It has been a wild 2011, and like all financial journalists and stock-pickers out there, I made my share of bonehead calls. Case in point: A painful endorsement of Bank of America (NYSE:BAC) at the beginning of the year when it was worth twice what it is now!
But some of my writing proved to be right on the money. My take on some big issues like the debt debacle, for instance, as well as specific recommendations — mostly buy recommendations on dividend stocks and sell-side calls on some high-profile blue chips facing headwinds.
I don’t pretend to have a perfect track record. A review of my columns on InvestorPlace shows that I basically moved with the market this year — sideways, with a mixed bag of good calls and bad ones. Most often I managed to get it right and wrong in the same article — such as a March call on Walgreen (NYSE:WAG) that said Walgreen stock was a bargain after an earnings miss. If you bought when I wrote my column on March 23, you saw 15% gains in just two months — then the bottom fell out of the market during the summer, and WAG remains in the red on the year.
That pretty much sums up what this year was like for most investors, I reckon.
In the spirit of disclosure, I thought it would be nice to share some of my worst advice as well as my best predictions from the past year. Here they are:
Debt Crisis Commentary
In an Aug. 11 column on MarketWatch and here on InvestorPlace, I named “three bedrock blue chips to buy at fire sale prices” that included Wal-Mart (NYSE:WMT), Cisco (NASDAQ:CSCO) and AT&T (NYSE:T). AT&T has been lackluster, but Wal-Mart is up almost 25% since that writing and Cisco is up 35%.
I am particularly proud of this call because it came coupled with an earlier column about the August S&P downgrade of U.S. debt. In an article widely distributed on MarketWatch, InvestorPlace, Huffington Post and others, I asserted that the downgrade changed little — it wouldn’t fix Washington, it wouldn’t affect the economy and it wouldn’t affect Treasury rates. When the market opened down 500-plus points on Monday, some folks thought I was crazy.
Time, it seems, has proven me right … so far.
Good Sell Calls
Picking stocks to sell was easy in 2011. But I’ll stick to some of the articles about big-name stocks that made big moves:
In April, I warned of some big-name stocks to avoid. The market’s flop helped prove this call right — but the bearish take on Sprint (NYSE:S) was particularly well-timed. The stock flopped more than 50% since the column was published April 14.
A May 5 column on stocks to sell is much of the same. While some were good calls based on broader market moves, General Motors (NYSE:GM) gave up about 40% since I sounded the warning bell.
And in what I hope was one of the most obvious calls of the year, in February I discussed whether the Market Vectors Egypt Index Fund (NYSE:EGPT) was a bargain or a bust amid unrest in the region — and came down clearly on the sell side. The ETF is off 50% since then.
Another no-brainer was a Sept. 26 column on Eastman Kodak (NYSE:EK), saying the stock was heading to zero. Shares are off 70%, and at less than $1, that target of nothing seems to be pretty accurate.
Good Buy Calls
The buy side was much more difficult, and frequently when I got it “right,” it resulted in lackluster single-digit returns that more or less tracked the market. But a few big winners include dividend stocks I called out amid the volatility as a safe haven.
In March, taking my advice on Lorillard (NYSE:LO) would have netted you about 18% during the next nine months. An April call on AmBev (NYSE:ABV) garnered 22% gains.
And then there was a July 28 article about blue chips for the debt crisis where all are winners even though the market is in the red — led by 15% returns in McDonald’s (NYSE:MCD) since publication. The story is the same for a September column on other dividend stocks, with all five picks posting profits and pharma stock Bristol-Myers Squibb (NYSE:BMY) leading the pack with 20% gains in just a few months — double the market.
My WORST Calls
The ugliest recommendation of the year that I made involved, embarrassingly enough, a feature promoting the top picks from top InvestorPlace.com contributors. I made a very aggressive recommendation on Bank of America (NYSE:BAC) because I wanted to win — and I knew a sleepy blue chip wouldn’t get me to the head of the pack.
I briefly was in the lead across the first few months as BAC moved upward … but then it began a steady downward spiral to current valuations around $5.50 per share.
I ate a lot of crow as a result of this boneheaded call … but at least I warned folks that while I had to stick with the stock as part of our contest, I already had thrown in the towel and considered BAC a horrible investment.
If you think that was bad, it gets worse.
In a controversial column on MarketWatch and on InvestorPlace after the Japanese earthquake and tsunami, I offered up some stocks in the nuclear industry to buy — all have underperformed the market, but the biggest black eye came from USEC Inc. (NYSE:USU). The stock is off a gut-wrenching 70% since my article.
I could try to explain away that this has more to do with the debt crisis in Europe affecting nuclear plant funding than any aversion to uranium, but that’s all academic. A 75% loss is pretty brutal — and I sincerely hope nobody followed my advice on that doozy.
Accountability at InvestorPlace.com
In the new year, I hope to continue some regular disclosures from all our InvestorPlace columnists as a way to show that we are giving recommendations in good faith and that we are not afraid to own up to our mistakes.
If you have any comments to share with our writers or have ideas on how we can best achieve some form of transparency, please send your thoughts to me at firstname.lastname@example.org.
We are a site run by investors, for investors, and we are in this together. It’s very important to me that all readers can trust our commentary — so please don’t hesitate to drop us a line.
Jeff Reeves is the editor of InvestorPlace.com. Write him at email@example.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.