Don't put much stock in money magazines: Investment picks from expert advisors at financial publications tend to perform worse than the market average, finds new research from the University of South Florida.
An analysis of 10 years of stock recommendations from the personal finance magazine Kiplinger's revealed the so-called "expert" picks performed roughly 3 percent worse than the average stock during the same period. Investment suggestions from the magazine SmartMoney achieved similarly poor returns, finds data from a separate USF study.
"If you were to follow these magazines' experts advice, you would be worse off than having randomly picked stocks for yourself," explains study coauthor Richard Borghesi, Ph.D. Why? Magazine investment pickers tend to select stocks that have been "hot" up until publication--probably because naïve readers will look up the stock's history and be impressed by its recent run of success. But those same stocks typically underperform once the magazine is in print, Borghesi says.
And it wasn't just one or two bad bets pulling down the average. Most of the magazines' bets turned out to be bad ones, the study data shows. Past research has indicated many other investment publications are equally crappy at predicting the market's winners and losers. So save your money and avoid the stock-picking advice of magazine experts, the research suggests.
How should you invest? If there were a simple answer to that question, most of us wouldn't be working anymore. But Warren Buffet--one of the world's wealthiest men and most-consistently successful investors--offers these 32 financial nuggets of wisdom.
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