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Opinion
Barry Ritholtz

Stock-Picking Contests Are No Way to Pick Stocks

But they could be made more useful with some simple changes.

Alpha producer or alpha dog?

Alpha producer or alpha dog?

Photographer: Norman Smith/Hulton Archive/Getty Images

Let’s give Barron’s credit: of all the various stock-pick-a-thons I see each year, theirs is the most honest. The publication reviews its own performance, doesn’t crow too loudly when winners emerge and admits when they stink it up. “Last year was a tough one for equities, and our picks had it slightly rougher,” the editors wrote last week. This is as much transparency as one could hope for, setting the standard for those who publicly select or write about stocks for public consumption. Other outlets should follow the practice of acknowledging their track record as well as Barron’s does.

But the problem with these contests isn't transparency or lack thereof, but rather that the entire exercise is futile because the outcomes are entirely random.