The (Non)Performance Of Kiplinger‟s Expert Recommendations

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Richard Borghesi
Thomas Pencek

Keywords

investment advice, market efficiency, experts

Abstract

We examine the performance of 1,572 stock recommendations published over the past 10 years by Kiplinger’s Personal Finance magazine.  Kiplinger’s picks earned a risk-adjusted mean abnormal monthly return of -2.58% over the 6-month post-pick period.  Our analysis indicates that the recommended firms were larger than average, and that the non-risk-adjusted returns of these stocks exceeded market returns prior to being selected.  The poor post-pick performance cannot be attributed to a small subset of stocks or to a particular time frame.  Instead, the experts appear to significantly underperform throughout much of the period examined.  Our findings suggest that the experts of some popular investment periodicals may bias their analyses in favor of hot stocks to appeal to the interests of naïve subscribers.

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