The best, and worst, Dow stocks for 2012

[Common Sense Party]

In order to identify the best and worst stocks in the Dow for 2012, we reviewed the DJIA stocks which had the most and least implied upside. Not surprisingly, the ones with the most upside potential in 2012 were among the worst performing in 2011. Similarly, the least attractive DJIA stocks are in many cases stocks which are now trading close to new highs. After looking at Thomson Reuters data, there are several stocks which may significantly outperform the market this year and several that will be disappointments.

These are the best and worst stocks in the Dow for 2012.

http://bottomline.msnbc.msn.com/_news/2012/01/12/9974941-the-best-and-worst-dow-stocks-for-2012

I'm not even going to post the rest of this nonsense; that's not my purpose in starting this thread.

My purpose is to rant against idiotic articles like this.

First of all, I'll reveal my bias in that I'm not a big fan of investing in individual stocks. I suppose it's fine if you know what you're doing and you take the time to really research and dig through annual reports and you truly understand the company. And it's fine if you have a broadly diversified portfolio of at least a couple dozen stocks, in different industries.

But how many people fit the above description? Very few.

It's much more likely that some near-novice investor who has rarely dabbled in stocks will think that reading one article on MSNBC.com or in Money magazine makes them well-informed, and they go out and invest a good chunk of their retirement savings in one company. Based on the recommendation from some web journalist you've never met who uses pablum phrases like "implied upside"? And then what? What if that stock tanks?

Why do stockbrokers and financial consultants have to jump through hoops, take grueling tests and abide by stringent compliance rules and they still aren't allowed to give financial advice or make predictions, yet journalists can make ridiculous predictions like "The Best Funds to Own Now!" or like this article?

Anyway, seeing titles like this makes my skin crawl and I just had to rant.

What do y'all think?

[wordpix]

1. I'm with you. I have been investing since the mid-nineties though my employer & gradually learned

not to pick my own stocks. I thought I was such an expert as my investments increased in value in the late 90's with the tech sector soaring, and I thought I could pick good individual stocks ----but then they crashed and I learned quite a bit like Do Not Invest in Individual Stocks Unless You're Playing Around with a Small Amt. of $$$ You Can Afford to Lose!!!!! Now I just pick mutual funds that specialize in what I want to invest in, like solar, small cap/large cap, or stocks screened for certain criteria like no nukes or tobacco companies. I leave the individual cos. to my investment co., which is longstanding and has a good rep.

Since I began investing, the number of mutual funds and portfolios has jumped, not to mention ETFs. It's all very complicated to know what to invest in. I feel like I'm still a novice at all this, even though I've read a lot and occasionally change allocations as I've learned more over these 15 years.

My bro is a stock market expert who believes in buying good companies (not stocks) and holding them for a long time. He totally believes that no one can time the market and I have to agree. Most of the blather on TV and in magazines contains statements about what's already happened, and no one knows what WILL happen. My philosophy: if you think solar stocks will be doing well 20 yrs. from now (or health care, or railroads), buy into that sector and hold on, even if the fund is doing poorly now. Of course, you have to check out your investment company, the fund facts, and their records first. But picking individual stocks? NO!

My two cents.

[Common Sense Party]

2. Agreed. That is a good, common sense approach to investing.

I wish more people had your attitude.