We’re Officially in a Stock Picker’s Market
It’s Friday in the Wall Street Daily Nation. If you’re a newbie, that means I’m skipping the longwinded analysis. Instead, I’ll let some carefully selected graphics speak for me.
This week, I’m highlighting an encouraging development for all the people that believe they possess superior stock-picking skills.
The world’s actually going to see what you’re made of in 2012!
Make Room for the Holy Spirit
In the financial advice business, we’re fond of saying “You’re only as good as your last recommendation.”
In 2011, though, it really didn’t matter what anyone recommended. Why? Because most asset classes and stocks were behaving like Jennifer Lopez and Casper Smart, dancing in perfect lockstep. Or, in official financial jargon, they were trading with extremely high correlations.
But, that’s not the case anymore! And now stocks are trading far apart, at historically low correlations.
So says the latest research published by Oppenheimer’s Chief Investment Strategist, Brian Belski. Take a look.
As Belski notes, “2012 has been an entirely different story [than 2011], as correlations have fallen dramatically with current levels near their lowest levels in over the past 25 years.”
If you think that’s just a bunch of claptrap coming from a U.S. financial firm trying to pitch its own products and stock-picking prowess, think again.
Research from our Japanese brethren over at Nomura Holdings (NYSE: NMR) arrived at the same conclusion.
Clearly, investments move in tandem during times of crisis. Yet, as I pointed out on Wednesday, the market is experiencing a period of peacefulness, typified by a low VIX (Volatility Index).
That means it’s time to dump the index funds and cozy up to your favorite stock-picking investment newsletter editors.
Why? Because Belski’s research also found that since 1990, active management (i.e. stock-picking) outperformed passive management (i.e. indexing) during periods of low correlations.
We’re experiencing this firsthand. Some of our WSD Insider recommendations are up as much as 25% since officially recommending them on January 9. And all of the companies in our Vertical Vision Portfolio are in positive territory.
And what a coincidence… we’re accepting new subscribers here.
Shameless self-promotion aside, you can rest assured our team recognizes that the next crisis is bound to send correlations soaring – and really put our skills to the test. But we’re up to the challenge. And we hope you join us to find out how we fare.
That’s it for this week. But before you sign off, let us know what you think about this weekly column – or any of our recent work at Wall Street Daily – by sending an email to feedback@wallstreetdaily.com, leaving a comment on our website, or by catching us on Facebook or Google+.
Thanks and enjoy the weekend!
Ahead of the tape,
Louis Basenese
Related Topics: Market Analysis, Stocks
