The value of SmartMoney's stock recommendations

Richard Borghesi and Thomas Pencek

Applied Economics Letters, 2011, vol. 18, issue 10, 949-953

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.

Date: 2011
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DOI: 10.1080/13504851.2010.518946

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