Fortune’s Best Stocks for 2009… Yeah, Right.
The Fortune magazine released their Best Stocks for 2009 list a few days ago. That reminds me of Fortune’s similar list for 2008.
Let’s see how we’d do if we had followed Fortune’s list of “best” stocks for 2008, early in 2008. Here are their 2008 recommendations (if you can’t see the spreadsheet below, please go here):
The crowning recommendation in this list is definitely, without doubt, Merrill Lynch. Just to remind you again of what Fortune said about Merrill:
Question: What do you call it when an $8 billion asset writedown translates into a $30 billion loss in market cap? Answer: an overreaction. Yes, Merrill’s shares deserved a punishment for the firm’s mortgage-related bungling. But the public flogging has far exceeded the transgression, which is why smart investors should buy this stock before everyone else comes to their senses.
Daaaammn. Luckily I wasn’t smart according to Fortune!
Honestly though, I didn’t buy Merrill not because I was smart or better informed than Fortune. I didn’t buy MER because I already work in a bank, and investing in another bank’s stock is just too many eggs in one basket for me. (I, for one, will NEVER buy the stock of the company I work for, unless it’s part of my compensation. Not diversified enough for my taste.)
But anyway. The point I’m trying to make here is that, 2008 has proven to us that the smartest guys with the smartest bunch of people working for them can be totally, irrefutably, horribly wrong. People are even starting to ask whether our most basic assumptions about stocks are no longer valid. What the Fortune magazine is recommending is not necessarily any better than what we can come up with a reasonable amount of homework ourselves.
So I’d say, trust yourself. Hold on to your money. Invest carefully, only after doing your own homework. And Merry Christmas! Here’s to a better 2009 ahead 
(Image courtesy of Jeff Kubina @ flickr.)