Take Stock-Picking Experts with a Grain of Salt

Your guess is as good as theirs

Photo by Fedor on Unsplash

Recently, I came across a Barron’s article written a little more than a year ago and chuckled to see how far off-base its expert predictions were. Their premise, as you can see from the headline below, was that homebuilder stocks were on the decline because demand for their product was dropping. Investors should probably sell now (then) to protect their capital.

Home Builders' Stocks Are Downgraded. Demand for Housing Just Isn't the Same.

I hope you did not follow their advice. Since the article’s publication, homebuilder stocks have soared. In 2022, a BOA analyst predicted that Dream Finders Homes (DFH) would soon be trading around $10.50, but today (September 2023), it will cost you $19.90 to buy a share. The same expert believed that Owens Corning (OC) would drop to $80. Today it’s trading at $146.75.

The analyst from Wells Fargo didn’t fare any better. She believed that Meritage Homes’ (MTH) stock was on the decline, but since then, it’s risen by 87%. She predicted that Toll Brothers’ shares would drop to $48, but today, they’re selling for a hair under $84, an…