Today I’ve gotten bogged down in a couple articles that haven’t yet reached fruition, but I also have some good news — the redoubtable Lynn, who keeps so many things running smoothly here at Stock Gumshoe despite my best efforts to gum up the works, has gotten our initial 2017 Spreadsheet up for your consideration.
For folks who don’t know, we track each teaser pick made by the newsletters — we don’t really know when they recommended the stock to their subscribers most of the time, and we certainly never get a note when they sell their position, so the basic rule for the tracking spreadsheets is that we assume someone bought the shares the day the newsletter ran a teaser ad promoting them (and we wrote about it), and we hold them forever. Because of the restrictions for live spreadsheets from Google, we have each year in a separate spreadsheet for you to browse as you like — but they are not “end of the year” numbers or annualized numbers or anything fancy like that, even back to 2007 that spreadsheet still just indicates what the return would be if you bought the stock the day it was teased by a newsletter in one of their ads, and held it until right now.
We still have to go back and do some updating in some of the older spreadsheets for events that sometimes get missed a few years after a teaser runs, like acquisitions or splits that impact the shares, but you can browse back through those years in case you’re ever looking for some long-term perspective on the promises made by investment newsletter sales copywriters — and yes, our original articles are linked from each spreadsheet as well, so you could go back and get a sense of what kind of potential was being talked up for the stocks being teased. Unfortunately, we usually find that the same kind of potential is touted for the huge winners (like the Fool’s teasing of Netflix back in 2007, for 5,700% gains) and the huge losers.
There are always, as you might guess, more losers than winners — but sometimes it’s pretty close, we’ve had years in which half the teased stocks either beat the S&P or were, at the least, in positive territory. More typically, about a third of the stocks tend to be successful and 2/3 relatively unsuccessful ideas… and the middle ground of ideas that are either a little better or a little worse than the market is pretty large.
And for those who ask, yes, that Motley Fool pitch about Netflix is a rarity, indeed… we see nearly every newsletter pitch giving us dreams of 1,000%+ returns, but as of now, if you had bought every single stock that was teased by a newsletter and uncovered by Stock Gumshoe over the past decade, that NFLX pitch would be the only 1,000% return you’d have. There are several 100% gainers in most years, which I’m sure is helped by the fact that the market overall has risen pretty steadily for eight years, but the true huge gains are extremely rare. Much, much more rare than the 95-100% losses, which usually significantly outnumber the 100%+ gainers in any given year.
And, of course, I try to remember to throw in some rearward-facing humility and note that I wasn’t all that enthused about Netflix back in 2007, when it was at $10-15 or so a share (split adjusted, that would be about $2.50) — it was expensive and uncertain and in a huge transition back then, so you had to be a believer that the online streaming business would really take off, replace the DVD-by-mail business, and generate dramatic growth. As I recall, I gave it a “meh” response at the time and never owned the shares… oops.
But sometimes, of course, there are good ideas hiding in these newsletter promotions — and sometimes when we look into the details and think for ourselves we’ll find that they’ll be good enough, or attractively valued enough, to knock us out of our complacency and make us buy shares. Hopefully we’ll be won over by more 200% gainers than 95% losers in the years to come.
Curious about the top of the list for this young year? So far the darling stock is Shopify (SHOP), which was pitched by the Motley Fool last Summer as well but really got re-pushed by the Motley Fool Rule Breakers folks in a big way starting in January, when they told anyone who would listen that it’s “like buying Amazon in 1997” (and I’ve seen that same ad again just today, so presumably they’re still fans) … and close behind that is Mobileye (MBLY), thanks to the premium takeover bid that stock received from Intel (INTC) about three weeks ago. Both of those are up close to 50% (I own some SHOP call options personally in my Real Money Portfolio, for full disclosure, and will probably write some more about that position for the Irregulars on Friday as I try to figure out what to do with them).
And yes, for ye of little faith, we have also had two 50% drops already in just the first stirrings of this new year — a junior miner and a junior oil explorer have both fallen that far since they were pitched back in January, I’ll let you explore the spreadsheets to discover which ones… our tracking sheets are always available here.
Notice any patterns or ideas hiding in those teased stocks? See any splits or acquisitions or other errors we should fix? Ideas for how we should improve this 2008-vintage tracking technology? Please let us know with a comment below…