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The Real Story: First-Quarter Report Card

In my debut column for at the beginning of the year, I wrote: "The purpose of this column is to help you increase your investment returns by selectively going against the consensus."

I knew that contrarian picks would surely raise some eyebrows and touch some nerves, as some of the feedback proved (see below).

But I remain convinced that one of the best ways to make money in the market is to zig when others are zagging.

A review of the performance of my first-quarter stock picks bears this out. Over the past three months, I have recommended six longs and six shorts. In total and broken down into longs and shorts, they have beaten the S&P 500, as the accompanying table indicates.

(Results do not include Wednesday's long recommendation of Movado (MOV), although the stock was up more than 3% early Friday after Jim Cramer echoed my bullish comments on "Mad Money" Thursday evening.)

Results are based on closing prices on the day the recommendation was made.

If you bought and sold every one of The Real Story's recommendations on the day they were made, you'd be sitting on a 2.6% gain vs. a 0.4% average gain if you bought or shorted the S&P 500 on those same days.

Keep in mind, The Real Story portfolio is a diverse group of stocks that includes technology, healthcare, retail, utilities, industrials, real estate, financials, restaurants and media. In my opinion there is less risk in that vs. simply owning the S&P 500, as the group is divided evenly between longs and shorts.

The long positions are up 4.2% vs. 1.6% if you bought the S&P on the same day as each of the various recommendations.

The shorts are in the black by 1.8%, even while the S&P has risen by 0.9%.

The Real Story So Far
Beating the S&P, long and short
Stock Story date Recommendation Last * Profit Percentage
LAMR 1/5 Short 52.40 -5.97 -12.9%
BJ 1/10 Short 31.69 -1.99 -6.7%
APPX 1/19 Short 28.25 9.18 24.5% closed 3/9/06
PFCB 1/25 Short 48.83 1.46 2.9%
WBS 1/31 Buy 48.49 1.39 3.0%
ENMC 2/8 Buy 5.15 -0.55 -9.6%
SUNW 2/15 Buy 5.15 0.83 19.2%
ADBE 2/27 Short 36.33 2.86 7.3% closed 3/23/06
ELN 3/6 Buy 14.76 2.06 16.2%
SCG 3/10 Buy 39.51 -0.56 -1.4%
BOOM 3/14 Buy 35.77 2.83 8.6%
JOE 3/23 Short 61.75 -0.80 -1.8%
Real Story Portfolio 2.6%
* as of close 3/30
Source: Thomson Financial

The biggest winner was a recommended short of American Pharmaceutical Partners (APPX) on Jan. 19. The position was closed on March 9 for a 24.5% gain. We also currently have a 21.5% winner in Sun Microsystems (SUNW). I'm still looking for a $6 price target on Sun. Investors are also looking at double-digit gains in Elan (ELN), while Dynamic Materials (BOOM) is up over 9%.

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