January 2, 2014

The Results Are In !!!

Followers of this blog know I have been following the results of the picks of a major brokerage firm for an entire year and the results are in.

JP Morgan gave us these picks via CNBC on the last day of 2012 so I posted the prices an investor would have got on the first trading day of 2013 and now the last day of 2013 and COMPARED them to a regular old boring index fund.  See the results below including the % gain for each.

Boeing (BA) - 76.93 136.49 77.4%
Bank of America (BAC) - 11.96 15.57 30.3%
Capital One (COF) - 60.05 76.61 27.6%
McDonalds (MCD) - 90.21 97.01 7.5%
Visa (V) - 155.71 222.68 43.0%
Apple (AAPL) - 547.76 561.11 2.4%
Ebay (EBAY) - 52.28 54.87 5.0%
Whole Foods (WFM) - 92.42 57.83 (after 2-1 split)(115.66) 25.1%
Starbucks - (SBUX) - 54.51 78.39 43.8%
Target (TGT) - 58.34 63.27 8.5%
2013 JP Morgan stock picks average 27.1% 

Vanguard Total Market (VTI) - 74.65 95.92 28.4%
Schwab Market (SCHB) - 35.04 45.01 28.4%

OK, so the average of the JP Morgan stock picks is 27.1% which is a pretty awesome year HOWEVER, the index funds averaged 28.4%.  These results do not include dividends or fees which both scenarios would include so would cancel each other out.  Additionally, you would likely pay a fixed fee of 1% to have someone 'manage' your money which would of course lower your results versus buying an index fund yourself.

The conclusion is easy.  Don't waste your valuable time and money using a stockbroker or financial advisor and paying a fee for under performance.  As I and others (Warren Buffett) have said repeated, it is extremely difficult to outperform an unmanaged index fund.