Little Book of Picking Top Stocks

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.