This past year was well-noted as a lousy one for stock-pickers.
The final numbers aren't in, but through the third quarter, fewer than 10 per cent of the U.S. "active" fund managers who invested in large stocks were beating the Standard & Poor's 500, according to analysis from Wharton Research Data Services at the University of Pennsylvania (and reported by The Wall Street Journal's Jason Zweig).
So, I look back at my mixed results in stock commentary this year as a minor victory, particularly after a lousy 2013.
As time has passed, I've become better at being particular about the time frame for my advice. This stock will likely be flat for a year, but rise in the future. A high flier might continue to rise, but have issues in the long term. I like to think this raises the quality of the advice. Others might say it's equivocating mushiness. Either way, it means I can say it's still too soon to tell for some picks.
So, on with it, then. I compared the stocks' performance with either the S&P/TSX composite or the S&P 500, whichever is applicable. I count 70 stocks on which I expressed some view, bullish or bearish, through the end of October. Of those, 38 went in the right direction, per my view; 32 did not. (The analysis is through Monday's closing prices.)
Let's take a look at some that went most markedly the wrong way.
Old friends tormented me once again. A negative call on Dollarama Inc. in 2011 was one of my worst that year; I embraced the stock in late 2012, to much success. In June, I decided to swing back to the bearish camp because a declining loonie and a rising Ontario minimum wage were two problems largely out of the company's control. It's outperformed the S&P/TSX composite by 33 percentage points since.
I've never been positive on Lululemon Athletica Inc., but the shares broke out after my "Bet on Gildan, not Lululemon. Again" piece in June, which reiterated a call I've made three times now. Lululemon outperformed the composite by 28 percentage points since the column; at least Gildan beat the index by 11 points.
I remain a long-term bear on Canadian grocers for competitive reasons, but investors disregarded a July article, "Loblaw, Empire shares seem fully valued" by bidding up the shares in the second half of the year. They outperformed the composite by 31 percentage points and 25 percentage points, respectively.
My worst call, by a large margin, was the recommendation that investors look past Genworth MI Canada and buy shares in its U.S. parent, Genworth Financial Inc. After a deeply negative earnings surprise, the shares were halved in value, meaning it's underperformed the S&P 500 by more than 64 percentage points. (It may be small comfort to you that after the crash, I bought 300 shares of Genworth in a retirement account – and I'm down more than 6 per cent since.)
Enough self-loathing. Some success stories:
I'm not sure I deserve a prize for pointing out in mid-October that Ebola-related stocks were overpriced. But some people were out there buying them at those levels, and the two I focused on, Alpha Pro Tech Ltd. and Lakeland Industries Inc., have underperformed the S&P 500 by 80 percentage points and 70 percentage points, respectively.
A March story on fuel-cell stocks highlighted the prospects of the technology, but made clear there was so much volatility in the shares they were "not meant for investors," versus speculators, as one analyst put it.
All three companies featured have underperformed the indexes by 50 percentage points to 70 percentage points.
The 2014 "buy" recommendations featured a number of solid singles and doubles, if not home runs. Goldman Sachs Group Inc., Yahoo Inc., payroll company ADP Inc., Canadian lender Easyhome Ltd., retailers TJX Cos. Inc. and Ross Stores Inc., and online brokers Charles Schwab Corp., E*Trade Financial Corp. and TD Ameritrade Holding Corp. all beat their benchmarks by at least 10 percentage points, some by 20.
Two more: A late-September recommendation of Alimentation Couche-Tard Inc. was a huge winner, with nearly 40 percentage points of outperformance, but it was a mixed victory, as the point of my argument was that it didn't need a big deal for investors to win. Of course, investors won when the company announced a big deal to acquire Pantry Inc. in December.
And another defence of Facebook Inc. in January was rewarded by nearly 32 percentage points of outperformance. (Disclosure: After gaining roughly 200 per cent on my personal holdings, I cashed in my chips on the stock despite my belief there's more success in the future.)
So, in my inimitable optimistic spirit – well, it could have been a worse 2014. Let's see what the new year holds.