Got a quarter? Can you flip it? Congratulations, you're a stock guru.
For months now, I've used Motley Fool CAPS to evaluate the Wall Street wizards who rate stocks. In "Get to Know a Guru," we meet the unsung heroes (and villains) of Wall Street. In "This Just In," we determine whether their upgrades and downgrades are up to snuff. Today, using the full breadth of CAPS, I'll tell you which of these analyticial hotshots are truly hot -- and which are most definitely not.
Newsflash: They're not
We often hear that 80% of mutual funds underperform the market. Now CAPS lets us fact-check that statement. It tracks the performance of every stock pick made by 124 professional stock pickers, from talking heads like Jim Cramer to financial bastions such as Citigroup. More importantly, CAPS notes whether the picks are beating or lagging the S&P 500's return. The result? Of 124 professional players, 75 have sub-50% accuracy records in CAPS.
Meet Wall Street's "Dirty Half-Dozen"
Here are the six least-accurate professional investors, along with their worst public recommendations, according to CAPS. We've measured how badly their open picks are lagging the S&P 500 now, or how far behind their inactive picks were when they closed.
As you can see, even the "best" firms on this list get twice as many picks wrong as they do right. What's more, half of the denizens of this ana-list appeared in last month's edition of this column -- suggesting they're pretty consistently bad. If you'll pardon my bluntness, I think you're better off flipping a quarter than paying these analysts for investing advice.
Lies, damned lies, and statistics
Confession time: The numbers above sure look convincing, but a relatively new system like CAPS will always have bugs. Some are intentional, such as our decision to forbid ratings on "penny" stocks with market caps of less than $100 million, or stock prices under $1.50 per share. But some are just glitches in the system that may unintentionally affect the statistics CAPS generates.
If you're an analyst named above, and you've got a gripe about your rating -- and the facts to back it up -- we'll work with you to fix the problem. Just drop our CAPS feedback board a note. On the other hand, if you're just mad because we're highlighting statistics you'd rather not advertise, well, there's little we can do for you.