“Buy These Stocks for 2019” Forward Test
November 12, 2019 - Investing Expertise
When media recommend stocks, should investors pay attention? To check, we look at performance of stock recommendations for 2019 from December 2018 articles in several publications. Specifically, we test:
- 10 buy recommendations from InvestorPlace published 12/13/2018.
- 19 buy recommendations from Kiplinger published 12/7/2018.
- 8 buy recommendations from Motley Fool published 12/13/2018, 12/21/2018 and 12/22/2018.
- 10 buy recommendations from TheStreet published 12/3/2018 and 12/14/2018.
- 19 buy recommendations from USA Today published 12/28/2018.
- 8 buy recommendations from US News published 12/14/2018.
For each source, we form equally weighted portfolios of recommended stocks at the close on 12/31/2018 and hold without rebalancing. For a broader perspective, we form an equally weighted portfolio of all recommended stocks (Overall). Because the sample period is very short, we focus on daily performance statistics, but also look at cumulative returns. We use SPDR S&P 500 (SPY) as a benchmark. Using daily dividend-adjusted prices of the 74 recommended stocks and SPY during 12/31/2018 through October 15, 2019, we find that: Keep Reading