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December 11, 2006


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"I often wonder what the total return would be if every paper, magazine, TV show, etc. went back five years and calculated the return for all the investments they'd recommended. I'm sure it wouldn't be pretty. I've seen pieces where magazines went back and reviewed their "recommended" list of investments that were detailed in one article previously, but I've never seen a comprehensive review of all the investments recommended."

One of the problems is that very few of these "buy" recommendations ever state a length of term. I've seen some reports which tend to advise when to sell assets. This is probably more useful information, but all the press goes toward hot stock picks. It's as if no one knows enough to buy but everyone is somehow an expert at knowing when to cash in their chips.

I suspect, as you do, that such an analysis of past performance would put some real egg on the face of the prognosticators. The only problem is that they never say when you should sell so you can't make a hard determination of the track record.

Re #4.

I get SmartMoney, and just a couple of days ago the "What Stocks to Own for 2007" issue came. They did a review of the last few years of their buy lists.

I saw that (and will be posting on it later.)

If you notice, they have other recommended stocks and funds all throughout that issue, but their article concentrated only on a certain series of articles. Seems a bit fishy to me.

I do listen to some of those recommendations in the financial media from time to time, but in a very different way. I assume that by the time I notice them, the profits have been priced out of them for me. Okay, that doesn't mean that the recommendations were good or bad. But I read the reasons behind the recommendations. It's about learning. I ignore financial gurus who can't explain which something is a good investment opportunity or who spout gibberish.

It takes time, but a savvy reader can differentiate between genuine advice backed by real numbers and a advertisement disguised as an article. One big clue: the actual advertisement is usually next to in with a few pages of the 'article'.

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