This column was originally published on RealMoney on Jan. 10 at 12:00 p.m. EST. It's being republished as a bonus for TheStreet.com readers.
2005 was a good year for my guru strategies. If you had bought all 89 of the stocks I wrote about on the same day I touted them, you would have had an average gain of 7.7% at the end of 2005. This compares with a gain of 3.3% from investing in the
over a comparable period.
Let me explain how I did the math. I took the closing price of each stock on the date I recommended it and compared it to its closing price for the year. Taking all the winners and losers, the average gain per recommendation was 7.7%. Each recommendation was given equal weight.
Then I sought to find out how much investors would have made if instead of buying my picks, they had put the same amount of money in an S&P 500 index fund instead on the date of each recommendation. The average gain from investing in the S&P 500 would have been 3.3%.
Fifty-two of my picks (58%) went up and 37 (42%) went down.
By way of comparison, the
Dow Jones Industrials
dropped 0.61% for the year, the
rose 1.4% and the S&P 500 gained 3%.
April 25 column when it was trading at $223.53. It closed the year at $414.86, gaining 85.6%. During that same period, the S&P 500 gained 7.4%.
In addition to Google, some of my better calls were:
Holly ( HOC): 125%;
Western Digital : 57.6%
Southern Copper ( PCU): 48.4%.
My biggest losers included:
Movie Gallery ( MOVI): -85.6%;
Toll Brothers : -29.4%;
CNS : -25.1%
My investment strategy is simple but rigorous: I have distilled the strategies of some of the greatest investors in history into discreet, quantifiable steps (these investors include Warren Buffett, Peter Lynch and Martin Zweig). Using a computer program I created, I screen all publicly traded stocks. Those stocks that receive a strong recommendation from at least one of these strategies are eligible to be written about in my column. Usually, though, I wait until a stock earns a strong thumbs-up from at least two strategies before I write it up. There is no emotion behind these recommendations, no prognostications -- nothing but computer-generated calculations.
Below, I've listed all my recommendations from Jan. 1 to Dec. 30, 2005. All the data are split-adjusted. The returns cited don't include dividends or transaction costs.
At the time of publication, Reese was long Toll Brothers and Southern Copper, although holdings can change at any time.
John P. Reese is founder and CEO of Validea.com, an Internet investment research and stock analysis firm selected as one of Forbes' Best 100 sites on the Web. He is also co-author of
The Market Gurus: Stock Investing Strategies You Can Use From Wall Street's Best
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Reese appreciates your feedback.
to send him an email.
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