Never make forecasts, especially about the future....
On 3rd December 2007 Pat Dorsey Director of Equity Research at Morningstar made some predictions on camera and the outcome illustrates perfectly the risks associated with attempting to pick stocks based on an analysis of fundamental value.
Only one of the recommended stocks outperformed the S&P 500 while the remainder significantly underperformed the index and in the case of Wachovia investors would have lost all their money.
The antidote to this uncertainty is to simply buy and hold a broadly diversified index fund.
|
Stock |
Dec 2007 |
Fair Value Est |
Sept 2009 |
Percent change |
|
US BanCorp |
$32.98 |
$41 |
$21.23 |
-35.62% |
|
BB&T Corp |
$35.90 |
$49 |
$26.71 |
-25.59% |
|
Bank of America |
$46 |
$70 |
$16.34 |
-64.47% |
|
Wachovia |
$42.50 |
$61 |
$0 |
-100% |
|
Synovus Financial |
$25.12 |
$35 |
$3.51 |
-86% |
|
S&P 500 |
|
|
|
-28.01% |
The original video has subsequently been removed by Morningstar. Hardly suprising really.