Friday, 24 October 2008 02:00

Blog vs. Broker, whom do you trust!

The Name Brand - that bastion of marketing that the finance and investment industries have come to rely on to convince those who should no better to do things that they shouldn't -has come under attack. "Attack by who?", you may ask. Attack by me, Reggie. "Who the hell is Reggie?" you ask. Well, a quick bio , and a list of writings that have brought use here so we can move on...

In the past week or two I attempted to debunk the "'Name Brand' is the best" mentality of so many individual and INSTITUTIONAL investors enamored by the marketing machine that is the Wall Street banks, brokers and Greenwich/mid-town hedge funds. In attmepting to do so I have released this blog's research model results, provided a glimpse into my proprietary trading, a backgrounder on my investing style, and a comprehensive comparison of both the blog and my results as compared to all major (and minor) hedge fund indices.


Now that we know:

  1. that a man can beat market averages,
  2. we know hedge funds don't necessarily deliver that much absolute alpha,
  3. we know the difference between relative and absolute return,
  4. we know the difference between return and risk adjusted return,
  5. and know who the hell Reggie is...


It's time to move on to what is the actual essence of Wall Street, the big money center banks and brokerages (or at least what's left of them). As representative of Wall Street, I am using the four largest and most representative banks and brokerages - Goldman Sachs, Citibank, JP Morgan, and Morgan Stanley.


I compared the 62 companies' opinions that I have covered in the blog with that of the big Wall Street name brands' analyst buy/sell recommendations. Needless, to say, the results are not even close. I have started the blog in September of 2007, and have been patently negative every day since. Both the blog research and my proprietary trading account have been short, save for one long call - Bear Stearns after going short from the 130's to the JP Morgan announcement to buy the company for two or three dollars per share. I knew this to be unlikely to go through, and announced that strategic calls were totally underpriced. We all know how that story ended.

Since nearly all of my positions were short, I am using a margin account to quantify the blog's research, which I feel is most realistic since you can't short in a cash account.

image007.png



Cash Margin account (most realistic, since shorts often recommended)
Reggie's Blog Research returns 42.4% 81.6%
Citi -30.6%
GS -33.0%
MS -22.4%
JPM -40.2%

Just to be as conservative a possible, I included cash comparisons as well. Same story, different numbers.

image005.png

Below is a table of the 62 stocks that I covered in the blog, with a direct comparison with the guidance of the big boys, stock by stock. For those who want even more proof and meant, I have included all of the numbers and calculations that went into this via pdf download (57 pages of stuff). This document is available to download for free, without registration -  pdf Blog vs. Broker Analysis - supplementary material (1.09 MB 2008-10-24 14:43:34) .

Get Adobe Reader Adobe Reader version9 or higher required.


I literally expect every brokerage and wealth management client of all of these banks to buy a subscription to this blog. All I ask is,

"Who has issued the best
guidance during these turbulent times?"

BoomBustBlog's Holding period return (short, margin account)

Reggie's
HPR without margin and commissions

Brokers
(Holding period return)

Stock

1 month

3 months

Since invested

Citibank

Goldman Sachs

JP Morgan

Morgan Stanley

len

143.4%

52.0%

36.0%

74.7%

-37.9%

69.5%

-93.7%

hov

134.4%

53.8%

47.3%

70.2%

-65.2%

-62.4%

phm

98.4%

46.1%

26.5%

52.2%

-35.0%

-44.6%

-44.2%

ctx

131.8%

43.5%

30.6%

68.9%

-39.2%

-65.1%

63.2%

dhom

130.6%

0.0%

0.0%

68.3%

No coverage

bzh

150.3%

58.2%

50.3%

78.1%

-70.9%

80.0%

rdn

164.5%

44.7%

-32.0%

85.2%

No coverage

mtg

176.2%

65.4%

50.8%

91.1%

-65.4%

dhi

127.5%

61.1%

52.5%

66.7%

98.7%

-61.4%

-65.4%

tol

25.1%

24.9%

4.3%

15.5%

-10.6%

-9.3%

-11.7%

bsc

182.7%

33.2%

94.3%

No coverage

cfc

151.2%

0.0%

0.0%

78.5%

No coverage

mbi

172.4%

45.6%

-24.0%

89.1%

37.4%

-79.6%

abk

187.3%

26.8%

-0.9%

96.6%

4.7%

-90.9%

wm

193.7%

99.8%

99.5%

ryl

62.6%

37.3%

26.0%

33.8%

-26.5%

-28.3%

-56.1%

ms

123.6%

27.1%

51.5%

63.9%

-71.2%

-70.1%

-70.6%

ggp

179.2%

82.3%

90.4%

91.7%

56.5%

-94.6%

-93.7%

bac

78.9%

30.5%

24.9%

41.4%

-52.9%

-29.5%

-54.6%

-55.5%

kbh

84.4%

34.9%

20.8%

44.1%

-25.4%

-47.3%

-70.5%

lehmq

196.3%

99.8%

-99.9%

ago

103.8%

42.8%

10.4%

53.8%

0.0%

-57.8%

-46.0%

key

109.1%

24.0%

10.0%

56.3%

-69.9%

-59.8%

47.7%

ffhs

58.5%

10.8%

10.1%

31.0%

No coverage

c

90.6%

30.9%

31.2%

47.0%

6.6%

-63.5%

-7.1%

wfc

-1.1%

8.6%

-7.5%

1.1%

4.7%

-15.2%

-9.3%

gs

74.2%

18.4%

39.8%

38.8%

-46.8%

-44.3%

-37.9%

mer

132.2%

33.8%

39.7%

67.8%

-72.3%

-67.8%

-76.4%

-44.8%

wb

163.4%

58.3%

63.3%

83.4%

No coverage

kfn

-72.8%

33.2%

-34.9%

-81.2%

-73.4%

jef

147.8%

60.5%

68.0%

75.4%

-45.4%

pnc

53.4%

43.4%

32.2%

27.8%

-80.9%

-80.6%

-83.6%

bpop

33.9%

21.9%

16.3%

18.0%

No coverage

sti

89.2%

33.1%

9.3%

45.7%

-27.1%

-43.9%

-51.1%

-48.3%

snv

65.8%

28.1%

7.8%

34.0%

-28.1%

-31.3%

20.7%

mi

57.3%

20.2%

7.0%

29.7%

-28.6%

28.9%

57.4%

-28.7%

asbc

57.6%

22.7%

-10.1%

29.9%

-46.8%

fctr

62.0%

13.4%

-15.1%

32.1%

No coverage

mtb

-1.0%

0.6%

-60.3%

-48.3%

-50.5%

-66.5%

hban

33.1%

16.2%

-8.1%

17.6%

10.6%

-10.9%

-27.3%

-38.2%

bbt

15.4%

9.5%

-21.0%

8.8%

10.6%

-10.9%

-27.3%

-38.2%

jpm

17.2%

21.6%

-10.6%

9.7%

-18.9%

-11.2%

-19.5%

usb

22.0%

6.5%

3.3%

12.1%

13.4%

-15.6%

-17.0%

-20.4%

cof

25.3%

15.3%

1.2%

13.7%

-24.7%

nara

51.8%

32.0%

10.0%

27.0%

No coverage

sasr

54.9%

35.5%

10.1%

28.5%

No coverage

hnbc

60.4%

19.3%

-16.6%

31.3%

No coverage

cvbf

16.8%

24.0%

9.0%

9.5%

No coverage

gbci

-8.0%

25.2%

1.1%

-2.9%

No coverage

fhn

7.3%

22.0%

-2.4%

4.8%

-54.3%

46.5%

-43.5%

44.8%

ncc

-29.6%

11.2%

-15.2%

-13.7%

-88.1%

-83.5%

-89.5%

-53.9%

cfc

16.6%

0.0%

0.0%

9.4%

No coverage

rf

95.5%

24.8%

3.6%

48.9%

-24.8%

-58.7%

-59.0%

zion

53.2%

21.0%

-15.6%

27.7%

-3.7%

-84.4%

-56.2%

-31.0%

tcbk

-15.5%

13.8%

-28.0%

-6.7%

No coverage

fitb

84.0%

31.5%

16.7%

43.1%

-62.2%

-19.1%

67.6%

59.9%

sov

140.7%

67.7%

69.9%

71.4%

-76.0%

ge

68.5%

23.5%

34.5%

35.1%

-51.8%

-55.0%

-55.0%

axp

68.0%

34.6%

32.6%

34.7%

-44.4%

-47.2%

hbc

42.7%

19.5%

21.5%

22.0%

28.2%

nav

95.7%

50.9%

52.8%

48.3%

-47.8%

wire

33.4%

16.9%

18.3%

17.2%

No
coverage

sfd

70.2%

19.7%

36.5%

35.3%

-45.3%

-14.4%

Reggie's
Returns

81.6%

30.6%

16.7%

42.4%

-30.6%

-33.0%

-40.2%

-22.4%

As compared to ALL of the popularly followed indices...

BoomBustBlog's Holding period return (short, margin account)

Reggie's
HPR without margin and commissions

Brokers
(Holding period return)

Stock

1 month

3 months

Since invested

Citibank

Goldman Sachs

JP Morgan

Morgan Stanley

Reggie's
Returns

81.6%

30.6%

16.7%

42.4%

-30.6%

-33.0%

-40.2%

-22.4%

DJI Index

-21.5%

-26.8%

-36.7%

CCMP INDEX

-25.0%

-30.5%

-38.6%

CTRN Index

-24.7%

-32.2%

-40.9%

UTIL Index

-20.1%

-28.3%

-29.5%

UKX Index

-22.7%

-27.2%

-36.7%

HSI Index

-27.1%

-40.5%

-36.3%

RTY Index

-29.2%

-30.2%

-37.3%

OEX Index

-21.6%

-27.4%

-38.0%

SPX Index

-24.5%

-30.1%

-39.8%

AS30 Index

-20.5%

-23.7%

-37.2%

SPTSX Index

-26.3%

-31.6%

-31.3%

MXWO Index

-27.2%

-34.3%

-41.5%

FTAW11 Index

-33.8%

-42.7%

-48.1%

MXEUG Index

-21.5%

-26.8%

-41.5%

MXWO Index

-27.2%

-34.3%

-41.5%

MXEU Index

-21.3%

-26.6%

-42.1%

DJGT Index

-22.9%

-29.7%

-39.8%

SGX Index

-24.7%

-30.2%

-36.8%

SVX Index

-24.4%

-29.9%

-42.7%


Last modified on Tuesday, 10 August 2010 08:25