Thursday, January 18, 2007

Deconstructing Barron's Roundtable

Today was a good day. All my portfolios went up. The NASDAQ got clobbered. My AAPL puts went up, since Apple had blow-out earnings and still managed to fall hard. And IBM announced great earnings this evening, only to have its stock get whacked. Having stocks fall on great news makes my day.

But enough about me. Let's make today about the Barron's Roundtable, where a dozen market "experts" talk about - - invariably - - how much higher the market is going to go.

I love Barron's dearly, mainly because it had the good sense to give my start-up (Prophet.net) the "Best of the Web" award four years in a row. But I take issue with their roundtable for a couple of reasons.

One is that they tend to have the same clowns back each year, including the singularly nauseating Abby Joseph Cohen. I don't think the fact she is so physically unattractive to me would grate so much if she weren't so bullish all the time. Oh, by the way, here's the roster:

Art Samberg, Chairman and CEO, Pequot Capital Management, Westport, Conn.;

John Neff, Retired portfolio manager, Vanguard Windsor Fund; managing partner (retired), Wellington Management, West Conshohocken, Pa.;

Marc Faber, Managing director, Marc Faber Ltd., Hong Kong;

Scott Black, Founder and president, Delphi Management; portfolio manager, Delphi Value Fund Boston, Mass.;

Meryl Witmer, General partner, Eagle Capital Partners, N.Y.;

Oscar Schafer, Managing partner, O.S.S. Capital Management, N.Y.;

Archie MacAllaster, Chairman, MacAllaster, Pitfield MacKay, N.Y.;

Felix Zulauf, Founder and president, Zulauf Asset Management, Zug, Switzerland;

Fred Hickey, Editor, The High-Tech Strategist, Nashua, N.H.;

Abby Joseph Cohen, Chief U.S. Investment Strategist, Goldman Sachs, N.Y.;

Mario Gabelli, Chairman, Gamco Investors Inc., Rye, N.Y.;

Bill Gross, Founder and chief investment officer, Pimco, Newport Beach, Calif.

The second thing is that Barron's shows the tables of how the past picks of these experts have fared. That's just fine, except for the fact that for the one or two members who actually have the gonads to offer bearish opinions, their picks are shown as negative values if they do well. In other words, if a short suggestion goes from $100 to $50, the column showing the percentage performance is -50%. I imagine 95% of the readers skim the % column and, seeing the negative numbers, figure the person who made the call it a nit-wit.

The proper thing to do would be to show the true return so that people are comparing apples to apples. This is just example 5,739 of how the world hates bears. They can't even give credit where credit is due.

Oh, there's a third thing I don't like about how Barron's shows this information. They don't even show the average return for the picks! Some people have five picks, others ten, others three.........but they don't bother to show the average return. Is that idiotic, or what? I mean, how is anyone supposed to judge how decent these overpaid people are?

Well, Tim to the rescue. I've punched in the results for the roundtable picks of 2006. And I have - gasp - actually computed the average returns of the picks. They are, in descending order, as follows:

Meryl Witmer: 60.26%
Oscar Schafer: 34.36%
Art Samberg: 30.7%
Scott Black: 28.55%
Marc Faber: 27.86%
Felix Zulauf: 27.38%
Mario Gabelli: 20.16%
Fred Hickey: 18.18%
Abby Joseph Cohen: 17.55% (pfftt..)
Bill Gross: 17.3%
John Neff: -8.6%
Archie MacAllaster: -13.25% (go get 'em, Archie!)

Keep in mind two things. First, these people are, by and large, paid millions and millions of dollars. Second, the market was up about 18% last year. So hottie AJC got paid a bundle for doing.........ummmm..........well, I'm not sure.

I would also add that the results for the roundtable's mid-year picks are also available. Fred Hickey - - just about the only bear in the group - - scores a nearly 20% gain on his picks (and the market went straight up during the second half of last year!) Whereas all three of Abby Joseph Cohen's picks fell in price, averaging a nearly 12% drop. Nice going, Abs. Way to earn your millions!

So there you have it. The experts. The bulls. The unjustly rewarded. How these people can to be in such positions of authority is quite beyond me.

13 comments:

Leisa said...

I was sorry to see that Liz Ann Saunders (Charles Schwab) was not part of the round table this year. I have found her to be very credible and capable of girding her loins and talking about the tough stuff. I've never had any respect of AJC. But she doesn't need our approval, now, does she?

Sanjay Sola said...

congrats on your Apple puts, Tim. bears deserve a few down days.

Richard Nikoley said...

"How these people can to be in such positions of authority is quite beyond me."

We live in an idiocentric world, Tim, which means people resist thinking for themselves (omniocentric) and instead seek to congregate around an authority or guru of some sort.

So, requirement one is that you have the personality to play the role, and number two, that you are willing to operate within a range of opinion just wide enough to appear "objective," but certainly calculated to fall within the expectations of the average seeker of authority.

To state it plainly: To keep 'em comin' back for more.

Lauriston said...

Tim

First I think AJC is a fine woman, and is actually attractive like everyone else. But that is just my personal opinion. I think I kind of find it uncomfortable when men quickly pick on something like attractiveness whenever a tough woman is in the neighborhood, kind of reminds me of Trump/Rosie feud where Trump immediately picks on Rosie's weight. Secundo, I have seen AJC on TV and she is great for that particular role, i.e. BS just like all the men that do the same job. I actually think she is smarter than many of the men for reaching where she is in a male-dominated world. And in 2006 her calls were almost 100% spot on and I went long and made a good bundle after her appearances on CNBC. I think for me trading is just finding the movers and shakers and following their tracks.

Anyway, enough about AJC!! OK, one last thing, I wish I could earn her type of mullahs!! Otherwise, let's sad to see the charts are missing, maybe a picture of AJC would have been nice :)

fastermasterblaster said...

Tim,

Thanks for the persistence and astute observations.

Last night after reading your calls I did some technical soul searching ... and sold my remaining long positions at market open, then bought QID. I figured you contributed to saving about 6% of my portfolio value in one trading day.

I thank you beary much for the guidance.

evenflo269 said...

Hi Tim,
I am a first time poster and wanted to say that I enjoy your site here. Also, I was wondering your opinion - with the recent weakness in Techs and the market overall, which sectors do you feel have the most potential for shorting? Also, where do you find is the best place to find pre and post market action info?
Thanks for everything.
SJE

Tim Knight said...

Fastermasterblaster - I am delighted my thoughts helped save you money. Wonderful!

Lauriston - points are well taken. If it helps my cause at all, I will say that every single ONE of the guys is also really unattractive. But I guess none of these people are picked for their good looks, eh?

Lauriston said...

Tim- OK, all settled. I had to defend the poor woman. I think there is a secret part of me that doesn't like her perpetual bullishness, but these purveyors of stock are all the same I agree! One thing though, I am waiting for the day that she turns bearish. That will be one heck of a day to behold...

Tim Knight said...

"Also, I was wondering your opinion - with the recent weakness in Techs and the market overall, which sectors do you feel have the most potential for shorting? Also, where do you find is the best place to find pre and post market action info?"

No particular comment on sectors; I'll try to "get back to the charts" with today's post, and that may yield some insight.

As far before/after hours information, here are three helpful links:

CBS Marketwatch after hours: http://www.marketwatch.com/tools/stockresearch/screener/afterhours.asp

NASDAQ Pre-Market: http://dynamic.nasdaq.com/dynamic/premarketma.stm

NASDAQ After Hours: http://dynamic.nasdaq.com/dynamic/afterhourma.stm

EddieFl said...

COHEN AND GS



I think i could put up Abby's picture up at my Uncle's farm to keep the varmin away,,, yikes,,, what a sight.

She looks like a 15yr old fat little boy. .

Regarding GS, i am still short, with put, Looking to get out near 200 market price.

PB said...

I actually keep a picture of Abby in my wallet! Whenever and wherever I get an "unexpected" boner, just one look at her picture makes the monster go down!

Thanks Abby from saving me from a few embarrasing situations!

Lion would only eat her with a sour face!

Finster said...

Hi Tim,
Love your blog. Great tech information & charts to present investment ideas for which to do further DD on.

As for the Barron's roundtable, I noticed the misrepresentation of the return % on the shorts as well. In addition to Fred Hickey, I also like to read Marc Faber and Felix Zulauf's comments and picks. They seem to me to "tell it like they see it" and don't cater to the perpetual bulls.

Pan said...

Hey Tim,

I'm all busted up that you don't find AJC physically attractive. Just last week she was telling me about what an ass you made of yourself at the Xmas party with a crossdressing secretary.

AJC is not in a display profession. It's truly disgusting that you can't seem to get past it. Next you'll start sharing with us stock tips from Jessica Simpson. More your type, eh?