Ignore Barrons Terrible Picks, And Go With The Stocks That Work!
No one ever claimed it was easy to make money picking stocks. But lately, so-called experts are making positive returns seem like a fantasy. And theyre giving stock picking a bad name.
Of course, penny stock investors like us know better.
Ill get back to that in a minute. First, lets talk about Barrons
As an investor, youre probably familiar with Barrons. Its an extremely popular source of financial and market news. As a matter of fact, its been around since the 1920s!
But apparently, the magazines stock picking team hasnt learned much in the last 90 years. You know, like how to pick winners.
You see, at the end of every year, Barrons publishes their top ten favorite stocks for the upcoming year. This portfolio of big name companies is supposed to outperform the overall market. For instance, they claim their 2012 picks should earn returns of 15% to 20%.
That sounds nice in theory. Too bad their 2011 portfolio was an unmitigated disaster.
Theres really no way to sugarcoat it. Of Barrons ten favorites for 2011, seven are down for the year, including General Motors (GM) sinking a hefty 45%.
As a whole, the 2011 portfolio is down over 8% year to date. Thats significantly worse than the overall market. As of this writing, the S&P 500 is down 3% for the year, while the Dow Jones Industrial Average is up 3%.
In other words, the experts picked ten very large – and supposedly safe companies and somehow managed to underperform the market by a considerable margin.
Great work guys.
Seriously their analysts couldve thrown darts at the Wall Street Journal and constructed a better portfolio than that! (We can only hope they used the dartboard method for 2012s picks )
Heres the thing
If you just want to own large cap, blue chip stocks, just buy an index fund or ETF. Their cheap, easy, and sector diversified.
But why waste your time with large caps to begin with?
If you actually want to earn decent returns, particularly in a down year, penny stocks are the way to go.
Often times, penny stocks arent strongly correlated with the overall market. So, you can see positive returns even if the overall market is falling. These days, thats simply not possible with large caps theyre all so highly correlated with each other.
Whats more, penny stocks receive little, if any, analyst coverage. That means most investors dont realize these companies even exist. And its very possible to find a gem of a stock before others pile in. All you need is a little time to do some research.
Besides, whats the alternative relying on Barrons? Hey, if thats what you want to do, I have a nice set of darts I can loan you.
Yours in profit,
Gordon Lewis
Category: Investing in Penny Stocks, Penny Stocks to Buy
