got a lot of catching-up to do when it comes to the size of my brokerage account pie vs. my T-IRA pie. But when the funds in the IRA are throwing money at me, it's a nice problem to have.

Just remember to look at RSI at different time periods - day/week/month/year and also that RSI can remain 'oversold' or 'overbought' for long periods of time .... if you're going to play with technical analysis, one indicator alone usually isn't enough.

Crash

Thanks, @rforno.
@hank my single stocks still comprise a bit less than 10% of overall total.

hank

Crash said:

Thanks, @rforno.
@hank my single stocks still comprise a bit less than 10% of overall total.

Just under 9% individual stocks here. Did cut back in recent weeks as noted elsewhere. Mutual funds comprise about 70%. Remainder in ETFs and a couple CEFs.

Although I let go of PRWCX earlier in the year, I know it to be a fine fund. Enjoy hearing how others employ it. Age does not allow me to position as aggressively as might like to.

Sven

Stock picking is very tough for average investors including myself. I hold only a handful that I know and keep track of.

Be careful with penny stocks since many have NO earning. I much prefer investing through experienced fund managers and not ETFs/index funds.

It is a good chance that US is entering a recession and please be careful if you decide to venture into smaller cap space.

Old_Joe

"It is a good chance that US is entering a recession"

Of course the SF Bay Area is more exposed to technological layoffs than most other areas, but I'm also seeing lots of layoff commentary on non-tech business such as DHL logistics, for example. San Francisco is really going to be a ghost of it's recent self before this is over. Between the pandemic and now an approaching recession things are not looking good at all. Municipal tax revenue is already seriously compromised, with city government already instructed to curtail the filling of open job positions and prepare for future personnel cuts.

A significant number of financial commentators that I follow are suggesting that we are already in a "rotating" recession, as layoffs cascade from business to business.

Crash

Sven said:

Stock picking is very tough for average investors including myself. I hold only a handful that I know and keep track of.

Be careful with penny stocks since many have NO earning. I much prefer investing through experienced fund managers and not ETFs/index funds.

It is a good chance that US is entering a recession and please be careful if you decide to venture into smaller cap space.

Good advice. I won't buy a stock if I see no reported earnings, or a loss in the most recently reported figures. The rule of thumb definition of "penny stocks" is a value of below $10/share, correct? I own two. Despite this past stinky week, I'm not unhappy with what I own. LAST year's stock selections were just plain DOGS. I don't even want to think about it! What I own currently are companies i envision as longer term holds, not trades. Real Estate is taking it on the chin. I've also selected equities in several different industries, deliberately:
a) R.E. (post offices ONLY!)
b) clothing manufacturer
c) regional bank
d) oil/gas midstream (L.P.)
e) aluminum & (to a lesser extent) renewable power generation.

Sven

Penny stocks are those from the pink sheet, Russell 2000 index. Low priced stocks still have earnings but you really need to know what you are picking and I don’t quite honestly. That is why I hire experienced fund manager.

In this space, I like Fidelity Low Priced stock, FLPSX, YTD is down -7% as of 12/26/22 to best the mid cap and small cap index funds.

yogibearbull

Penny stocks used to under $1, but now under $5. One consequence of very low prices is that margin may not be available, institutions ignore those and delisting danger is high.

FLPSX is now mid-cap (MC), not even small-cap (SC). About 35% is non-US, so it may be called Global MC Value. When Tillinghast was still an analyst starting out at Fido, there was a contest held on what kind of new fund should be introduced. Tillinghast proposed a low-price fund and that in those days was about $10. FLPSX prospectus says low-price now is $35 (on average). Elsewhere, Tillinghast or Fido have said that the idea now is to have average price around an average US stock that may be $60-70.

PRESSmUP

Perhaps owning individual stocks is indeed not prudent for most folks, but I consider it a hobby. I picked it up from my dad who was a factory worker at Timken Roller Bearing in Canton, Ohio, yet read the Wall Street Journal every day, and bought stocks like AEP and RPM, a local firm and manufacturer of Rust-oleum. Early on, I also followed Josh Peters, ex from M* and his dividend portfolio along with his books.

My portfolio is 58% individual stocks (about 20), and most pay dividends....largely common names like JNJ, ABBV, BMY, T, WPC (thanks @Scott from MFO for that one), AEP, PRU, AVGO, RPM, O...etc. Many I purchased while "accidental high yielders" during the Covid crash. I'll be adding during the upcoming downturn, both to individual stocks and funds.

I'm down 9.2% this year, less than that of most funds I own, thanks to the outperformance of the individual stocks.

rforno

@PressmUP I'm a similar style investor - I'd say I'm 85% in quality dividend equities and equity funds (mostly individual stocks, though) held for the long haul. What little FI I hold is either stuff from 40-ish years ago I was given as a child or included in some of my funds. I may hold short-term treasuries from time to time just to put idle cash away for a while, too

I'll run numbers in another week or so, but while I'm down for 2022 as well, I've still done better than the broader indices, which is fine by me.

Mark

@PRESSmUP @rforno same roughly 75% in quality dividend equities (the usual suspects) amassed and added to over time, usually down times. The remainder of my portfolio consists of ETF's, BDC's and PIMCO bond funds which are used to generate the cash for those equity positions.

PRESSmUP

@Mark ...Which BDC's? I've been looking at MAIN, and was considering that for 2023.

Mark

@PRESSmUP, MAIN is not a bad choice at this time. I use ARCC and have been looking at ORCC but it's been doing an ugly advance to the rear as of late.

Old_Joe

@PRESSmUP- Timkin Roller Bearings! Wow, haven't heard that name in many years. When I was in grammar school they advertised in The Saturday Evening Post, with very informative descriptions of what they made, why their tapered roller bearings were superior to ordinary ball bearings, and descriptions of the many types of equipment that used those bearings. Timkin did their part in kindling a lifelong interest in things mechanical. Thanks for the memories!

Junkster

What I would like to know is where Barron’s came up with the -12.1% return for the S@P through 12/17/22.

Observant1

That's interesting.
M* and YCharts both indicate that VFIAX has returned -17.92 YTD.

Junkster

Observant1 said:

That's interesting.
M* indicates that VFIAX has returned -17.92 YTD.

Yes, S@P price return is -19.17% while total return is -17.99% or -17,88% depending on which reporting service you check. But nowhere close to Barron’s -12,1%. Unless that was a typo by @Hank.

Mark

@Observant1 @Junkster from the Barron's article:

"Every December for the past 13 years, Barron’s has identified 10 promising stocks that could outperform the market. This year’s group had a value bent, a benefit during a year when value outperformed growth by 19 percentage points. Barron’s 10 picks did even better.

The 10 stocks had a negative total return of 1.7% through Dec. 14, as measured from our publication date in December 2021. That’s 10 percentage points better than the S&P 500 SPX -1.11% index, which was down 12.1%, including dividends, over that span. "

Article

Junkster

Thanks @Mark that explains the discrepancy. It is not YTD but one year through 12/14/22.

hank

Nice to see @Junkster posting. Double-checked that number. And it’s accurate (according to the article) as previously stated. However - I misstated the time period being measured and have corrected the OP. Two things influenced the lower number on the S&P than you might expect:

(1) They are calculating from 12/17/21 to 12/14/22 - the interval between the two sets of Barron’s recommendations.

(2) There’s a footnote along with that - “Total return includes dividends. Source FactSet”

FWIW

sma3

When I have looked at the prices in the past, Barron's seemed to use the close on Friday that it is available , rather than the opening on Monday when anyone can buy the idea. A bit biased as most stocks get a "Barron's pop" on Monday

Anyone use AAII "Shadow Stock" portfolio for small caps and micro caps? Long term it has done very very well ( with greater than Market volatility) , but it is somewhat hard to buy and sell because of the small volumes. I remember an interview with the CEO of a very small but publicly traded firm soemwhere. Their stock shot up 30% one day. He couldn't figure it out. Finally realized that his company had been added to Shadow Stock portfolio