Ever wondered how accurate stock market experts' predictions really are? Would you be better off following the advice of the financial 'gurus' or just sticking it in the bank? Compare, contrast, and discover how their stock predictions unfold.

Investment Period

DISCLAIMER: The information provided in Gurudex is for general guidance only and whilst reasonable care has been taken to source accurate information, InterTrader accepts no liability makes no warranty, expressly or implied, as to the accuracy of materials on our site.

THE BIG PICTURE
GURU LEAGUE
Order by
  • ACCURACY
  • GROWTH

Introduction

The purpose of Gurudex is to assess a selection of the biggest institutional 'gurus' and compare how accurate their stock predictions have been over a 12-month period.

We also want to compare how investing in these predictions compared with the performance of the S&P 500 and savings account interest over the same period.

DISCLAIMER: The information provided in Gurudex is for general guidance only and whilst reasonable care has been taken to source accurate information, InterTrader accepts no liability makes no warranty, expressly or implied, as to the accuracy of materials on our site.

Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell.

It should also be noted that PAST PERFORMANCE IS NOT AN INDICATOR OF FUTURE PERFORMANCE and investors should always seek independent advice regarding your suitability to use our products and ensure you fully understand all associated risks.


Source Data

All prediction data has been sourced from Fool.com during the period 1 January to 31 December 2015. From Fool.com we collected:

  1. The date of the prediction “start date”
  2. The stock ticker symbol
  3. The start price
  4. The call

Almost all predictions did not specify a 'time frame' for the investment and very rarely have the institutions indicated this. For this reason we allow the user to select either a 30, 90 or 180-day investment period to apply to each prediction.

We have sourced stock pricing for each prediction from Yahoo Finance UK and have used the adjusted close price.

For the avoidance of doubt, we have excluded stocks that have been delisted during 2015.

S&P 500 data has also been sourced from Yahoo Finance UK; and for savings interest a flat rate of 3% has been applied.


Methodology

Timeframe for Each Investment

The timeframe for each prediction has not been indicated on Fool.com.

To allow for a like-for-like comparison, users are able to select the period for which each predicted investment should be held. The investment periods available include 30 days, 90 days, 180 days or until 31 December 2015.

However all investments are closed off by 31 December 2015.


Calculation of Accuracy

A prediction is deemed accurate if the sell price is higher than the buy price for the selected investment period. Where the sell date falls on a weekend or bank holiday, we have applied the stock’s close price on the preceding trading day.


Calculation of portfolio value

The graph plots each of the dates that a prediction is made. At each of those dates we calculate the average of the returns of all the predictions bought prior to that date. For stocks bought but not yet sold, we have calculated the contribution to the total return on investment for that date, based on the stock price for those stocks on that date.

At the 31 December 2015, we show the overall return on all predictions made throughout the year. Where a prediction is still in play we have used the close price on 31st December 2015 to calculate the return on investment at that date.


Example

As an example, take the following predictions:

  • 1st Jan - £100 invested in GOOG
  • 15th Jan - £100 invested in IBM
  • 20th Jan - £100 invested in KRFT

If the user selects the 30-day investment period, each prediction is deemed to have been invested in for 30 days after the buy date.

So on the 1 Jan an investment of £100 won't have any return as the investment has just been made so the point plotted is 0% return.

On the 15 Jan a total of £200 is invested - the £100 in GOOG has gone up 5% and the £100 investment in IBM has just been made, so it has a 0% return. The total return on the portfolio on that date is therefore 2.5% - that's the figure that's plotted.

By 20 Jan there is the £100 in GOOG, £100 in IBM and £100 in KRFT. GOOG has stayed static at a 5% return, IBM has grown to a 5% return and KRFT has been bought just that day so its return is at 0%. As a result, the £300 investment in the portfolio has returned 3.3% - which is plotted as the 20 Jan point.

By 1 March the 30-day period has expired for all the investments. GOOG made 5% (£5), IBM made 5% (£5) and KRFT made 5% (£5) - so the total ROI across the £300 investment is 5% (£15). If there were no other investments in the period under study, the final data point on the graph would show an overall return on the portfolio of 5%.

The aim is to allow users to look at any point on the graph and see how much this strategy has made or lost, relative to investing in the S&P 500 or generating savings interest.


Calculation of The Big Picture

This graph shows the average portfolio value, at the start of each month, of all the predictions made by all the institutions combined.

The calculation of the 'Accuracy' for The Big Picture is based on the average accuracy of all the predictions made by all institutions included in this analysis. The calculation of 'Total Gains' for The Big Picture is based on all the gains/losses of all the preductions made by all the institutions included in this analysis.

What if you invested in all the stocks predicted?

53% ACCURACY
+6.3% TOTAL GAINS

Here's what would happen if you followed all of the investment banks' stock advice in 2015, holding each recommendation :

Landscape
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1st Jan 2015
  • .
  • 1st Apr
  • 1st Jul
  • 1st Oct
31st Dec 2015Past performance is not an indicator of future performance
Following the prediction
S&P 500 Index
3% interest in the bank

This graph compares three separate types of investment. The first is the return on investment of the predictions made by all the investment banks if you sold ; the second tracks the performance of the S&P 500 Index, and the third shows a standard savings account earning 3% annual interest.


DISCLAIMER: The information provided in Gurudex is for general guidance only and whilst reasonable care has been taken to source accurate information, InterTrader accepts no liability makes no warranty, expressly or implied, as to the accuracy of materials on our site.

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