We missed out on some of the fun at 2017’s stock market party. Stocks we picked to outperform the market ended up trailing their benchmarks, on average.
It wasn’t by much, but certainly enough to notice. The stocks we recommended were up 8.1% from the date of publication to the end of the year. The benchmarks against which we gauge picks rose 10%, on average, in the same stretch. Taking dividends into account, our picks climbed 9.6% versus 11.1% for the benchmarks. The Standard & Poor’s 500 index, including dividends, rose 11.8% in the comparable period.
On the, well, positive side, we consistently panned stocks at the right time. For the third year in a row, our bearish calls performed worse than their benchmarks. In fact, they also fell in absolute terms. On a total-return basis, they slid 1.9%, even as their benchmarks rose 10%.
Readers keep us honest with letters, comments, and tweets, but we also keep tabs by tracking our picks every six months in the magazine, and in real time at Barrons.com. Large-cap stocks are measured against the S&P 500, mid-caps against the S&P Midcap 400, and small-caps against the Russell 2000.
There are some exceptions and caveats. The Scorecard that starts below includes company-specific articles, but not stories analyzing several companies or entire industries. And when we publish follow-ups to pieces that urge readers to sell or cover, we lock in the profit or loss up to that date.
So what happened last year? We missed a few of the biggest trends in the market, and were often oriented toward value stocks—those Wall Street may have left behind—rather than the growth and momentum stocks that led the market. Technology and health care were the best performers in the S&P 500 in 2017. We caught some of those trends, turning bullish on Amazon.com (ticker: AMZN) in May. And we made smart calls on health care, too, suggesting insurer Anthem (ANTM) in January and drug company Abbott Laboratories (ABT) in February.
Our best pick last year was SolarEdge Technologies (SEDG), an Israeli company that makes components for solar-power systems. The stock nearly tripled as solar investments jumped in some parts of the world.
Sarepta Therapeautics (SRPT) also had a banner year, returning 71%, on positive news about its muscular dystrophy drug, including more acceptance by insurers. Caterpillar (CAT) made like a butterfly, soaring 56% after our bullish May call.
BUT THERE WEREN’T ENOUGH of those gems.
Dogs like Under Armour (UAA) and General Electric (GE) hampered performance. Under Armour suffered as sportswear sales continued to slump in North America and Adidas (ADS.Germany) stole more market share in sneakers.
In November, we advised investors to cut their losses and sell, after the company posted its first quarterly loss in more than a decade. And GE has had a months-long meltdown that a new CEO is trying to reverse. Diebold Nixdorf (DBD), which makes ATM machines among other products, also defied our predictions of a rebound.
We had more success on the negative side. Barron’s warned Peabody Energy investors in January that they would probably leave bankruptcy court with empty pockets. And the stock did indeed zero out in the restructuring. Medical device-maker Glaukos (GKOS) had been shooting higher on the success of its glaucoma treatment before our April story warned that its shares were richly valued and competition was coming. Since then, it’s plunged 50%.
And Snap (SNAP) snapped in the wrong direction after its stock-market debut; Facebook (FB) keeps eating its lunch, and taking Instagram pictures of that lunch. Our prediction that the share price would be cut in half came almost exactly true, as the stock fell to $14.61 by the end of the year from $27.09 before the story appeared.
Our 2018 vow: Get to the party on time or get out before it ends.