We’re now halfway through 2017, and it’s time to see how the stock picks of some of the leading popular finance publications (Time, Fortune, and Forbes) have performed. Each of these organizations published end-of-year stock picks in 2016, and most people don’t follow-up and see how these stock picks actually perform.
When we looked at the first-quarter results of the stock selections back in April 2017, the results were decidedly mixed. Let’s see if the picks have done better in the past 3 months.
Time
Time Magazine recruited four fund managers back in December 2016 to give 3-4 stock picks for 2017. Time compiled these stocks picks in an article, Top Stock Picks From 4 Professional Investors Who Keep Beating the Market. Let’s see how they’ve done:
| Stock | Ticker | 2017 Return |
| Charles Schwab | SCHW | 9.3% |
| Natl Oilwell Varco | NOV | -11.8% |
| Union Pacific | UNP | 6.2% |
| CVS Health | CVS | 3.2% |
| Gilead Sciences | GILD | 0.2% |
| Intel | INTC | -5.5% |
| Service Corp Intl | SCI | 18.7% |
| The Toro Co. | TTC | 24.5% |
| Vail Resorts | MTN | 27.0% |
| AGCO | AGCO | 17.0% |
| Hyundai Motor | KRX:005380 | 9.2% |
| Kia Motors | KRX:000270 | -2.8% |
| United Overseas Bank | SGX: U11 | 13.3% |
| Average Return | 8.3% | |
| S&P 500 Return | 9.3% |
The average of the 13 Time Magazine picks has returned 8.3% through the end of June. Not a bad return, but not as good as the S&P 500, which has returned 9.3%. There have been some good picks by the experts: Vail Resorts is up 27%, and Toro has risen 24.5% this year. Unfortunately, there have also been bad picks as well, including National Oilwell Varco (-11.8% return) and Intel (-5.5% return).
Fortune Magazine
Fortune Magazine published their 2017 stocks picks (The 21 Best Stocks To Buy For 2017) as part of a larger “Investor’s Guide” at the end of last year. Here’s how Fortune’s picks have performed:
| Name | Ticker | 2017 Return |
| B2Gold | BTG | 18.6% |
| Bank of America | BAC | 10.5% |
| Celgene | CELG | 12.2% |
| Check Point Software | CHKP | 29.2% |
| Citigroup | C | 13.1% |
| Fiat Chrysler | FCAU | 16.6% |
| GlaxoSmithKline | GSK | 14.7% |
| Lam Research | LRCX | 34.6% |
| Newmont Mining | NEM | -4.6% |
| Palo Alto Networks | PANW | 7.0% |
| Pentair | PNR | 19.9% |
| Pernod Richard | PDRDY | 24.3% |
| Royal Dutch Shell | RDS.A | 1.3% |
| Sberbank of Russia | SBER | -10.6% |
| Sony | SNE | 36.6% |
| SPDR Metals & Mining | XME | -1.1% |
| Suncor Energy | SU | -9.2% |
| UnitedHealth Group | UNH | 16.7% |
| Vail Resorts | MTN | 27.0% |
| Varian Medical Systems | VAR | 27.3% |
| Williams Cos. | WMB | -0.8% |
| Average Return | 13.1% | |
| S&P 500 Return | 9.3% |
Fortune’s picks have been very good, beating the market by a hefty 3.8%. Six of its 21 picks have risen by 20% or more through the first half of 2017, including Pernod Richard, Lam Research, Check Point Software, Sony, Vail, and Varian. It has also had some big misses, with Sberbank of Russia (-10.6% return) and Suncor Energy (-9.2% return) being their worst picks.
Forbes
Forbes published their 2017 picks in their end-of-year article “How To Invest in 2017: The Best Stock Picks From 7 Pros“. They polled seven investment strategists to give one stock pick for 2017. Let’s see how they have done:
| Name | Ticker | 2017 Return |
| General Motors | GM | 2.4% |
| ONE Gas | OGS | 10.5% |
| USG Corp | USG | 0.5% |
| Independence Realty Trust |
IRT | 14.7% |
| Forterra | FRTA | -62.0% |
| Dycom Industries | DY | 11.5% |
| IBM | IBM | -5.6% |
| Average Return | -4.0% | |
| S&P 500 Return | 9.3% |
Forbes’s picks have underperformed the market by a whopping 13.3%. This is largely due to a disastrous performance by Forterra, which has fallen by 62% in the first half of the year. The stock tanked more than 50% in the two weeks of trading after it delivered disappointing first-quarter earnings.
Conclusion
After six months of 2017, one publication has outperformed the market (Fortune), one publication has roughly matched the market (Time), and one publication has underperformed the market (Forbes). Picking stocks is hard, and while Fortune’s picks have done well so far this year, Forbes or Time may do better next year.
The misfortune of Forbes’s picks, specifically the pick of Forterra, highlights the importance of diversification. Warren Buffett may have said to “Put all your eggs in one basket, but watch over your basket closely”, but one bad earnings performance, as happened with Forterra, can destroy an entire “diversified” portfolio of 10 or even 20 stocks. Investing in index funds, such as the S&P 500 and Total Stock Market, insulates you from big losses by individual stocks like Forterra.
What do you think? Do you read these annual lists of stock picks? Do you think they typically outperform, underperform, or match the S&P 500?
I skim these yearly because I find their rationale fascinating. Still the performance results you list here do not surprise me. Picking stocks over a short term less then a year imho is speculation. Add to that if they had some secret process they wouldn’t publish it in a national magazine.
Bingo! Jim Simons makes a ton of money on his hedge funds and keeps how he does it a secret.
Great to see a follow up on those picks. I suspect the point of the story is keep it simple stupid. Vanguard (or Fidelity) index funds all the way. With a toddler running around I don’t have the time to evaluate and pick stocks individually.
I agree with Full Time Finance that short term picking is speculation so maybe in 10 years these will be winners.
Agreed. Who has time to do their homework and pick stocks?
Great Post. I do apply the passive investing strategy and my portfolio is into Vanguard/Fidelityindex funds. At the same time, I love reading investing books in the line of security analysis, all about assett allocation, etc . I still plan to do some stock picking in the future (I am young). I understand it is more work but nothing wrong if you have the time and you enjoy a it.
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