Well, it’s the midway point of the year, and that means coming clean on just how ugly my track record has been in 2014.
I don’t keep a formal percentage gained/lost tally on my calls, but I do try to regularly recap what I got right and wrong when I tell investors to buy or sell a stock. Thankfully, the market has had a good tailwind this year and has made most of my calls look pretty good.
However, my worst calls were ones where I bet against picks that not only rode the rally, but actually outperformed. That goes to show the danger of missed opportunities that can weigh on your portfolio just as much as bad investments that underperform.
I did get some big calls right, too … but nobody likes a braggart. So let’s start with my worst calls first.
And if you’re wondering why I’m publicly airing these bad calls, the reason is simple: Doing this because the exercise reminds me of just how flawed I am as an investor, and that I have to work constantly to improve and overcome my biases. I also choose to do this publicly in the hope that it will remind others of their selfsame shortcomings.
So without further ado, my best and worst calls (so far!) of 2014 on InvestorPlace include:
My Bad Calls
- On Jan. 17, I made the boo-boo of predicting 2014 would be the year of international growth. While some markets like South Africa have managed to keep pace, others I plugged — including Russia and China — have lagged painfully behind.
- Also on Jan. 17, I warned that Facebook (FB) would report bad earnings and should be sold. Shares are up 18% since then, almost three times the S&P 500.
- On Jan. 30, I said Apple (AAPL) was not a buy. Adjusted for its 7-for-1 split, shares are up about 30% since then.
- On Feb. 10, I warned solar stocks were about to cool off. Well, First Solar (FSLR) is up about 40% since then and the Guggenheim Solar ETF (TAN) is up about 12% to roughly double the S&P’s return.
- On Feb. 27, I warned it was safer to simply watch JCPenney (JCP) than invest in the battered retail stock. Safer or not, JCP stock went on to add about 60% since then.
- On March 4, I said Russian internet stock Yandex (YNDX) was a good (albeit aggressive) buy… and the stock has lost 8% since then while the market has chugged higher. Disclosure: I have a personal stake in YNDX, so at least I’m eating my own cooking on this call.
- On April 28, I still couldn’t give up my bearish position on Apple. I said AAPL stock was a sell on strength after earnings. It has risen another 15% since then, almost three times the S&P 500. Ooops.
My Good Calls
- On Jan. 2, I warned that coal king Cliffs Natural Resources (CLF) was a sell. Shares are off 40% since my sell call.
- On Jan. 7, I warned of chasing high-valuation tech stocks and instead offered five “cheap” plays. Only one has significantly underperformed the market – IBM (IBM), which is flat YTD – while three are up by double digits, led by the 20% gain in Hewlett-Packard (HPQ).
- On Jan. 27, I said Caterpillar (CAT) earnings hinted at a recovery and a strong future. The stock is up nearly 30% since my buy recommendation, and the best performer in the Dow Jones Industrial Average this year.
- On Jan. 29, I said Yahoo (YHOO) would be dead money until the Alibaba IPO allowed for a special dividend payment. Shares are off 6% since that call.
- On March 13, I went back to the large-cap tech well with 5 high-yield tech stocks to buy … and all five falls have outperformed since my recommendation. The leader, Intel (INTC), is up 26% since my call.
- On March 20, I said to buy enterprise tech. The worst of the sector has tracked the market, and Cisco (CSCO) has added 16% in about three months to almost triple the S&P.
- On March 25, I offered another batch of seven dividend stocks — some tech, but all with the idea of being “crash-proof” investments. All are in the green, only two have underperformed and the biggest winner is up more than 18% in just a few months — not counting dividends.
- On March 26, after Panera (PNRA) earnings, I said the worst wasn’t over yet. PNRA has shed another 20% since then.
- On April 24, I said GW Pharmaceuticals (GWPH) was the best among a risky crowd of marijuana stocks. The pick is up more than 50% since then while other hot penny stocks in the sector have crashed and burned.
- On April 28, I said to sell Twitter (TWTR) before earnings. The stock then gave up about 25% in a few days.
- On May 1, I picked Yelp (YELP) as a bargain buy … and that stock is up more than 30% since then. Too bad I didn’t put my money into that one.
- On May 9, I picked Groupon (GRPN) as a bargain buy after dropping almost 50% year-to-date. The stock has snapped back 15% since then … and full disclosure, I recently put my money where my mouth is on this call, so I hope it continues to run.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he personally owned a stake in both GRPN and YNDX but no other securities mentioned here. Write him at firstname.lastname@example.org or follow him on Twitter at @JeffReevesIP.