The little book of picking top stocks : how to spot the hidden gems

"Brace yourself. You're about to see the stock market from a radically new angle. The focus of this book is figuring out which stock is going to be the year's single best performer in the S&P 500 Index. In the period studied here, those stocks have produced one-year returns ranging from 80% to 743%. You've read the standard investment approach lots of times. Financial institutions and personal wealth advisors present familiar themes: "Focus on the long term. Diversify. Stick to high-quality companies with dependable earnings and proven management." These are wise words, well worth heeding if you hope for a secure financial future. But let's face it. Those prudent principles don't even vaguely describe the actions of certain investors. A nontrivial percentage of people who buy stocks are shooting for a monster payday. Not between now and retirement in 40 years but immediately. Or sooner. They have zero interest in "hitting a lot of singles." They're swinging for a grand slam, game over, right this very inning. The instant gratification style of investing made headlines on the business page and beyond in 2021. Hordes of market newcomers became obsessed with meme stocks. The shares of a few companies with a ton of social media buzz went to the moon--and back, in some cases"-- Provided by publisher 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."