If you believe in the "wisdom of the crowd" and the ability of individual stockpickers within a community to outperform the so-called experts, you'll want to check out the latest research from CXO Advisory Group, which looked at whether the favorite equity investments of stock market newsletter gurus reliably outperform the market. After analyzing the performance of the 70 favorite investments of stock market newsletter gurus, the answer, it appears, is no.

In fact, the average return of all 70 guru favorites was 0.8% with a very large 46% standard deviation of returns. Moreover, the favorites tended to underperform broad benchmarks such as the S&P 500 over selected time horizons. What's more, 20% of the stock picks ended up under $10, and six ended up under $5, perhaps hinting that the stock picks were speculative in nature: "It seems that, when presenting their favorite investments, participating guru may often be swinging for the fences with high-risk picks that on average underperform the market at an investment horizon." 

The bottom line, according to CXO Advisory Group: "Investors should beware of the favorite equity investments of stock market newsletter gurus. Many favorites may be swing-for-the-fences speculations."

NOTE: Please keep in mind that TradeKing does not specifically endorse any of the securities or trading strategies mentioned. Depending on your risk-reward profile, this trade may or may not be suitable for your portfolio. The stocks mentioned are for educational purposes only.

[image: Swinging Strikeout via Wikimedia]