Photo: Steve Price’s Flickr
Here’s how we put together our list of the Best Stock Pickers on Wall Street:We started with an extensive list of brokerage firms offering equity research to their clients. We then compiled a list of each of firm’s price targets for each Dow Jones Industrial Average (Dow) constituent effective January 1, 2011 or near that date but within two months of that date.
We decided to compare the analysts’ price targets effective January 1, 2011 price target to the December 31, 2011 close for practical reasons. We believe the price target is relevant for individuals making investment decisions who also want to take advantage of the long-term capital gains tax rate, which requires holding an investment position for at least 12 months.
Our sources of data included Bloomberg, Nasdaq, StreetInsider, Fly On The Wall, Benzinga, and FinViz.
We limited our list to firms offering coverage on at least 10 of the Dow constituents.
We also reached the respective brokerage firms multiple times, asking them to provide us with any data we didn’t have, as well as to confirm the data we did have. Some firms responded quickly and either confirmed or corrected our data. Others were less helpful, and some even refused to share their data with us.
In the latter cases, we relied on the numbers we had already found.
Once we had all of our data and the markets closed for the year, we calculated the size of the error for each analysts price target based on a percentage. Then we took a weighted average of those errors for all of the analysts for each firm. The firm with the lowest error scored highest terms of accuracy in our study.