Amid the current market volatility, it’s more important than ever to carry out in-depth financial research to find stocks primed to outperform for the coming months.
Luckily there are plenty of seasoned professionals with a proven track record who can help inform your investment decisions. And while financial bloggers may not attract the same attention as Wall Street analysts, they are a powerful source of information with their provision of independent stock research.
Over one hundred million investors visit financial blogs every month – and use blogger predictions to make crucial investment decisions. But often these decisions are based on the recommendation of bloggers they know very little about.
TipRanks, the world’s first financial accountability engine, is all about bringing transparency to financial advice. It makes it easy for investors to make data-driven investing decisions. Its Natural Language Processing (NLP) algorithms track the recommendations, transactions and portfolios of over 40,000 financial experts including corporate insiders, hedge fund managers, and of course, financial bloggers.
We thought it would be interesting to use these capabilities to get a ‘macro’ perspective and see which financial blog provided the best stock recommendations over the last year, and which didn’t. We included leading financial blogs such as Seeking Alpha, which posted a whopping 15,340 recommendations in the last year and the Motley Fool. In addition to dedicated financial blogs we also looked at individual bloggers on news platforms such as MarketWatch and TheStreet.com.
We looked at three key criteria: 1) success rate; 2) average return and 3) statistical significance, which means that experts with more recommendations are more likely to be ranked higher.
With the numbers crunched, the results are now in:
Best Financial Blog by Success Rate
InvestorPlace was the number 1 financial blog in terms of success rate, with 59% of all the 4,586 predictions made by bloggers on the site profitable on a one-year basis. This was just above the 57% success rate scored by Motley Fool and beat the 51% success rate achieved by each of Zacks, Seeking Alpha, and GuruFocus.
TheStreet.com and MarketWatch followed closely with a 50% success rate on blogger stock recommendations.
Best Financial Blog by Average Return
Interestingly, the data revealed that financial blogs showed a significant range in average return – with several blogs actually scoring negative returns on their stock recommendations.
The site with the highest average return was easily GuruFocus, with an impressive 12% average return across 154 recommendations, made by 24 different financial bloggers. InvestorPlace and Motley Fool also performed very well- with a 9.3% and 9.2% average return, respectively. And TopStockAnalysts impressed with an 8.9% average return for its 841 stock predictions.
However the next best-performing financial blog only scored a 2.6% average return (Seeking Alpha), with Zacks close behind at 2.5% across its 2,280 stock calls. TheStreet showed an average return per recommendation of just 0.5%.
How Does the Best Financial Blog Compare to the S&P 500? And to the Sector?
Our data team discovered that GuruFocus bloggers beat the S&P 500 by 4.6%- and InvestorPlace did even better, with a 6% return over the S&P 500. Motley Fool and TopStockAnalysts also performed strongly against the index.
In terms of sector, the top performer was GuruFocus with an average return over the sector (of each stock rated) of 5.9% vs InvestorPlace’s 5.1%.
Again several websites significantly underperformed both the S&P 500 and the sector, with one financial blog underperforming the sector by 13% and the S&P 500 by 13.8%.
For the S&P 500, the performance was measured using a Buy & Hold strategy of 1 year (or Short & Hold for bearish calls), while comparisons to the sector were done against the relevant SPDR ETF (XLE, XLF, etc.).
Who is the Best Financial Blogger Out There?
Running all the data through the TipRanks system revealed that the top stock picker out of all the financial bloggers is InvestorPlace’s Luke Lango. This growth-focused equities blogger says his goal is to synthesize and communicate actionable investment ideas to the public.
Overall, Lango scores a stellar 80% success rate and 44.3% average return per recommendation, measured over a one-year period. This means that out of 499 stock recommendations, 401 were profitable.
Even compared to the S&P 500, Lango has significantly outperformed- with a 65% success rate and 32.6% average return vs the index. His most profitable prediction was for China’s electric-vehicle maker Nio in June, which subsequently delivered an eye-watering gain of over 700%.
Top Picks from The #1 Blogger
Here is what the top blogger had to say:
On the cannabis sector as a whole, Lango wrote, “Cannabis stocks have been on fire ever since Election Day 2020, with the ETFMG Alternative Harvest ETF (NASDAQ:MJ) rallying 45% since early November on the idea that a Joe Biden Presidency will pave the path for federal decriminalization and legalization of cannabis in the all important U.S. market.”
He points to the cannabis industry’s biggest producer, Canopy Growth, as leading this charge forward, with the stock up over 50% since November 4.
“Canopy Growth has taken big steps over the past few years in order to streamline operations, reduce its cost basis, and improve cash flows. This sets the stage for Canopy to be a more profitable producer going forward, meaning that big revenue growth in coming years will flow into big profits, too,” Lango explained.
When it comes to DraftKings, Lango argues that it will “leverage network effects and first mover’s advantage to dominate the sports betting and Daily Fantasy Sports verticals” of the iGaming trend, with the shift to online gambling set to persist long-term.
The blogger also counts himself as an EV sector bull, as Lango has recently backed Nio and ElectraMeccanica. Specifically, he believes Nio shares can climb even higher despite already having jumped 99% since October 13.
“To-date, everyone has focused on NIO’s potential to dominate the enormous Chinese EV market at scale. The company will do that. But the company will also find great success in expanding its retail footprint in North America and throughout Europe,” Lango opined.
Meet the Top 25 Financial Bloggers on TipRanks
See an overview of the Top 25 Bloggers from leading financial blogs, and find out which top stocks they are recommending right now. Please note that the list of top bloggers is dynamic, as it is updated daily.