Kiplinger "Experts" record on 4 stocks

[Finance Dave]

I'm reading the Kiplinger Retirement Report, a pay-for service newsletter. I'm reading the December 2009 issue, and it's interesting to see what they said then, and how it's worked out. There is one article where they identified 4 great stocks to have during the "coming" recovery. I've shown them below.

UPS - their biggest winner. It was trading at $58 at that time, and is now at $80...wish I would have bought that one.

Kimberly-Clark - was at $65 then...now at $74...not exactly stellar given the broader market during that time

Pepsico - was at $62, now at $66...ouch.

Paychex - was at $31, now at ...ding ding ding.....$31.

Seems the "experts" didn't do so well on these four, compared to the S&P shown below.

S&P - was at 1,106, now at 1,400ish....about a 27% gain. I'll stick with indexing.

 

[justplainbll]

What about the divies?

 

[SJ1_]

I'm reading the Kiplinger Retirement Report, a pay-for service newsletter. I'm reading the December 2009 issue, and it's interesting to see what they said then, and how it's worked out. There is one article where they identified 4 great stocks to have during the "coming" recovery. I've shown them below.

UPS - their biggest winner. It was trading at $58 at that time, and is now at $80...wish I would have bought that one.

Kimberly-Clark - was at $65 then...now at $74...not exactly stellar given the broader market during that time

Pepsico - was at $62, now at $66...ouch.

Paychex - was at $31, now at ...ding ding ding.....$31.

Seems the "experts" didn't do so well on these four, compared to the S&P shown below.

S&P - was at 1,106, now at 1,400ish....about a 27% gain. I'll stick with indexing.

Great little post! It is always Interesting when you look at the old predictions. The only thing you can really control is the cost.

 

[pb4uski]

What about the divies?

Would help in the comparison but still would not bridge the gap.

 

[Finance Dave]

What about the divies?

Yes, I ignored that....Bad Dave...Baaaad Dave lol

 

[Gerbil Wheel]

Kiplinger is one of the worst rags out there...a glorified fish wrapper.

 

[Finance Dave]

Kiplinger is one of the worst rags out there...a glorified fish wrapper.

Wow, that's a pretty harsh statement without giving any examples or support for your argument. I call foul.

 

[Keim]

Wow, that's a pretty harsh statement without giving any examples or support for your argument. I call foul.

I completely agree. What makes you think they're glorified?

 

[bssc]

I like Smart Money since they go back and look at their recommendations and show which ones were good and which suggestions stunk.

 

[Sarah in SC]

I kinda call them all "money porn" but still read them. There's good stuff in Kiplinger and in Smart Money, but it buried under the same old advice they drag out every year.
I like it when they do those review articles on their hot picks for last year. It is pretty funny that they always have these "best of" mutual fund articles, then in the same issue tell people not to chase the hot funds!

 

[ChiliPepr]

UPS - their biggest winner. It was trading at $58 at that time, and is now at $80...wish I would have bought that one.

Kimberly-Clark - was at $65 then...now at $74...not exactly stellar given the broader market during that time

Pepsico - was at $62, now at $66...ouch.

Paychex - was at $31, now at ...ding ding ding.....$31.

Seems the "experts" didn't do so well on these four, compared to the S&P shown below.

S&P - was at 1,106, now at 1,400ish....about a 27% gain. I'll stick with indexing.

I know you said you ignored dividends... so let's look at this a little more in detail...
UPS: $58 to $80 for the stock price, $4.53 in divs = (80-58+4.53)/58 = +45.74% return
Kimberly-Clark: $65 to $74, $6.18 in dividends = (74-65+6.18)/65 = 23.35% return
Pepsico = $62 to $66, $4.43 in dividends = (66-62+4.43)/62 = 13.59% return
Paychex = $31 to $31, $2.81 in dividends = (31-31+2.81)/31 = 9.06% return.

Assuming you invested equally in each stock you would have returned (45.74+23.35+13.59+9.06)/4 = 22.94% return without reinvesting the dividend.

S&P went from 1,106 to 1,400 = (1400-1106)/1106 = 26.58% return

The S&P still wins, but my guess it would be even closer if you reinvested dividends.

I am not advocating buying stocks over funds, but I think Kiplinger's did OK in this exercise.

 

[soupcxan]

S&P went from 1,106 to 1,400 = (1400-1106)/1106 = 26.58% return

Now you are ignoring dividends in the S&P500!

The S&P that you see quoted in the media does not include dividends and no adjustments are made when they're distributed. So to get total return you need to look at something like VFIAX and get historical prices, adjusted for dividends, from yahoo finance.

12/4/09 - 97.66
3/30/12 - 129.79

For a total return of +32.9% (plus more if you reinvested divs). For the same period, the S&P went from 1105.98 to 1408.47, or +27.4% (which is the price return excluding divs).

But the bigger picture here is that these are non-risk adjusted comparisons (maybe Kip just picked a bunch of high-beta stocks and got lucky) and there aren't nearly enough data points to support any real conclusions about Kip's stock picking ability...

Honestly, if you knew how to pick winning stocks, would you go work as a mass media magazine writer for $50k/year and give away your secrets?

 

[Finance Dave]

I know you said you ignored dividends... so let's look at this a little more in detail...
UPS: $58 to $80 for the stock price, $4.53 in divs = (80-58+4.53)/58 = +45.74% return
Kimberly-Clark: $65 to $74, $6.18 in dividends = (74-65+6.18)/65 = 23.35% return
Pepsico = $62 to $66, $4.43 in dividends = (66-62+4.43)/62 = 13.59% return
Paychex = $31 to $31, $2.81 in dividends = (31-31+2.81)/31 = 9.06% return.

Assuming you invested equally in each stock you would have returned (45.74+23.35+13.59+9.06)/4 = 22.94% return without reinvesting the dividend.

S&P went from 1,106 to 1,400 = (1400-1106)/1106 = 26.58% return

The S&P still wins, but my guess it would be even closer if you reinvested dividends.

I am not advocating buying stocks over funds, but I think Kiplinger's did OK in this exercise.

Thanks for digging up the additional info and doing the math!

 

[Finance Dave]

Honestly, if you knew how to pick winning stocks, would you go work as a mass media magazine writer for $50k/year and give away your secrets?

Exactly. That's what I tell all my friends about these "opportunities" advertised on TV all the time....if they are so good at it, why do they need to sell books and get money from you while giving away their secrets.