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A Stock Profit Recap of 2012 & (Relucant) Forecast for 2013


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A Stock Profit Recap of 2012 &

A (Relucant) Forecast for 2013

As we write this a few days before year-end, it looks like 2012 will be a good year for investors. The S&P 500 is up about 12% for the year, and its smaller-cap brethren are up slightly more, with the MidCap 400 gaining about 15% and the SmallCap 600 rising 13%.

The big laggard for the year has been the Dow Jones Industrial Average, which is only up about seven percent. It is unusual for the Dow’s performance to diverge from that of the S&P 500 by so much. Perhaps it is because the Dow includes a much smaller number of stocks--only 30 versus 500 for the S&P. (Another example of the benefits of diversification.) We thought perhaps it is because the Dow is dominated by value stocks, but the Russell 1000 Value Index is up about 15%. Our best guess is that it is because of the math that underlies the Dow index. Unlike most other indices, which are market-cap weighted, the Dow is stock price weighted. And it turns out that several of the highest priced stocks in the Dow were relatively poor performers.

The strong performance by stocks over the past year caught many pundits by surprise. Fortunately, it didn’t catch this investment newsletter by surprise. In the January 2012Turnaround Letter issue, we predicted that the S&P 500 would rise by ten percent in 2012. It didn’t catch most of our readers by surprise either. In the poll at the beginning of the year, 19% of those who voted predicted that the S&P would rise more than 10% by the end of 2012, and another 6% said it would rise between five and ten percent. Only 22% predicted that the S&P would fall. Make your own market prediction for 2013 by voting in our S&P poll.

Our other projections for 2012 had mixed results. We got it right (at least based on the S&P indices) when we said that small caps would outperform large caps.  Our prediction that high-grade bonds would underperform may or may not have been right, depending on which types of high-grade bonds you look at. And we definitely got it wrong when we said that high yield bonds would underperform. They rolled on to another strong year, with the Merrill Lynch High Yield Master index rising 15%. 

Recapping the past year is easy; what about a stock market forecast for 2013? Read the full January 2013 article--including a forecast for the coming year.



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Sizeable market moves can increase the temptation to sell on downdrafts and buy on upswings; however, we strongly advise against attempting to do that. The chances of getting out at the right time and then back in again before the market rebounds are extremely slim. Read More.

Harnessing Activists to Help Find Turnaround Stocks

Activist investors often produce attractive returns for their clients; and you can still use their influence to help your position as a turnaround investor in two ways: Buy a position in a stock with the expectation that an activist will soon follow or buy after an activist takes a stake.


Value Investing


While one of the many dozens of activist funds might find their way to selecting your particular stock, this approach is likely to be frustrating and unrewarding. A better approach is to buy after the activist makes their move. Once an activist takes a stake in a company, how do you evaluate whether it is worthwhile to follow on? Admittedly, this is a bit of an art... Learn how you can harness the power of activist investors to find market-beating turnaround stocks.

Turnaround Letter Stock Pick Named Top Performer of 2017


stock market advicex


What Last Year's Top Stock Pickers Are Buying in 2018


This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.


George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."