How well does it pay to own the Standard & Poor's 500 Index's
best-performing stock of the year? Over the 2012-2021 period, the
one-year total return ranged from 80% to 743%. This book identifies the
quantitative and qualitative traits of stocks that made it to #1 and
tells the stories of how they got there. A key indicator, the
Fridson-Lee Statistic, makes its debut in these pages.
Aiming for the massive upside of the #1 stocks entails substantial
risk. It's not something to do with more than a small percentage of your
portfolio. But attempting to pick the coming year's top performer can
provide an outlet for speculative impulses that might otherwise spoil a
prudent, long-term investment plan. And by investigating the
statistically determined best candidates for #1, you'll gain important
insights into stock selection.
The Little Book of Picking Top Stocks explains why conventional equity
research provides only limited help in zeroing in on the index's future
top performer. Spotting the #1 stock isn't Wall Street analysts' focus,
although the information they furnish about companies' competitive
strategies is quite helpful. Problematically, investment banks'
fundamental stock reports are structured around a valuation metric that
was discredited nearly half a century ago--earnings per share.
Author Martin Fridson's previous writings on the stock market include
the books It Was a Very Good Year and Investment Illusions, as well
as articles such as "Ben Graham's Value Approach: Can It Still Work?" He
has received the CFA Society of New York's Ben Graham Award and has been
named the Financial Management Association International's Financial
Executive of the Year. The Green Magazine called his Financial
Statement Analysis (co-authored with Fernando Alvarez) "one of the most
useful investment books ever."
