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.