The value of SmartMoney's stock recommendations

Abstract

We examine the value of expert picks published by SmartMoney, a popular investment periodical. Most can be described as ‘hot’ stocks – those that have experienced run-ups in price before publication. However, these stocks subsequently underperform the market by 0.45% per month in the 6-month post-publication period. We also observe that market risk-adjusted abnormal returns (AR) are −1.18% per month over the same time period, which is significantly below expectations. Results suggest SmartMoney’s recommendations have negative value to its subscribers.

Notes

¹Only two of the stocks in our sample traded on the AMEX, so we omit showing results from that exchange.