This Time, The Optimists Won

It is time to revisit this prediction from September 28 2011 ""I'd be buying the market," says Citigroup's chief U.S. strategist Tobias Levkovitc". At the end of September of last year the S&P 500 was close to 1,175 and at the time of writing it's around 1,396 (an 18% increase). The average daily opening value was in the vicinity of 1,311 (an 11% increase).

As a result I'll mark this prediction as correct on The Scoreboard.

Note: The link from my article is defunct, but you can get a copy of the original AP story here.

Driving Down Share Prices

General Motors has been around for over a century, but today we'll focus on a financial prediction by Malcolm Berko of The Beacon-News. The prediction is actually a follow up and reiteration of a previous prediction made in February of 2011. Mr. Berko recapitulates in August of 2011 that "Still, I’d not buy the stock.", referring to GM's November 2010 initial public offering after reorganization.

On August 4th of 2011, GM opened at around $27 per-share. A year later, GM is down about 30% to around $19 per-share. The average stock price in the interim was close to $23. Here is what that average implies: Suppose that you took a contrary position to Mr. Berko back in August of 2011 and bought GM stock. Then you sold completely at random during the following year. The result would have been that you lost, on average, 14% of your investment (the difference between your buying price and the average price).

The S&P 500 averaged slightly above its opening price on August 4th 2011, so in that respect GM stock underperformed the (non-automotive) market. Consequently, I'll mark this prediction as a success on The Scoreboard.

Mastering a BAC Prediction

Here we are, well over a year after we recorded a stock market prediction by thestockmasters.com regarding Bank of America Corp. Their prediction was, roughly stated, that shares of Bank of America Corp. would lose value over the next year. They didn't follow up their article a year later, so I'll do it for them:

At the time we recorded the prediction, back in February of 2012, BAC stock was trading at around $14 per-share. A year later it was half as much, and is still trading at around $7 per-share. The average price over that year was about $9. The market at large, as measured by the S&P 500, did not behave similarly and stayed largely at the same levels (for purposes of comparison with BAC). For visual reference, here is a graph of both BAC and the S&P 500, shown as a percentage of their initial value in February of 2011.

The conclusion is that thestockmasters got it right, and their prediction will be marked as correct on The Market Scoreboard.

Disclaimer: I am not now, nor have I ever been a stock holder of Bank of America Corp.

Is "Falling Down" on Netflix?

It's time to look back to a prediction we recorded a year ago, back in July of 2011. The prediction is summarized in this quote from the article "I think Netflix is a short".

The implication would be that if the prediction were correct, you could have loaned some Netflix stock around late July 2011 and payed off that loan today at a profit (sell high, buy low later).

The numbers bear the story, as does the following visual representation of the precipitous decent of the Netflix stock price in the past year from the vicinity of $250 to $70 per-share (roughly a 70% loss).

The average (monthly) opening price was around $128. In comparison, the S&P 500 did not behave the same way staying around the 1,200-1,300 point region.

Accordingly, I am going to mark this prediction as a success on the The Scoreboard.

Disclaimer I am not now, nor have I ever been a Netflix stock holder. Incidentally, I don't even subscribe to their service.

About this Guy Who Really Likes Apple

The Longest January series is long gone and we are back to recording people's stock market predictions and seeing how they fare against reality.

Today I look at a prediction made by Farhad Manjoo on February 15 2012 in an article titled "Apple’s Stock Is a Bargain: The company hasn’t peaked — huge growth lies ahead." Mr. Manjoo then proceeds to gush emphatically about the prospects of AAPL stock, which has appreciated in trading some 15% since Farhad's article was published (the S&P 500 increased by about 3% in the same time).

While the prediction seems in good shape so far (half of it is correct; the company's stock price hadn't peaked in February), I will have come back to it in February of 2013 to finalize its status on The Scoreboard. Then we will have to attempt and quantify what "huge growth" meant.

Disclaimer: I am not currently, not have I ever been an Apple Inc. stockholder (incidentally, I don't even own any of their hardware).