Hot Stock Picks for a Rallying Market

I have some hot stock tips for you.

I know you are troubled by the economic pickle we are in, but not to worry. This is the time to be "dollar cost averaging out of safe assets" and "into more risk assets --equities and corporate bonds."

Which stocks, you say?

I am so glad you asked. Here's a list:

Johnson & Johnson (JNJ)

Pfizer (PFE)

Wyeth (WYE)

IBM (IBM).

I also have picks for you in the health insurer and service sectors, but you have enough to get you started.

Don't take my word for these pearls of wisdom. They come directly from Bob Doll of Blackrock. Doll has a very impressive title. He is the Vice Chairman, Global Chief Investment Officer--Equity of Blackrock.

Doll gave investors the benefit of his views on CNBC on April 9, 2009.

Blackrock is no rinky dink operation. It manages over $1.31 trillion and has offices in nineteen countries. I can only imagine the resources Bob can call upon prior to publicizing his stock picks to eager investors hungry for market timing and stock picking advice from a real investment pro.

Since Bob is comfortable going on TV and telling investors now is the time to get back into the markets, surely he was able to predict the current crises and warn investors last year to flee to the safe assets he now suggests we all abandon.

Not exactly.

Bob did an interview with Nightly Business Report's anchor Susie Gharib on January 7, 2008.

The Dow was at 12, 827.

Bob predicted the U.S. would "narrowly escape a recession..." This would be good news for investors because Bob's crystal ball told him stocks would hit new records. For those investors who wanted to know what sectors would benefit most from the big rally, he suggested large companies and growth stocks, as well as emerging markets. Bob's "best advice" for investors in 2008 was to engage in "dollar cost averaging" and to "stick to the higher quality companies, the U.S. multinationals and don't give up on the emerging markets."

Susie ended the interview by complimenting Bob on his "interesting list of predictions."

The Dow closed on April 10, 2009 at 8083. Investors who dollar cost averaged into stocks got clobbered.

It is not surprising that Bob's predictions were so wrong. Predicting the direction of the markets is not easy. Take bank stocks for example. They were down over 55% from January 1, 2009 through March 9, 2009.

But look what happened from March 9, 2009 through March 23, 2009. Bank stocks were up over 65%.

Here's the real kicker. If you were out of the market on March 20, you would have missed out on almost 50% of that gain.

Raise your hand if your broker or advisor told you how important it was for you to be invested on March 20.

What continues to amaze me is how successful advisors and brokers are at convincing investors they should pay them to manage their money based upon their ability to predict the unpredictable. No amount of contrary data seems to undermine this flawed premise, including evidence of terrible past predictions.

You have to ask: When will investors realize that investing with those who claim a skill they don't have is harmful to their financial health?

I have an "interesting prediction."

Very soon.

The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein.

Comments

[Frost319]

Well, I am fairly new to the game of investing.

If you are planning to follow Bob or other top figures with "buy and hold" or "Dollar cost averaging" then you are in for next 20 to 30 years of your life. The market goes through multiple cycles of recessions and booms. What goes up, must come down. We all learned that lesson as children. Your risk is, when I retire, will the market be in a recession or a boom?

@CNBC & Bloomberg
Whenever you hear someone give their 2 cents on the market, ask yourself, what is in it for them? He/She, from ABC Investing Firm will come on TV and advise to sell Company/Stock XYZ because of this and that reason. In the back-end, they may be shorting XYZ for their clients. Just look into who and why before you buy or sell anything.

@My 2 cents
There is still more darkness to come before we see the light at the end of the tunnel. The way U.S. is spending money and may need to print some more green bills, would require more gold bars to back their currency, otherwise its just monopoly money. (hint: invest in gold / mining as a counter)

The good part about the market right now, its volatility. Buy on lows or those record breaking crashes and sell on 10%+ gain on recovery. Leave your emotions at the door, become Data from star trek.

Good Night and Good Luck Investing.

[dodgingdogma]

Now, my concern isn’t of the Jim Cramers of the world being given a high enough platform. It is of professionals giving their suggestions and foresight on what’s happening with genuine intentions. Yes, I believe those people are out there. Personally, I would like to nominate PIMCO’s Bill Gross and Mohammed El-Erian, who run the world’s largest bond fund. More obvious examples are Warren Buffet and George Soros, who at many times have conflicting assessments. But, these assessments are explained, and these explanations give viewers at home added insight, a more practical education and, with time, a sharper filter to decipher useful information from the static.

While this populist rage against financial news continues, in blogs like Solin’s for example, its merits shouldn’t be lost.

[dodgingdogma]

A couple years ago, it would have seemed unthinkable for me to orchestrate a defence of the financial news media. The thesis of Solin’s blog entry could easily have been mine.

Granted, pundits try and predict where the market is going and what the public should be doing with their money. They peddle their education as a means to win credibility and identify themselves not just by their names, but the firms they are promoting. With this, the public gets their perspective, and, although the hard way, they fortunately are learning to take it with a ‘grain of salt.’ Bob Doll at Blackrock, Solin’s example, does put himself and his firm out there with every prediction. A blown call reflects, not just on him, but on Blackrock. People cannot be chastised for putting forth their opinion to the public. Whether they’re talking rubbish or not, their credibility is put on the line. And, as we listen to their opinions, we develop a filter of our own….of who speaks with the most merit. For examples, viewers of Mad Money, including Jim Cramer’s more ardent followers, will take his suggestions with a greater trepidation. I will be shocked if I meet anybody who regards him as an oracle.

[dodgingdogma]

Two occurrences last Friday made me come back to this Huffington Post blog entry by Daniel Solin. One, it was the 20th anniversary of CNBC’s founding. The second was Jim Cramer’s highly spirited retort to Mr. Solin’s public mockery of “In Cramer We Trust” on CNBC. Cramer was so incensed that he interrupted Solin’s interview to give him a piece of his mind. Where was that energy during his interview on The Daily Show, I wondered? Unfortunately, Cramer took the opportunity to attack John Bogle and defend his prowess. It is with thoughts of financial news and their market-timing pundits, such as Cramer, that I write today.

Mr. Sorin’s contribution to empowering Americans to take control of their financial future is nothing short of exemplary. While I haven't read "The Smartest Investment Book You'll Ever Read," I have heard great reviews. To him, I say, stay passionate.

However, in the great zeal seemingly everyone has taken in bashing pundits and financial news; I feel somebody needs to hear a rebuttal. While, undoubtedly in a perfect world, we would like to see the type of investigative journalism that would bring a greater credibility to outfits like CNBC and Bloomberg, if we had the option between the manner in which media coverage is conducted today or no coverage at all, which should we go with? If trashing the pundits that make bold predictions dissuades them from presenting their thoughts on the market, will it be worth it for us?

[joeversusvolcano]

GCEH is an undervalued OTC security valued at 0.01 per share, but set to skyrocket in the next month. Check out their website at http://www.gceholdings.com.

[TJCole]

Just buy stock in those who manufacture death, weapons, things to kill people, you'll almost never lose..!

[cylindar]

Hey, how about General Electric?

[Harry Tuttle]

The individual is ultimately responsible.

The mutual fund industry is a giant marketing machine. Less than 1% can make you money after fees on a risk adjusted basis. Their presentations, however, are very impressive.

Most people are greedy and gullible, so I disagree with the notion that this is going to change. Whether in finance or politics, people believe what they want to believe. Critical thinking is psychological taxing because we are genetically predisposed to agree.

[twofish]

PhilipTaylor: "the Main Street anger will stop this pillaging of the 99.9% of Americans"

Really? How? What are we going to do, chuck the Democrats and go back to the Rethuglicans? Aside from yelling at the tv, firing off emails and not voting, what can we do to influence them, especially as compared to all that lovely bribe money -- er, campaign contributions?

[AmericanFool]

Dan, I don't agree with everything you say, but you are so right on this. It's worse than you depict, if possible. 65% of stocks do worse than the market average. 35% do markedly better, so much better that the gains (generally) more than offset the losses from the other 65% to yield the index return. This means if you bypass the index investment to go with individual equities, the odds are already stacked against you, 2 to 1, despite the market's growth bias over time. Your advisor better be really good to beat those kinds of odds. I believe it can be done, by a Buffet, a Soros, a Lynch, a Rogers, or a Gross... but your odds of making a major league team are better than joining that group.

[djwfutbol]

After a lifetime of hearing about the stock market, first from my grandparents who owned stock in the '20s and then my parents who owned stock in the '60s and '70s and my own experience in the last 30 years, I am here to tell you - listen close - It ain't investing, it's GAMBLING!

Don't believe any of the garbage you hear on CNBC or wherever else. Treat it the same as you do the casino and only wager what you can afford to lose. And, eliminate the middle man at every opportunity.

[appleknocker]

About those bank stocks: If they went down 55%, then up 65%, that still leaves them 25.75% below their 1/1/09 values. No?

[SeenItBefore]

About stock prediction­s... I guessed and lucked my way from an initial $20,000 investment to $116,000 on paper from July of 1984 to October 18, 1987.

On Friday, the 19th, as the market started to collapse, I called all my brokers with instructions to sell everything immediately.

Seven to nine days later the brokers started to return my calls and proudly announced they had sold all my holdings.

Of course, the strike prices were at the lowest bid. I now had $21,500 in my account. If I had put the money in a bank, I would have made three times this with virtually no risk.

Within days all of my previously owned stocks surged and by the time my broker executed my buy orders, the rally was over. I lost my fanny and commissions hit me hard.

I called my cousin, a high level (V.P.) at Merriil/Lynch and asked him about my experience. His answer was concise. "I have been in this business for 18 years and have never owned a single share of stock."

And he advises people. And invests (?) their life savings...

[PhilipTaylor]

My belief is that Wall Street wants everyone to "SELL LOW" as this is part of the Harvesting of Main Street Wealth for the Elite Banksters that the Elites plan every DECADE (sometimes twice a decade - but this is the biggest in History because of the HOLE they DUG for themselves with their Greed).

This is also the largest transfer in History of Main Street Taxpayer money and Wealth to Wall Street including three other countries Banks (London, Germany, and Switzerland).

I believe the Financials are a "Suckers Market" as they still have $Trillions of Toxic Waste stored "Off-The-Books" and buying High is always a bad Idea. But they did relax the "Mark-to-Market" rule so the Banks can continue to hide all this bad debt and so they will do like Wells Fargo did and Fake a great quarter by simply NOT writing off any BAD Debts!

Hang on to your portfolio as the Main Street anger will stop this pillaging of the 99.9% of Americans. Do the opposite of what Wall Street says to do on CNBC or Bloomberg.