In what was the 2nd year of our annual stock picks competition, I certainly had a lot of pressure. Why? Because I was the defending champ! After winning in 2009 with 2 tech stocks (including one Chinese one, Baidu (BIDU)) and 2 commodity ETF’s, I was back with the exact same formula this year trying to replicate that success. Unfortunately, things did not turn out as well this year and what ultimately caused my fall was the incredible drop by UNG, the natural gas ETF. I guess it was a gamble in some ways to have selected UNG this year.. and it turned out to be a very bad one.
I will be reviewing each of my stock picks in this newsletter. Obviously, selecting 4 stocks that will perform well during the year is a big challenge because we cannot get out of them, no matter how good or how badly they are doing. On Monday, I will be publishing my 4 stock picks for 2011, which should make for a very interesting challenge.
The overall return for my picks this year was not terrible, it stands at -0.45%…a bit better than 0, but obviously still disappointing and well short of a repeat.
Without further wait, the review of our 4 stock picks:
iPath Dow Jones-UBS Nickel ETF (JJN) +32,12%
This turned out to be my winning pick for 2010 and in reality, as I have written, investing in precious metals such as Gold, Silver, Platinum and others has turned out to be a terrific bet. Why? The price increase has been mostly demand driven because of China’s continued growth.Selecting Nickel was a great pick, but many other white metals such as Silver would have been even better. Since JJN is futures based, it’s return would also be a bit different from physical based ETF’s on silver.
Sohu (SOHU) +10,84%
Sohu has filed to gain as much traction as I was hoping for and was a victim of a difficult year for the Chinese market. That being said, the return was still fairly good and I can’t really complain about it.
Google (GOOG) -4,20%
Google was a very difficult stock for me to understand in 2010. I was very bullish on Google and do think that the company has made significant progress in 2010 both in terms of its business and even in financial metrics. That’s not to say that I would not do anything different, as I did give some ideas of what I’d do if I were Google CEO Eric Schmidt. But the stock had a very difficult year as analysts continue to expect slower growth in the near future in search advertising.
United States Natural Gas Fund LP (UNG) -40,56%
The killer…. Natural Gas seemed like a great investment compared to oil in relative terms but several factors contributed to Natural declining in 2010. Add to that a lot of slippage because of the fact that UNG rolls its futures position every month and you get a true disaster. In terms of commodity ETF’s, very few choices could have been worse if you exclude leveraged ETF’s.
I would love to congratulate Wild Investor who won the competition this year thanks to a return of over 27%. You can see the final rankings here and I will be linking to the other recaps as they become available. Stay tuned for my 2011 picks, to be published on Monday!
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Disclosure: We do not hold positions in any of these 4 stocks