More on the Importance of Stock-Picking

Investors aren’t well-served when the media discusses the stock market as if it were one giant stock. In reality, there are thousands of stocks and they all have minds of their own. Understanding this point is crucial to good stock-picking.

Here’s a good example of how divergent the stock market can be. Last Tuesday, the Consumer Staples Sector reached an all-time high. Bear in mind that the S&P 500 is still about 13% below its all-time high. The next day, the Healthcare Sector also hit an all-time high. It took healthcare more than eleven-and-a-half years to take out its old high. Back in early May, the Consumer Discretionary Sector made an all-time high, although its been down since.

How are the other sectors doing compared with their all-time highs? Tech and Telecom are still down more than half, and Financials are off more than 60%. Energy, Materials and Industrials are all about 20% below their highs.

It’s not one market — it’s several thousand different ones.

Posted by on July 23rd, 2012 at 10:37 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.